Ohio Governor Mike DeWine has signed a significant legislative package aimed at overhauling the state’s property tax system. This reform is projected to save taxpayers billions of dollars over the next three years by capping future property value increases that typically lead to automatic tax hikes. However, this change will decrease revenue for schools and local governments.
Key Legislative Actions
The governor ratified several bills in a ceremony at the Statehouse, including House Bill 124, House Bill 129, House Bill 186, House Bill 309, and House Bill 335. These laws will take effect in 90 days, aligning with one of the primary goals of legislative Republicans as they approach the midterm elections.
Tax Relief Provisions
- Estimated cuts in future property tax increases could total $3 billion.
- Automatic tax hikes due to rising property values will be capped.
- Communities experiencing tax spikes since 2022 will receive retroactive tax reductions.
Governor DeWine commented, “These bills bring about meaningful, impactful tax relief that brings clarity, and no longer will people see the spikes they have seen.” The legislation aims to address concerns shared by voters regarding rising property taxes, which have been a top priority for lawmakers over the past two years.
Concerns and Criticisms
The proposed changes sparked debates among legislators, particularly regarding funding methods for the tax cuts. Some lawmakers expressed concerns that cuts to school funding might compel communities to seek new tax levies, potentially offsetting the expected benefits of the tax relief measures.
A grassroots campaign is currently underway to abolish property taxes entirely, aiming for a November 2026 ballot measure. Whether this initiative will gather sufficient support remains uncertain.
Financial Implications for Schools
The legislative package includes a one-time allocation of $410 million intended to temporarily assist schools that will lose funding due to the cap on inflation-related tax increases. This is part of an effort to alleviate immediate financial pressures on educational institutions.
Adjustments to Tax Calculation
- The calculation of the 20-mill floor for school districts will be revised, removing certain exemptions.
- This change aims to ensure more communities exceed the 20-mill floor, thereby limiting future automatic tax increases.
While the exact savings amount may vary based on future property values and community responses, the Legislative Service Commission initially estimates substantial savings for property owners. However, stakeholders argue that increased tax burdens on landlords may not sit well with all constituents, as one of the bills introduces measures that raise taxes on certain residential property owners.
Empowerment of County Budget Commissions
Additionally, the legislation enhances the authority of county budget commissions, enabling them to reduce voter-approved tax levies unilaterally. This measure may offer flexibility in managing local tax rates amid ongoing financial adjustments.
The culmination of these legislative efforts marks a pivotal shift in Ohio’s property tax landscape. As state officials implement these reforms, the impact on taxpayers, schools, and local governments will be closely monitored in the coming years.
