Poorly targeted bills will do more damage to public schools
The four property-tax bills approved or set for approval by the Ohio Senate today will damage public schools and public services across the state, without targeting aid to the many homeowners and renters who really need it.
“Instead of constraining school districts and local governments and providing tax cuts that don’t go to those who truly need them, the General Assembly should pay for targeted property-tax relief for those that are spending an outsized share of their income on such taxes,” said Zach Schiller, research director of Policy Matters Ohio.
The four bills are:
- House Bill 309, which empowers county budget commissions to roll back certain voted levies, including renewal levies that have just been approved. “This is an affront to Ohio voters and is a hypocritical move by legislators who otherwise claim they want to give voters more authority,” said Schiller.
- House Bill 186, which would limit tax increases in those districts that are at what’s known as the 20-mill floor, the minimum levy for schools. However, while this will mean tax cuts in Indian Hill, by some measures the richest community in Ohio, it will not do so in East Cleveland, the poorest, or most of the big cities in the state. So, while harming rural and small-town schools, its blunt approach means it leaves out many of those who most need tax relief. In a late addition to the bill, the Senate eliminated the 10% nonbusiness credit for non-agricultural properties that the state pays for and increased the owner-occupancy credit from its current 2.5% to 15.38% when it is fully phased in. While this will help owner occupants state-wide and keep some owners of investment properties from receiving a credit, it is not sufficiently targeted, as owners of expensive homes will get the most aid.
- House Bill 335, which would limit the growth of what’s called “inside millage,” the first 10 mills of property tax that overall bring in nearly $4 billion a year to schools, counties, townships, public health districts and other taxing authorities. The LSC has estimated this would reduce inside millage by a total of between $620 million and $763 million during tax years 2026, 2027 and 2028. Nor is this reduction targeted, either: Taxpayers in Hunting Valley, where the average home value is $1.9 million and overall taxes did not go up after the last revaluation, do not need a tax cut. Nor do Ohio’s millionaires, who just got an average $19,000-a-year state income tax cut and who pay a far lower share of their income in property taxes than middle-income Ohioans do.
- House Bill 129, which includes additional local school levies in the 20-mill floor. According to a preliminary LSC analysis, the combined effect of H.B. 129 and H.B. 186 will be total revenue losses to school districts of $862.9 million during Tax Years 2025, 2026 and 2027 compared to what was expected. Joint vocational districts would lose another $174.4 million from H.B. 186, so the total loss of revenue would be more than $1 billion over the three years.
“Many Ohio homeowners – and renters, who pay property tax through their rent – need assistance paying property taxes,” said Schiller. “But the General Assembly should target help to them, not pass measures like those teed up for Senate approval today that compound the harm of abandoning the Fair School Funding Plan and don’t distinguish those who need help from those who don’t. That can be done for each individual, based on whether property tax is taking up too much of the owner or renter’s income. It’s called a circuit breaker, and some form of it is in place in 29 states.” In one welcome step, the House amended H.B. 186 so $465 million earlier designed for the sales tax holiday will ease the immediate harm of that bill to school districts. But that and other late changes don’t go nearly far enough. The General Assembly should rein in other special-interest tax breaks and create a robust circuit breaker.