State Rep. David Thomas, R-Jefferson, debates on the floor of the Ohio House of Representatives. (Photo: Nick Evans, Ohio Capital Journal.)
Ohio House lawmakers approved two property tax measures on Wednesday. The bills would give little-known county boards greater control powers and dig into the weeds of Ohio’s byzantine system of tax classification and abatement calculation.
At a time when many Ohioans are frustrated enough to put the property tax repeal on the ballot, the proposals include a number of changes that are likely to lower property taxes in the low term and stave off future increases.
But the question is whether voters will see improvement if it occurs. All changes happen under the hood and are indirect changes in processes that most taxpayers find arduous to understand.
After the measures passed the committee, the bill’s sponsor, state Rep. David Thomas, R-Jefferson, said it was “probably the committee that has had the most influence on property tax reform for several decades.” But he acknowledged that lawmakers remain in a arduous situation.
“We definitely stand behind what happened to taxpayers,” he said. “We just want to show that they will give us more time, which is a terrible thing to say to those who are struggling, but this is actually where we are in a sense.”
“We are passing these laws – the most significant in decades – and we are trying to show that the situation will change, it will improve, and we will not go away from it,” he added.
House Speaker Matt Huffman acknowledged that property taxes are confusing for many Ohioans, but lawmakers are trying to simplify the system.
“Part of what we are doing today is opening the black box and shining a light on it,” he said.
Regarding the proposed amendment to eliminate property taxes, the speaker believes that about 40% of voters are a robust yes and another 40% are a robust no.
“Like many elections, the final 10-15% make the decision,” he said. “I think this group of voters will make their decision based on what we do here over the next six or seven weeks.”
District budget committees
State law gives the treasurer, auditor and prosecutor in each Ohio county significant oversight of local levies. In the latest state budget, lawmakers gave county budget committees the authority to phase out “unnecessary” or “excessive” fees. Gov. Mike DeWine vetoed the measure, focusing on the board’s ability to reverse fees approved just months earlier by voters.
In committee, MP Thomas proposed an amendment to House Bill 309 adopting the suggestion of the property tax task force assigned to the governor. The changes included a five-year secure harbor for up-to-date fees and clear definitions of the words “unnecessary” and “excessive.”
“The purpose of these three was to help complete some of the guardrails that were requested by local entities and budget committee members,” Thomas explained.
State Rep. Daniel Troy, D-Willowick, complained that the governor’s task force also recommended a two-year secure harbor for extension fees, but that provision was not included in the amendment. Nevertheless, he supported this solution.
Warren County Auditor Matt Nolan, who was on the governor’s task force, praised the commission for adopting the changes. He argued that the county budget committee plays an significant role in controlling rising taxes, and because they are all elected officials, it is accountable for its actions.
“If we make the wrong decision, if we fund a popular institution like (the Developmental Disabilities Board) to the point where it loses money (and) it hurts services, we will stand for election and they won’t. So we have to make the right decisions or our voters will tell us so,” he said.
But on the House floor, state Rep. Desiree Tims, D-Dayton, said it wasn’t enough.
“Politicians should not ignore the will of the voters,” she insisted, adding: “I think we should let the voters have the last word.”
When given the opportunity to speak, Rep. Thomas argued that voters approve the fee by approving the service, not the number.
“If the government can actually provide this service at a lower price and doesn’t need that full tax amount, it’s in everyone’s interest to lower those rates,” he said.
Thomas said that in a few counties, local officials voluntarily reduce fees, but the bill makes it clear that all counties can do so. the state cannot rely on voluntary action.
“It takes the handcuffs off,” he said. “Will this be applied to every county? No, I can’t say that your budget cut across all 88 counties will be as aggressive for the taxpayer as I think it should be.”
However, we confirm once again in black and white that the Committee on Budgets has this ability.”
House Bill 309 passed 75-19.
What counts for the 20 millionth floor?
For decades, Ohio has provided homeowners with a property tax reduction to keep their bills steady as property values boost.
The idea is to block the so-called “silent” property tax increases. This argument goes that voters approved a certain amount of money in the ballot, so the taxing authority should not receive more money just because property values increased.
To avoid increases, counties regularly lower property tax rates so that more valuable properties bring in the same tax revenue.
The problem is that school districts cannot reduce throughput below 20 mills (or 2%). If property values rise high enough, the reductions will stop working as they will hit a demanding stop at $20 million. However, two sources of income, fixed fees and income taxes, are not included in this $20 million minimum amount.
Ohio House of Representatives Bill 129 would include them. Thomas explained that 237 school districts, or about 1/3 of the school districts in the state, voted for fees that are not currently included in the floor.
“So we are saying that in the future these 237 schools will not be at the level of 20 million schools,” he said, “and therefore will not increase as our values continue to increase.”
Fee reclassification creates slack in the system – effectively lifting these districts from the $20 million threshold and making room for additional reductions.
Lawmakers recently overrode the governor’s budget veto to eliminate emergency and in-lieu fees. But in doing so, they wiped out a set of accompanying state loans. Democrats warn that those loans total nearly $100 million statewide.
State Rep. Chris Glassburn, R-North Olmstead, thanked Republicans for delaying the change with a last-minute amendment, but insisted that “the $100 million error will be postponed for five years.”
“This is not the property tax relief our residents are asking for,” he said. “This is one of several technical changes we are trying to make to keep the system working properly in the future, but it won’t change the vast majority of Ohioans’ bills, and to the extent it helps people, it is to prevent the harm we caused as a result of this workaround.”
Thomas acknowledged that the measure is not an “end-all-be-all” on property tax reform, but said that “for our 237 school districts, for 1/3 of Ohioans, this bill puts us in a much better position.”
The bill passed easily, 81-16.
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