Following recent triennial updates, property values soared by an average 37% in Butler County, 34% in Montgomery County and 30% in Greene County. Warren County underwent the sexennial reappraisal last year and the average increase is 27%.
20-mill floor
The Senate Ways and Means Committee conducted an initial hearing on Senate Bill 66 Tuesday. The measure would modify the 20-mill floor calculation for school districts so huge tax windfalls — like those paid last year in Butler, Greene and Montgomery counties — could be eliminated.
Bill co-sponsors Sens. George Lang, R-West Chester Twp. and Sandra O’Brien, R-Ashtabula, tweaked the bill a bit from a version proposed last year.
A report by the Legislative Service Commission on the previous bill showed schools would lose $336 million in revenue and taxpayers would save roughly $296 million. The state would save $40 million in tax rollbacks.
“We have expanded the language in the bill to include unvoted millage and school district income taxes,” O’Brien, former Ashtabula County auditor, told the committee. “We have not received updated numbers on how much Senate Bill 66 would save taxpayers but including more in the effective floor will likely, significantly increase the initial $300 million in savings.”
Information from Ohio Department of Taxation shows here are four school districts in Butler County that charge income tax (Madison, New Miami, Ross and Talawanda), five in Greene County (Cedar Cliff, Fairborn, Greeneview, Xenia and Yellow Springs) and two in Montgomery County (New Lebanon and Valley View).
Some discussion followed about the constitutionality of including school district income taxes.
The County Auditors Association of Ohio has been very active in the quest for property tax reform and has issued a package of suggestions including one that targets the 20-mill floor. They say many of the districts that are at the floor have gotten revenue hikes of 20% or more.
Here’s how they explain it: Under Ohio law, school levies are subject to a floor that will not allow the tax rate to be adjusted downward when reappraisal increases occur. The CAAO proposes eliminating this hard cap on rate reductions and instead limiting growth on certain school levies to an inflationary index, containing revenue growth for districts operating at the 20-mill floor.
Major proposal
The House Ways and Means Committee also heard about a major piece of legislation known as the Homestead & Owner Occupancy Overhaul Act or House Bill 61, drafted by representatives David Thomas, R-Jefferson — who has been chosen by the majority caucus to spearhead property tax reform — and Jack Daniels, a Republican from New Franklin.
The LSC summarized the bill as doing the following:
- Restores the 10% nonbusiness property rollback to all voted levies, not just those approved before November 2013.
- Replaces the 2.5% owner-occupancy rollback with a flat $750 credit, indexed to inflation.
- Replaces the standard homestead exemption with a flat credit equal to the lesser of $750, indexed to inflation, or the total taxes levied on the property by school districts.
- Replaces the enhanced homestead exemptions with a flat $1,500 credit, indexed to inflation.
- Reduces full state reimbursement to local governments for revenue forgone from the owner-occupancy credit and homestead exemptions to 50%.
“I will tell you, in fact I’m bluntly telling you our bill is not perfect,” Thomas said, adding some aspects of the bill will likely change before they will encourage its passage, but it’s a starting point to right what has been wrong with the homestead exemption and other aspects of the law.
Thomas said the $750 number was chosen because it’s what the average homestead recipient would get if the exemption had been indexed to inflation in 2007.
“We are not advocating that that number be the final number, but it’s a good thing to think about, just how much of a difference our homeowners on homestead should be receiving,” he said.
Democratic Rep. Dan Troy from Willowick asked whether the cost sharing could backfire.
“The fact that the taxing entity will only be getting a 50% reimbursement for that, now they’re getting a total reimbursement for whatever we do,” Troy said. “Will this not result in higher property taxes through increased asks by the (taxing) entities.”
Thomas said they understand they need to explore unintended consequences and that’s why the numbers and percentages are fluid at this juncture. But he also added that many of the local taxing bodies have gotten huge unvoted revenue windfalls in recent years so they need to square things with the taxpayers “who need it the most.”
Democrat Rep. Derrick Hall from Akron also asked about the bottom line, given the locals could be picking up half the tab: “Are we talking a seven figure impact to revenue in a locality, or is it peanuts?”
Daniels said they don’t have the estimates yet and the numbers they used are discussion starting points.
Thomas told this news outlet a very rough “ballpark” cost would be $1 billion because “this essentially doubles the credits to homeowners that we currently expending.”
Senior citizens, disabled veterans
The Senate Ways and Means Committee also heard a bill pitch from Sen. Thomas Patton, R-Strongsville, that puts the entire financial onus for tax relief on local governments. Senate Bill 81 freezes property taxes for owner-occupants age 65 and up and making $70,000 annually and the state would not reimburse the locals.
“I ask you to help me protect our seniors from excruciating increases in property taxes. Our seniors are not asking for increased exemptions, only fixed property taxes while they are living on fixed incomes,” he testified. “This is commonsense legislation that would have a truly meaningful impact on our constituents.”
Patton also introduced Senate Bill 92 — which is a repeat of legislation he introduced while he was in House last year — that would give disabled veterans and their spouses a full property tax exemption, “Under this bill, no 100% service-connected disabled veteran would owe any property taxes to the county or state.”
He was asked how much the bill would cost and he harkened back to the estimate from last year which was $14.5 million, “which I think is a very small price to pay.”
‘Not easy’
As of Thursday lawmakers have introduced 225 bills and 12 concern property tax relief. There have been first hearings on a half dozen measures. Over the entire two-year 135th General Assembly only 23 bills were offered and two passed.
During every hearing lawmakers have said they understand the plight of their constituents.
“There will be many different bill ideas and I think this shows our taxpayers back home that we are serious as a legislature about addressing this in this General Assembly. They will see action this year,” Thomas said.
“But we also have to careful, there’s always unintended consequences when we make decisions. We can make the system extraordinarily easy and simple to understand but that would lead to negative consequences down the road ... This is not easy by any stretch.”
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