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Tag: Ohio Property Tax Reform

  • Ohio Lawmakers Send Five Property Tax Reform Measures to the Governor – Cleveland Scene

    Ohio Gov. Mike DeWine has some decisions to make on property tax reform. State lawmakers have signed off on five proposals in recent weeks, and now they’re headed for DeWine’s desk.

    Although the governor has expressed concern about rising property taxes, he has bucked earlier legislative proposals tucked into the state budget.

    Lawmakers initially promised to override several of those vetoes but pulled back after overriding just one, which prohibited certain kinds of levies including substitute and emergency levies.

    Instead, Republican lawmakers in the House launched a kind of property tax blitzkrieg, led in large part by former Ashtabula County auditor, state Rep. David Thomas, R-Jefferson.

    Thomas is a primary sponsor on all five of the bills lawmakers sent to DeWine.

    The proposals empower county officials to pare back levies previously approved by voters, create more room for tax reductions, limit the growth of tax bills to the rate of inflation, and shift the burden of proof in valuation disputes.

    On the Ohio Senate floor last week, another former Ashtabula County auditor, state Sen. Sandra O’Brien, R-Ashtabula, reduced it to a simple equation.

    “Our taxpayers, whom we represent, want property tax relief,” she said. “The bills that we are about to vote on, offer them that relief.”

    She reminded lawmakers they have little margin for error with grassroots organizers around the state collecting signatures for a ballot measure eliminating property taxes outright.

    “That scenario, if successful, would place Ohio at the edge of the abyss,” O’Brien said. “Today, we have the chance to show the taxpayers of Ohio that we hear their pleas for property tax relief.”

    Speaking at an event Friday, DeWine pointed to the property tax working group he set up after vetoing lawmakers’ budget proposals.

    He explained the group was tasked with “coming up with solutions where there’s no great solutions, frankly, no matter what we do.”

    The working group had to balance funding for local services like schools against homeowners struggling to make ends meet.

    DeWine acknowledged he doesn’t like all the compromises they reached, but insisted the group did a very good job.

    “So, I’ll judge those bills based upon what the committee came up with,” he said, “and in a few days, we’ll have some comments about that.”

    How the bills compare to recommendations

    Ohio House Bills 186 and 335 together limit the increase of property taxes to overall rate of inflation.

    The state constitution gives local governments the authority to levy up to 10 mills (or 1%) of property tax without prior voter approval.

    That constitutionally guaranteed amount is known as inside millage, while any additional taxes approved at the ballot are known as outside millage.

    Ohio House Bill 186 applies to outside millage and Ohio House Bill 335 applies to inside millage.

    DeWine’s working group explicitly endorsed the former and encouraged lawmakers to apply the same inflationary cap to inside millage.

    Ohio has a tax reduction system that lowers a homeowners rates to keep their tax bill steady for decades. But there’s an important limitation. The total amount of school levies can’t dip below 20 mills.

    Ohio House Bill 129 includes additional taxes in the calculation of the 20-mill floor.

    In particular the substitute and emergency levies lawmakers prohibited going forward didn’t previously count toward the floor.

    The working group suggested they should and be renamed as fixed sum levies, as well. I

    mportantly, the members urged lawmakers to maintain a 12.5% state share of funding if those taxes get renewed.

    Without that so-called ‘rollback’ districts would get less money for the same levy. All told, the gap would be about $96 million.

    Lawmakers agreed to keep the rollback, but in the House version, allowed for only one renewal of expiring levies.

    Critics warned that would delay rather than solve the problem. The Senate tacked on an amendment to allow ongoing renewals.

    Ohio House Bill 309 allows the county budget commission, made up the local auditor, treasurer, and prosecutor, to reduce voted levies they deem unnecessary or excessive.

    DeWine’s veto message said that “breaches” voters’ approval.

    His property tax working group determined the commission should have the authority but insisted on guardrails.  They recommended a five-year safe harbor for new levies and two years for renewals.

    The group also said there should be explicit definitions of “excessive” and “unnecessary.”

    State lawmakers took up the definitions, and in the House, they agreed to a five-year safe harbor for new levies.

    Renewals, however, would be eligible for reductions immediately.

    In the Senate, lawmakers trimmed further — reducing the protections to just one year after voter approval.

    Ohio House Bill 124 gives county auditors the benefit of the doubt when it comes to property valuations.

    Ohio counties do a full reappraisal on six-year cycles, but they update values three years in based on statistical trends.

    Under current law, if state tax officials object to the county’s math, the auditor’s only option is to go to the board of tax appeals.

    The bill would instead put the onus on the Department of Taxation to bring an appeal if it disputes the auditor’s findings.

    That proposal wasn’t part of the working group’s recommendations, but it cruised through committee without any opposition.

    Originally published by the Ohio Capital Journal. Republished here with permission.

    Nick Evans, Ohio Capital Journal

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  • Blunt Property Tax Measures Could Threaten Ohio Community Vitality – Cleveland Scene

    Last week, Ohio lawmakers overrode a governor’s veto, prohibiting schools from proposing emergency levies to maintain fiscal sustainability.

    The reasoning used by lawmakers was that levies like these are a contributor to property tax burden in the state. 

    Supporters of the bill argued that even though these levies required a vote from the people who would be subject to the tax, that voters did not know what they were agreeing to. According to them, eliminating the tax would stop voters from being duped.

    It’s an interesting argument, but not one with a lot of merit. 

    It seems that simply changing ballot requirements for transparency could have achieved the effect of solving the information asymmetry problem. 

    Now districts are down another tool for ensuring fiscal sustainability.

    Why do schools need local fiscal tools like this? 

    Why not have schools more dependent on the state for funds and less so on the will of local voters? 

    In the extreme, why doesn’t Ohio follow the lead of Hawai’i and eliminate school districts altogether?

    A classic paper by 20th century economist Charles Tiebout gives us a reason that we may want to preserve local fiscal tools like this. 

    Tiebout’s model of “Tiebout sorting” is built on the idea that people have choices about which jurisdiction they wish to live in. 

    Different local jurisdictions can provide different mixes of public goods and collect different levels of taxes to finance those goods. That means people can move to communities that provide them with their needs.

    Certain communities in Ohio have high taxes, good schools, and safe streets, appealing to families with children. 

    Others have lower taxes and amenities like senior centers, which can appeal to people who are retirement-age. 

    Still others can have their taxes allocated toward things like safety in entertainment districts, appealing to young professionals.

    Strategies like school finance equalization can make it easier to deal with equity issues — people who do not have the flexibility to move jurisdictions based on their public goods needs. 

    But overall, allowing communities to decide for themselves how much to raise for public goods and how to spend it allows for a diversity of communities that makes the state as a whole stronger.

    In the 1970s, the state of California went through its own citizen-led property tax revolt. 

    Spurred by housing prices that had more than doubled from 1970-1978, voters passed a citizen initiative that fixed property taxes in place across the state, with only small changes allowed over time.

    This has led to some problems. 

    Individuals and corporations have been given an incentive to sit on properties for decades without making improvements to the properties to avoid increases in property taxes. 

    Schools and local governments are not able to raise money at the rate of increases in costs. 

    This has been part of the policy landscape that has led to an exodus from the state over the past decade: things just don’t work there anymore.

    Despite the troubles Ohio has had in its post-industrial era, the state still has a lot of positives. 

    Housing and energy costs are still low compared to the rest of the country, cost-of-living-adjusted poverty is below average statewide, and the state is still an attractive place for people to start businesses and raise families. 

    Blunt approaches to local government finance will only make it harder for communities to provide the range of lifestyles that will make the state economy dynamic decades into the future.

    Originally published by the Ohio Capital Journal. Republished here with permission.

    Rob Moore

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  • Ohio Lawmaker Proposes Three Bills to Rein in Property Taxes, Working Group Debates Deferrals

    click to enlarge

    The Ohio Channel

    Sponsor (R) Rep. Gary Click

    Ohio state Rep. Gary Click is joining the chorus of Ohio officials floating ideas to rein in property taxes.

    The Vickery Republican recently introduced a “trilogy” of property tax reforms restricting what levies are available, potentially requiring more of them to go to the voters and imposing higher thresholds to pass more expensive levies.

    “I know that our constituents are demanding a response, and this is me saying, ‘I’m listening,’” Click said.

    His ideas join several others up for debate. A handful of proposals would cap the growth in property taxes — either to a specific percentage, the rate of inflation or based on a homeowner’s wealth. Others would expand the homestead exemption.

    After vetoing several property tax measures in the state budget, Gov. Mike DeWine put together a new working group to come up with suggestions as well. The group continues to meet and is tasked with sharing their ideas at the end of the month.

    Click’s trio

    The first bill Click filed, House Bill 420, would eliminate continuing levies. In short, every property tax proposal on the ballot after 2030 would need to have an end date.

    “We’re not saying that these are bad levies that are out there,” Click said. “But it’s saying, okay, each generation should have a voice in saying ‘I understand what I’m paying this tax for, I agree, or I disagree.’ I think that’s too much, or not enough, or whatever it is, but that each generation gets to have their voice heard.”

    State Rep. Gary Click, R-Vickery. (Photo by Graham Stokes for Ohio Capital Journal. Republish photo only with original story.)

    Continuing levies filed prior to that cutoff would expire unless they were approved to pay for bonds. Any taxes that did expire as a result of the bill would be eligible for renewal, but taxing authorities would have to take the proposal to the ballot.

    Click’s second measure allows local organizers to reduce what’s known as “inside millage.” The Ohio Constitution allows local authorities to levy up to 10 mills (or 1%) in property taxes without going to the voters. Anything beyond that amount requires voter approval. House Bill 421 would allow petitioners to go to the ballot to lower that 10-mill ceiling further.

    Organizers would need to gather signatures from 15% of the area’s voters in the most recent gubernatorial election to get the question on the ballot. The bill also requires two-thirds approval from local taxing authorities to put the question of restoring the 10-mill ceiling on the ballot.

    “What works in Sandusky County might not work in Seneca County; what works in Seneca County might not work in Crawford County or Marion County,” Click argued. “And so each county gets to assess and look at the situation, and what works for their community, rather than imposing a statewide assessment on property.”

    His last proposal, House Bill 422, would require supermajority support for proposals with higher millage rates. Levies of less than one mill (or 0.1%) could pass with a simple majority, but those of one mill to 1.9 mills would need at least 60% approval and those of two mills or more would have to clear 66%.

    “The more you want, the more you ask for, the higher the bar is going to be,” Click said.

    His second and third proposals, however, could test the boundaries within the state constitution. The Ohio Constitution sets the terms, barring local authorities from taxing property “in excess of one per cent of its true value” unless those levies are “approved by at least a majority of the electors.”

    Whether courts would interpret that section as guaranteeing 10 mills of unvoted property tax or a simple majority standard for additional levies is an open question. So far, Click said, he hasn’t heard any warning about constitutional conflicts.

    Working group check in

    The governor’s working group continues to wrestle with recommendations for lawmakers. At its most recent hearing, the group debated a pair of delay tactics.

    First, the working group considered offering some kind of deferral for homeowners hit with eye-popping property tax bills. But even that simple idea raises a host of other questions. Should it be one-time or renewable? Should the state charge interest? What about minimum requirements — do homeowners need a certain amount of equity or ownership history?

    The group largely settled on capping deferrals at a dollar amount whether they run once or consecutively. It also nixed the idea of charging interest, while leaving the door open for charging an administrative fee. In terms of minimum requirements, a home equity benchmark was popular, but Warren County Auditor Matt Nolan explained it would be difficult to assess.

    “You know, I can pull your mortgage to see what you took a mortgage out for,” he said, “but I can’t see how much you’ve paid down on that or not, and are there other outstanding liens that aren’t recorded?”

    Instead, the group landed on a 10-year home ownership minimum as a decent proxy. The members also seemed open to making ownership transferrable, so seniors who downsize don’t wind up resetting the clock.

    But not everyone was on board with deferrals. Lake County Auditor Chris Galloway likened pushing off payment amounts to kicking the can down the road.

    “It doesn’t change what somebody’s tax liability is,” Galloway said. “All we’re doing is changing the taking — collecting those taxes from grandma or her corpse, right?”

    Instead, Galloway suggested lawmakers pause property tax increases temporarily while they come up with a comprehensive response.

    “The idea behind it is to, like, hit the pause button somehow,” he said. “To stop the outrage, to stop the bleeding, to be able to say, let’s give ourselves some time to fix this problem right.”

    Auditors would still go forward with assessing properties and updating valuations, but tax bills would hold steady. That delay might give lawmakers time to pass legislation like House Bill 186 — an idea popular with working group members that would limit tax increases to the rate of inflation.

    But other working group members, particularly Chair Bill Seitz, seemed skeptical of the idea. Those paused tax increases would eventually come due, and in the meantime, the benefits would land unevenly. For instance, Galloway acknowledged taxpayers who saw spikes after last year’s reassessments, including those in his county, wouldn’t get any immediate relief.

    Originally published by the Ohio Capital Journal. Republished here with permission.

    Nick Evans, Ohio Capital Journal

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