The majority of county auditors oppose the “temporary fix” and have introduced three new ideas to mitigate the tax impact. Warren County Auditor Matt Nolan, testifying on behalf of the County Auditors Association of Ohio, outlined the ideas for the Senate Ways and Means Committee on Tuesday.
“While repeated band-aids and pet bills have made Ohio’s property tax bill incredibly complicated, at its heart, there are only three pieces to it. There are values. There are rates. And there are state credits,” Nolan said. “The CAAO opinion is that the only realistic and proper options at this point in time are to quickly adjust the rate or state credit side of the equation.”
Nolan outlined the possible options:
- Using ARPA or rainy-day funds, the state could grant a property tax credit to each property owner who sees an increase in their taxes as a result of the increase in values. This approach would apply to the vast majority of residential property tax owners who will see an increase in their taxes in 2024 solely dues to value increases.
- Apply the difference in taxes as refundable income tax credit. This would allow for the bills to go out as normal but apply a credit to all individuals who pay income tax in, and own property, in Ohio.
- A cap on the amount of increased revenue that can come from 20-mill floor school levies to no more than the annual inflation rate.
Sen. Kent Smith, D-Euclid, asked Nolan if he has any idea how much the first two options could cost the state.
“It struck me that that could be a really large number,” Smith said.
Nolan said they don’t have exact calculations but, “it will be a significant number; there’s different ways to skin a cat if you will. It depends on how much of the gap we want to cover.”
The state has $3.5 billion in its “rainy day” fund and it is unclear how much it has in unencumbered federal pandemic relief dollars.
The senate committee was taking opposition testimony on SB 153, which would mandate the state tax commissioner use a three-year, equally weighted average when reappraising properties. There are 41 counties undergoing the sexennial reappraisal and triennial update. Counties such as Butler and Montgomery are staring down residential value increases of 37% and 34% respectively.
Nolan told the committee — he testified against House Bill 187 in June — attempts to tinker with the property valuation process, at this late date, would be disastrous.
“Redoing this process under different rules would be impossible if we are to get the tax bills out in December and January, when they are traditionally sent. This would result in bills and collections happening much later than usual,” Nolan said. “This does not sound like a big deal — until you realize many local governments depend on these funds in the spring to pay their bills. Delaying it into the summer would lead to default on bond payments, inability to pay EMS and police payroll, in short it would have dramatic impacts on our most critical government functions.”
Montgomery County Auditor Karl Keith told the Journal-News their idea will be a win-win for everyone.
“Ohio has a tax problem, not a value problem,” Keith said. “The proposals we’ve developed as county auditors would provide immediate, significant tax relief for our property owners next year, and will not create unintended negative impacts in the future.”
The auditors are essentially hoping their ideas, mainly the 20-mill floor provision, can be swapped in the existing legislation that is slowly moving through the legislative process.
The Journal-News asked the Ohio School Boards Association their opinion of the 20-mill floor idea. Deputy Director of Legislative Services Nicole Piscitani said they would encourage the state to take this matter up in newly created Joint Property Tax Review Committee.
“OSBA acknowledges the impact that property valuation increases will have on taxpayers,” Piscitani said. “However, we are concerned about making permanent changes that would impact a school district’s local funding without full exploration of the proposal.”
The measure was not voted out of the committee, but it isn’t the main vehicle the legislature is using to try and effect change.
Butler County state and local officials have been fighting for a fix to the untenable situation since last spring. Sen. George Lang, R-West Chester Twp. tried to get the fix included in the state budget to no avail. Madison Twp. Republican Rep. Thomas Hall introduced HB 187 last spring which is nearly identical to SB 153.
Hall’s bill was voted favorably out of the House Ways and Means Committee with a few amendments and is possibly awaiting a floor vote Oct. 11 — the session scheduled for this week was cancelled. The House only has one session scheduled before the November elections. Hall told the Journal-News he isn’t certain whether his bill will make the agenda or not.
House Speaker Jason Stephens’ office also could not confirm next Wednesday’s agenda.
Hall said he won’t change the language in HB 187 because that would require another committee vetting.
“We’re working to ensure we get the opportunity to vote on it, and put it on the floor for all the reps to vote on it, to vote for the taxpayers of their respective districts,” Hall said. “I’m optimistic we have the votes to get it over to the senate.”
Lang told the Journal-News he liked some of the auditors’ ideas, but time’s basically up.
“It’s too late in the game at this point, they should have come to us with that early on,” Lang said. “It’s the reason we put a sunset on it, it will force us to get together and come up with a better plan.”
The 20-mill floor
Ohio law provides special protection for school funding. It provides a minimum millage level for school districts, or floor, that rates cannot fall below. Once a district’s total current expense millage is reduced to 20 mills, it cannot be reduced any further, so tax revenues grow as property values increase.
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