He praised lawmakers and the working group he convened to study the knotty problem and acknowledged they “had a difficult task.”
“Their work has achieved a delicate balance protecting our schools, fire and other local services, while bringing about significant relief for homeowners,” he said and later added “I think today we made great progress and we’re moving forward and I think it’s a great day for the taxpayers of Ohio.”
The reforms are aimed at curbing unvoted tax increases, giving taxpayers tax credits for overly high taxes they already paid, beefing up credits in the future and expanding the powers of local budget commissions.
Here’s the tax savings breakdown according to legislative service commission estimates:
- House Bill 129 revises the school funding formula calculation costing school districts roughly $609 million in lost revenue over three years.
- House Bill 186 caps tax increases in 20-mill floor school districts to the rate of inflation, gives a tax credit to homeowners who paid windfalls after value adjustments and now includes a boosted owner-occupied tax rollback. Tax relief amounts to $2.47 billion over three years.
- House Bill 335 limits inside millage increases for all taxing bodies to the inflation rate producing an estimated revenue loss of $620 million to $763 million over three years.
- House Bill 309 gives local budget commissions more power to rein in spending they deem unnecessary, cost savings can’t be estimated.
- House Bill 124 gives county auditors rather than the state tax department the upper hand in setting property values.
With the threat of a grassroots effort to eliminate property taxes altogether, the legislature worked feverishly throughout the fall to get the bills passed.
‘Relief, not just reform’
Warren County Auditor Matt Nolan, who is president of the County Auditor’s Association of Ohio, summed up when taxpayers will notice their lawmakers’ efforts.
“The vast majority of Ohioans are going to see property tax relief next July, and I mean relief not just reform,” he said. “And almost every Ohioan is going to see property tax relief through the next four years as we change the owner-occupied credit. There’s a lot of positives that came out of this for taxpayers.”
The owner-occupied credit was a last-minute Senate addition that will increase the 2.5% owner occupancy credit to 15.38% over four years by phasing out the 10% non-business credit.
Former Ashtabula County auditor Rep. David Thomas, who was hand-picked by Republican leadership to shepherd property tax reform, authored the bills and told this news outlet the legislature would have had to pass relief sooner — they had to overcome strong opposition — to give full relief next year.
“It was timing, for us to be able to accurately and confidently do the credit and say it will be done right for first half, we would have had to probably pass it in mid-October, at the very latest and that’s everything going perfectly,” he said. “We wanted to be safe and second half just made sense.”
Homeowners who live in 20-mill floor districts will reap the largest tax breaks, but they have also felt the most pain from large tax hikes in recent years. There are 483 school districts at the 20-mill floor — out of roughly 611 statewide. Ohio law says once a school 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.
In 2023 values jumped an average 37% in Butler County, Greene County 30% and Montgomery County 34%.
If housing values spike again everyone will benefit from House Bill 335 which limits inside millage increases for all taxing bodies to the inflation rate.
Not finished
Lawmakers say they aren’t finished reforming the system. Thomas said there are six or seven “priority” bills ready for vetting when lawmakers return from the holiday break, “we are not going to step away from this issue.”
This year 51 bills touching tax reform were presented, 38 in the House and 13 in the Senate — 27 of them have received at least one hearing.
The last time lawmakers attempted tax reform — within the framework of the biennium budget — DeWine vetoed all but one measure. He said the bills could harm schools and children and he set up his own property tax working group to examine the issue. The newly passed school funding tweak and budget commission provisions were among the vetoes.
Property taxes started going haywire about five years ago when the pandemic and other forces drove property values sky high, after reassessments and updates started happening. Property values are reassessed every six years and updated every three.
The road to enacting meaningful reform has been a little rocky and Nolan told this news outlet he didn’t think it could be done, “it is shocking to me, I’m a cynic by nature so I never thought we’d get anywhere close to this.”
“The thought that every single thing the auditors recommended would be approved in one fell swoop, it never crossed my mind that this was a possibility,” Nolan said. “This is the biggest property tax reform in 50 years, I’m the first to call out the legislature and governor when I don’t think they’ve done enough, they did every single thing we asked for. It’s a great, great step, I’m not saying it’s done and we don’t ever talk about property taxes again but we have to give credit where credit is due.”
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