Ohio State Rep. David Thomas, R-Jefferson, during a debate on the House floor. (Photo: Nick Evans, Ohio Capital Journal.)
The Ohio House of Representatives approved two more property tax regulations on Wednesday, this time tying future increases to the rate of inflation. The latest bills come on the heels of measures authorizing local commissions to phase out fees and modifying the tax formula to allow for larger reductions.
After the vote, flanked by a dozen Republican lawmakers, House Speaker Matt Huffman touted the more than $2.4 billion in property tax savings under the last two proposals. That’s about 10% of the total property tax collected in the state.
Huffman said that after 17 years in office, property tax reform is one of the most tough issues he faces; the prospect of a constitutional amendment eliminating property taxes helped instill a sense of urgency.
“I think it should convince a reasonable voter,” he said, “a reasonable Ohioan, that something significant has been done.”
Last minute changes
On Tuesday, MPs voted on the bills out of committee. House Bill 186 concerns the so-called external course House Bill 335 applies to internal miles.
The Ohio Constitution allows counties to collect up to $10 million (or 1%) in property taxes without first getting voter approval – that’s an internal amount. Any additional property taxes must go to the ballot before they take effect – these taxes are not taxable.
This distinction is significant from the point of view of inflation growth. Indoor mills earn additional revenue as property values augment, but Ohio’s outdoor mills operate a formula to reduce rates so that revenue remains consistent despite rising property values. This reduction formula has worked for several decades, but recently many parts of Ohio have run out of room to cut.
So, as property values increased, property taxes increased simultaneously.
House Bill 186 would cap external mileage increases at the rate of overall inflation in the economy. The point of contention was when to start the clock. A recent amendment moved the base year to 2023, but school officials across the state argued it would devastate their balance sheets.
On Tuesday, the bill’s sponsor, state Rep. David Thomas, R-Jefferson, relented and introduced an amendment that would have kept the schools together.
“What they actually lose in terms of less property tax revenue, we make up that amount with about $360 million in sales tax holiday funds,” he explained. “So that schools will be basically full until the next revaluation.”
The Commission also made minor changes to the internal milage measure. State law allows a county to voluntarily reduce its internal revenues and then replace those revenues with a local sales tax. The latest changes allow them to do the same with local income tax.
But Thomas said it’s significant to add safeguards “to prevent an entity from reducing, for example, its internal revenue in the first year, and then in the third or fourth year coming back and saying it needs it when it has increased taxes elsewhere.”
Debate in the House of Representatives
In the House, state Rep. Bill Roemer, R-Richfield, said the legislation was a plain answer to a clear problem.
“People are outraged by the spikes,” he said. “We do not want sudden increases – 20, 30, 40, 50% – while the social security of the population can increase to 2.9%,” he added.
Roemer said there would be no real loss if the state replenishes funds. But state Reps. Elgin Rogers, D-Toledo, and Daniel Troy, D-Will., argued that many districts would not benefit from the changes and that the property tax savings were too generous — affecting vacation homes, rentals and properties owned by out-of-state investors.
“That means $300 million — $300 million — may go to homeowners and not farmers,” Rogers said.
If lawmakers think the bills will prevent an amendment eliminating property taxes, “we’re kidding ourselves,” Troy said.
“I think it’s like pouring a glass of water on a forest fire,” he added.
There were also critical comments from the Republican Party. State Rep. Mike Odioso, R-Green Twp., stressed that he supports the initiative, but explained that even with the state matching funds, the school district he represents will receive nearly $800,000 less than planned next year. Next year, that amount will be about $700,000 lower than expected.
“We’ll just say it’s $1.5 million to do no harm,” Odioso said, warning that lawmakers would have to reconsider the issue as early as 2027.
But Thomas insisted that passing the bill sent a plain message.
“If your bill has gone up, it will never go up again,” he said.
The alternative is for homeowners to pay $1.7 billion more in property taxes over the next three years. According to Thomas, the main argument of both solutions is that the edged increases in property taxes over the past five years were wrong and “can never happen again.”
Despite criticism of both bills, with support from both sides, they were easily adopted. Supporters included, for example, MP Troy.
“The final version,” Troy said, “is kind of like the preamble to our constitution — it’s not perfect, but it’s a lot more perfect than the way it was introduced.”
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