Ohio House approves bills limiting property tax increases to inflation
Lawmakers hope concessions convince voters
By Nick Evans
Ohio Capital Journal
COLUMBUS — The Ohio House approved two more property tax measures Wednesday, this time tying future increases to the rate of the inflation. The latest bills come on the heels of measures empowering local commissions to roll back levies and tweaking a tax formula to allow for greater reductions.
Flanked by more than a dozen Republican lawmakers after the vote, House Speaker Matt Huffman touted more than $2.4 billion in property tax savings between the two latest proposals. That’s about 10% of the total property tax levied in the state.
Huffman said after 17 years in office, property tax reform has been one of the most intractable issues he’s faced; the prospect of a constitutional amendment abolishing property taxes helped instill a sense of urgency.
“I think this should convince a reasonable voter,” he said, “a reasonable citizen in Ohio, that something significant has been done.”
Last minute changes
On Tuesday, lawmakers voted the bills out of committee. House Bill 186 applies to what’s known as outside millage while House Bill 335 applies to inside millage.
Ohio’s constitution allows counties to levy up to 10 mills (or 1%) in property taxes without first getting the approval of voters — that’s inside millage. Any additional property taxes have to succeed at the ballot box before taking effect — those taxes are outside millage.
The distinction is important in terms of inflationary growth. Inside mills collect additional revenue as a property’s value rises, but for outside mills, Ohio uses a formula to reduce rates so revenue remains static despite rising property values. That reduction formula worked for several decades, but lately, in many parts of Ohio, it’s run out of room to cut.
So, as property values spiked, property taxes rose in tandem.
House Bill 186 would limit outside millage increases to the rate of overall inflation in the economy. The sticking point has been when to start the clock. A recent amendment pushed the base year to 2023, but school officials around the state argued that would demolish their balance sheets.
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Tuesday the bill’s sponsor, state Rep. David Thomas, R-Jefferson, relented and introduced an amendment that would keep schools whole.
“What they’re actually losing in terms of less property tax revenue, we backfill that amount to the tune of roughly $360 million from the sales tax holiday fund,” he explained. “To keep schools essentially full moving forward until their next revaluation.”
The committee also made small changes to the inside millage measure. State law allows a county to voluntarily reduce its inside millage and then replace that revenue with a local sales tax. The latest changes allow them do the same with a local income tax, too.
But Thomas said it was important to add in protections, “to prevent an entity from decreasing their inside millage in year one, for example, and then year three or four coming back saying they need it when they’ve also increased taxes elsewhere.”
House debate
On the House floor, state Rep. Bill Roemer, R-Richfield, said the legislation is a straightforward answer to a clear problem.
“People are upset with the spikes,” he said. “We don’t want the spikes — 20, 30, 40, 50% increases — when people’s social security might be increasing at 2.9%,” he added.
With the state backfilling the cash schools would miss, Roemer said there wouldn’t be any true losses. But state Reps. Elgin Rogers, D-Toledo, and Daniel Troy, D-Willowick, argued many districts won’t benefit from the changes, and the property tax savings are too generous — applying to vacation homes, rentals and properties owned by out-of-state investors.
“That means that $300 million — $300 million — that could be going to homeowners and farmers will not,” Rogers said.
If lawmakers think the bills will head off an amendment abolishing property taxes, “we’re kidding ourselves,” Troy said.
“I think this is like pouring a cup of water on a forest fire,” he added.
There were critiques from the Republican side of the aisle as well. State Rep. Mike Odioso, R-Green Twp., stressed that he supports the effort, but he explained even with the state backfill, a school district he represents will get almost $800,000 less than it was planning on next year. The following year it will fall about $700,000 short of projections.
“We’ll just say it’s $1.5 million of not holding harmless,” Odioso said, and warned lawmakers may have to revisit the issue as soon as 2027.
But Thomas insisted passing the bill sends a simple message.
“If your bill spiked, it will never spike again,” he said.
The alternative is homeowners paying $1.7 billion more in property taxes over the next three years. To Thomas, the central argument in both measures, is that the sharp increases in property taxes over the last five years were wrong and “they can never happen again.”
Despite the critiques leveled against the bills both passed easily, with bipartisan support. Rep. Troy, for instance, counted himself among the supporters.
“The final version,” Troy said, “it’s kind of like the preamble of our Constitution — it’s not perfect, but it’s a hell of a lot more perfect than the way it was introduced.”
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