A property tax circuit breaker is a more effective option that preserves school funding
Testimony to the House Ways & Means Committee on Substitute House Bill 186
Chair Roemer, Ranking Member Troy and members of the House Ways & Means Committee: I am Aditi Srivastava, tax researcher at Policy Matters Ohio, a nonprofit research institute with the mission of creating a more vibrant, equitable, inclusive and sustainable Ohio. Thank you for the opportunity to testify on Substitute House Bill 186. Unfortunately, this bill has severe defects and is not a true answer to the property tax issue facing Ohio. We recommend that you defer action on it.
The Indian Hill school district ranked second in 2023 in the median Federal Adjusted Gross Income (FAGI) in Ohio, at $133,674, according to the Ohio Department of Taxation. Its average FAGI ranked first, at $545,502. Property owners in the Indian Hill school district will receive tax cuts under the current version of HB 186.
By contrast, the East Cleveland school district is the poorest in Ohio. Median FAGI was $28,636, while the average was $37,571. Property owners there (as well as renters, who pay property tax through their rent) will receive no tax benefit under the bill. Yet Cuyahoga County reports that the average tax billed to property owners after the revaluation last year went up 26%.
Does this disparity between Indian Hill and East Cleveland make sense? It does not. Providing reductions to some of the most affluent people in Ohio while denying them to some of the poorest doesn’t pass the smell test. Of course, there could well be property owners in Indian Hill who need a tax cut, and conversely some property owners In East Cleveland might not. But this bill makes no distinction between individual property owners, whose situations may be different.
Based on median Federally Adjusted Gross Income, residents in six of the ten poorest school districts in Ohio will get nothing under the bill. These also include Youngstown, Warren City, Northridge Local, Sandusky City, and Warrensville Heights.
Property owners in most of Ohio’s big-city school districts excluding Cincinnati will also see no benefit from the bill’s focus on districts at the 20-mill floor. These include Akron, Canton, Cleveland, Columbus, Dayton, and Toledo. These findings are based on estimates from the Legislative Service Commission of what property owners in each district will receive. The LSC also found that property owners in many of the most affluent districts will not receive tax cuts, though some others will.
Property owners across Ohio have seen a surge in home values. But the effect on taxes has been uneven; House Bill 920 has held average taxes down in many areas of the state. In Franklin County, for example, values went up 41% in the last revaluation, while taxes rose just 6%. Yet some homeowners there did face property tax increases. Tax relief should target those who actually need it, not make across-the-board cuts irrespective of need.
The bill would reduce taxes on businesses as well as residential property owners. We don’t know how much will go to businesses, or how much businesses need such tax cuts. We do know that overall, Ohio businesses pay less in state and local taxes than the national average.[1] And that businesses are paying a much smaller share of property taxes in Ohio than they once did.[2] What is the rationale for including businesses in the substitute bill? At a time when many Ohioans are understandably concerned about increases in their property tax bills, the legislature needs to ensure that any effort to fix this issue does not exacerbate one of the underlying problems that led us to this point — a systematic shift in responsibility for funding essential public services from wealthy corporations and other businesses to residential homeowners.
Nor has there been an examination of the fiscal effect on individual school districts and JVSDs of removing nearly $1.7 billion in revenue over three years. Some 170 districts are estimated to lose at least 10% of the property tax they would otherwise collect in Tax Year 2027; eight districts (not including island districts) will lose more than 20% that year. The cuts would affect districts starting next calendar year, compounding the harm done by abandoning the Fair School Funding Plan. The combined impact will lead to layoffs, increased class sizes, reductions in course offerings, and cuts to essential academic supports for students in many districts.
The most effective, efficient form of property tax relief would be a circuit breaker that provides a credit to those taxpayers who are paying more than a set percentage of their income in property tax. This would direct the credits at those who truly need them; additional eligibility requirements for income and home values would further target such a program. A circuit breaker or something close to it is in place now in 29 states, and the states pay for it.
Substitute House Bill 186 would provide tax cuts to many who don’t need them, while leaving out many who do. It has not been thoroughly vetted; neither its possible benefits nor its harms have been adequately investigated. We respectfully suggest that you defer action on it. Thank you for the opportunity to testify.
[1] See Ernst & Young LLP in conjunction with the Council on State Taxation, “Total state and local business taxes: State-by-state estimates for FY23,” December 2024 https://www.cost.org/globalassets/cost/state-tax-resources-pdf-pages/cost-studies-articles-reports/score_ey-50-state-tax-burden-study_final_121824.pdf)
[2] Fleeter, Dr. Howard and Dr. Greg Browning, “Analysis of Residential Property Taxes in Ohio: a Balanced Approach to Reform,” Ohio Education Policy Institute, September 2025 at http://www.oepiohio.org/wp-content/uploads/2025/09/OEPI-Prop-Tax-Analysis.FINAL_.pdf