The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
This week, an Ohio property tax reform group set up by the governor released its recommendations. The question now is whether anyone in the General Assembly is listening.
The day after the proposals got released, the Ohio Senate voted to override one of Gov. Mike DeWine’s property tax vetoes in the state budget — one of several vetoes that led him to establish the working group.
Meanwhile, House Speaker Matt Huffman, R-Lima, is claiming the working group sided with lawmakers on two other provisions the governor vetoed. What the working group actually came up with is more like a counterproposal.
Still, Huffman wants to try to override both vetoes by the end of the month.
“I think it’s going to be easier now, because this group that the governor put together says, essentially the House is right in what they did,” Huffman said.
The working group issued 20 ideas in all. For the most part, those proposals fall in three buckets — support for existing legislation (with some tweaks), placing restrictions on the growth of levies and changes to way current taxes get collected.
Existing legislation
In terms of existing proposals, the working group voiced explicit support for four pieces of legislation. One, House Bill 186, limits the increase in property taxes to ensure they don’t outpace inflation metrics. Another, House Bill 156, would provide property tax credits for low-income seniors and disabled Ohioans. The working group recommended an amendment limiting the size of that credit.
Two other proposals get into the weeds of property tax exemptions. The working group endorsed House Bill 154 which would give school districts a voice in residential Community Reinvestment Areas, or CRAs. In these districts, improvements get big tax breaks, encouraging developers to build new homes or renovate existing ones. But school districts have complained those improvements mean more kids with little or no increase in revenue to schools.
Senate Bill 42 borrows the CRA model to deliver targeted property tax relief. Instead of blanket exemptions, local authorities could designate specific areas where low-income seniors could get a tax break. The working group likes the idea but argued there should be a cap on how many census tracts get included in the program and that the school board should have a veto.
More broadly, the members voiced support for an increased homestead exemption or a so-called “circuit breaker,” which limits property tax increases based on a homeowner’s income. But instead of endorsing specific bills, they voiced support for the concept.
Closing the tap
The working group dug through the property tax provisions DeWine vetoed in the budget to see if they could maintain the spirit of lawmakers’ proposals through a more palatable package. Both vetoes rejected proposals to choke off levies.
The members partially endorsed giving a county budget commission the right to roll back “excessive” or “unnecessary” levies. The governor argued that under that language a commission could overturn a levy voters approved just months before.
The working group determined the roll-back idea could work, but only with guardrails. Both “excessive” and “unnecessary” would need explicit definitions, and new voter-approved levies should have a five-year safe harbor before allowing any reductions.
One of the most highly publicized provisions in the state budget would have required immediate tax reductions if a school district carried over more than 40% of its operating budget in cash from year-to-year.
DeWine vetoed that idea and the working group agreed it was too harsh. Instead, the group set the carryover limit at 100% of a district’s budget. And rather than immediate tax reductions, it directed the district to justify its carryover to the county budget commission.
The working group proposed several other tweaks, too. To keep levies under control, county agencies with an unelected board should have the county commission sign off before putting levies on the ballot. Emergency levies should only be available for districts in financial distress, according to the state auditor; ballot language itself should be clearer and; to keep agencies from repeatedly going to the ballot, the working group wants them to keep as much of the interest those levies generate as possible.
Current collections
The working group also suggested the state use a lighter touch when it comes to delinquencies. Although the members argued fees and interest are an incentive to pay on time, they contend a short grace period and lower interest rates would really help homeowners stay in their homes.
In a similar vein, the working group proposed a tax deferral program for low-income seniors. That proposal wouldn’t reduce what they owe, but it would give them additional time to pay.
Group members also want lawmakers to go take a closer look at the books. Right now, transferring property through an LLC allows a buyer to avoid conveyance fees and conceal a property’s actual value. The working group said lawmakers should close that loophole. It also argued state officials should be checking for people claiming the owner-occupied credit or homestead exemption on multiple properties, and regularly reassessing all tax exemptions to ensure they’re doing what lawmakers intended.
Lawmakers’ take
In the General Assembly, the working group’s recommendations got a mixed reception.
For his part, Speaker Huffman welcomed the ideas.
“If these are suggestions of the governor, (the) legislature should always consider those suggestions,” he said.
But, Huffman emphasized working group support for existing bills and set aside its compromise proposals on school board carryover or county budget commission rollbacks. He promised a veto override on both.
“We’ll probably get that issue taken care of, well, certainly before we’re done at Thanksgiving, and likely before we’re done in October,” he said.
Senate President Rob McColley expressed more skepticism about the recommendations.
“I don’t believe all of the recommendations that they put forward are going to actually fix the problem or deliver the extent of the reform we needed,” he said.
Senate Minority Leader Nickie Antonio praised the working group for coming up with a reasonable compromise.
“They sound like really positive solutions,” she said, “the kinds of which people can say on either side, well, it’s not everything I wanted, but I could live with that — that’s what we should be doing.”
But House Minority Leader Dani Isaacsohn said the report amounted to “gimmicks” that wouldn’t put cash in Ohioans’ pockets.
“The real problem is that we rely on property taxes to pay for too much of our public services,” he said. “So, the funding our police and our fire and our schools and our libraries all falls on the back of individual property taxpayers, and it’s too much.”
“The state has to pay its fair share for public services,” he continued. “Otherwise, property taxes are always going to remain way too much of a burden for people in Ohio.”
