Governments would lose millions in funding if property taxes eliminated

Townships like West Chester would lose millions in property tax funding if a proposed constitutional amendment was passed by voters. Contributed photo

Credit: Sue Kiesewetter

Credit: Sue Kiesewetter

Townships like West Chester would lose millions in property tax funding if a proposed constitutional amendment was passed by voters. Contributed photo

Butler County schools and other local entities that provide critical services like police and fire protection would lose $658.2 million in funding if a proposed constitutional amendment eliminating property taxes succeeds.

Butler County Auditor Nancy Nix has broken down the numbers on erasing property taxes — there’s a grassroots effort afoot to put the measure on the November ballot — and they aren’t pretty. In fact some local entities like townships would be left with virtually no means of providing critical services like police, fire and road maintenance.

The Committee to Eliminate Property Taxes, is the citizens group based in Cuyahoga County trying to place a constitutional amendment on the November ballot eliminating property taxes. They need at least 413,487 valid signatures — they’re aiming for 600,000 to offset challenges — from voters in at least 44 of Ohio’s 88 counties by July 1.

Beth Blackmarr, the spokeswoman for Citizens for Property Tax Reform, told this news outlet: “It’s been wild, it’s just been crazy, the response has been overwhelming.” She said they have 600-plus people circulating petitions across the state and that number is growing.

New homes being built in Monroe. If property tax collections were eliminated, local governments say it would have a huge impact on their budgets. NICK GRAHAM/STAFF

icon to expand image

If it passes the new law would take effect in January but since property taxes are collected in arrears, the various tax collectors would still have that income source for another year.

In general, there are three taxing mechanisms for local governments. All local entities get collect property taxes; cities and schools can collect income tax and townships can collect income tax but only in partnerships with municipalities within Joint Economic Development Districts; counties impose sales taxes, but none get all three.

Blackmarr and others have suggested the $24 billion statewide property tax loss should be covered with income and/or sales taxes. However state lawmakers would have to take action in that regard, picking up a greater share of school funding, allowing townships to collect income taxes and increasing the 8% sales tax rate limit, to name a few.

“Leaders of the Committee to Eliminate Ohio Property Taxes have rightly spoken about the inability of the state legislature to fix the property tax crisis in Ohio,” Nix said. “Considering this failure over the past several years, how then can it be expected that this same legislature can protect Ohioans from the complete devastation of local governments by the elimination of approximately $24 billion — and do it in less than a year."

If the county were forced to fend for itself and make up the entire countywide $660 million property tax loss with sales tax, Nix’s office estimated it would require a 14.83% sales tax rate, a 128% increase from the current 6.5%. They estimate new sales taxes would need to generate $719.4 million to make up for the missing property tax and the existing $59.4 million to fuel the county general fund.

Assuming the state legislature would approve raising the current 8% sales tax rate limit — for the state and local entities combined — that’s a risky revenue source.

“There needs to be a balance among the various types of taxes, income, sales, property, when you shift everything over to sales tax you are damaging your whole economy,” Nix said. “Because people can make choices, they can stop buying or they can buy across the borders in other states. So then that crashes your retail market, it takes a wrecking ball to all functioning systems.”

The new House proposal would allow counties to raise their sales tax by 1% but only if voters approve it.

West Chester Twp. is the largest township in the state and its 66,000-plus residents would be left in the lurch in short order if property taxes were abolished. Township Administrator Lisa Brown told the Journal-News 70.2% or $40 million of the township’s $57 million budget is derived from property taxes.

“It would be devastating, pretty much our entire operation is funded through property taxes, the only funds that we take in that are not property tax related are some limited road and bridge funding which is through gas tax and license plate fees and some EMS billing through insurance reimbursement,” she said.

The Senate released its version of the biennium budget on Tuesday that included a number of property tax reforms, including a slight Homestead exemption adjustment, it alters the 20-mill floor school funding calculation and several levy restrictions among others.

The House announced its “Property Tax Relief NOW Act” on Wednesday that promises to deliver $3.5 billion in property tax relief Jan. 1, 2026. The bill would slash inside millage for all local governments except townships and other substantial changes. Essentially the House bill would force local taxing bodies to utilize other revenue streams and cut spending.

Blackmarr said these announcements mean nothing and won’t stop the signature campaign. If they don’t secure the required signatures for this November, they can and will keep collecting for 2026.

“Nothing is big or bold enough until it’s signed by the governor,” Blackmarr said. “That’s just period, paragraph end of report. They’ve made promises for the longest time. There were 40 bills last year that they could have done something with and they were busy with other things.”

Gov. Mike DeWine hasn’t taken a position on the ballot initiative but said recently the loss of that revenue stream would be troublesome.

“People have the right to put an amendment on the ballot,” Mr. DeWine said. “This happens all the time. The voters of Ohio vote, but obviously if we do away with real estate taxes, I don’t know how you fund our schools.”

Sen. Bill Blessing, a Republican from Colerain Twp. who chairs of the Senate Ways and Means Committee, said they need to be careful.

“The General Assembly shouldn’t do something very drastic and bad just because they anticipate this passing,” Blessing said adding it could backfire.

About the Author