Don Dixon, one of the commissioners, sent out a “call to action” to local and state leaders and convened several summits to tackle the problem. House Bill 187 and Senate Bill 153 were born out of that effort. Butler County Prosecutor Mike Gmoser suggested they mandate a three-year, equally weighted average when county auditors value property, instead of just relying on sales from 2022 and the legislators ran with it.
There are 13 county auditors in the throes of the triennial property value update, and the average initial recommendation was 34%, but in southwest Ohio the percentages were all on the high end: Butler (42%), Clermont (43%), Greene (32%) and Montgomery (37%).
Since then, most of the numbers have dropped slightly, but the equally weighted data produces an estimated average 25% hike for Butler and Montgomery counties, 28% for Clermont and 22% for Greene County. It also cuts tax revenues to local governments and schools by $539 million over three years statewide.
Properties statewide are reappraised every six years, and property values are updated every third year based on sales data and the shifts are reflected on tax bills the following the year.
HB 187, known as the Ohio Homeowners Relief Act, was authored by Republican representatives Thomas Hall from Madison Twp. in Butler County and Adam Bird from Clermont County. It passed out of the House by a vote of 58 to 26 on Wednesday and is headed to the Senate.
Credit: Submitted
Credit: Submitted
When will changes kick in?
Backers of the measure are rushing to get it through in time to stem expected tax hikes as property value reappraisals are underway and tax bills will go out next year.
Passing HB 187 was a scramble with Hall and many others lobbying just to get it to the House floor for a vote. The measure was on the session agenda in the morning Wednesday, in jeopardy of being removed by noon and back again after an hour-and-a-half mid-session recess.
After the recess, Hall made a pitch to his colleagues to pass the bill that revises the way property values adjustments are calculated.
“This critical legislation came as a result of recent increases in property valuations, all resulting in steep property tax increases throughout several Ohio counties...,” Hall said. “There is no doubt that this projected increase would hurt the vast majority of my constituents.”
Rep. Daniel Troy, D-Willowick, who has opposed the measure throughout committee hearings, noted the county auditors and treasurers associations oppose the bill because it will hamper their ability to get tax bills out in time next year. As a result, “there will be a lot of local government entities out there that may be in need of that first tax payment in 2024 that’s not going to be coming.”
“It is indeed well-intentioned, I think we’re all on the same page, but in their opinion and my opinion it is not ready for prime time,” Troy said. “For every reaction, for everything that is done in the property tax system there’s a counter reaction that takes place.”
Hall had hoped to pass the legislation with an emergency clause to have the bill take effect immediately, but he would have needed 66 votes. Without the emergency designation the bill, if approved, won’t take effect for three months after the governor signs it — assuming he does.
Republican Sen. George Lang of West Chester Twp. authored the twin bill, SB 153 in the Senate — largely so senators would know what they were dealing with when HB 187 came over. His bill is in the committee process so HB 187 is now the main vehicle. He told this news outlet he is confident they can get the bill passed through their chamber on Nov. 15 and ready for Gov. Mike DeWine to sign the day after.
They don’t want to try to insert an emergency clause on their end because the bill would have to return to the House. Instead, he said he plans to “tweak” another bill that would allow them to credit taxpayers on their second half tax bills for the bigger bills they’ll pay in the first round.
“It’s a little clunky at the end of the year, assuming we are successful on Nov. 15 and the governor signs it,” Lang said. “At the end of year every taxpayer will have some relief but they won’t get the full relief until the second half bills go out.”
Some criticize county auditors, saying their opposition of HB 187 slowed it down, preventing lawmakers from passing it sooner so it could take effect for first half tax bills next year.
Credit: Nick Graham
Credit: Nick Graham
Concerns raised
Opponents of the bill include many county auditors. Warren County Auditor Matt Nolan, providing testimony on behalf of The County Auditor’s Association of Ohio, raised concerns about “artificially adjusting a century-long process of valuation in a knee jerk reaction to the current real estate market.”
Nolan couldn’t be reached for comment on the passage of HB 187.
Franklin County Auditor Michael Stinziano told House committee members they calculated the impact of HB 187 on homes valued at $200,000 in three taxing districts that were below, at, and above the countywide average in his county. The largest tax savings under the bill in their study sample would be $401 and highest increase was $154.
“Artificially lowering taxable property values in the current cycle does not obtain a similar amount of tax relief and would undermine the core basis of property taxation — that a property should be taxed based on its actual value,” he said. “I am incredibly concerned about the increased tax burden on those who become house rich and cash poor, but this proposal will neither change how taxes are calculated nor provide relief for those who are burdened despite the significant changes in values that would come with this bill.”
When Gov. Mike DeWine’s Press Secretary Dan Tierney was asked what his boss thinks about the legislation, he said it is obviously a very complex issue, and they can’t lose sight of the fact all state taxpayers must be treated equally.
He said Guernsey County and Monroe County would have both had higher valuation values in their last reappraisal in 2021 if values were calculated by the method proposed in HB 187.
“It is a difficult issue in that when the valuation side of it is being discussed, there are 86 counties that would benefit from this, but two that would not and would have higher tax bills if calculated this way,” Tierney said. “So those are things the general assembly has to consider, and the governor has to consider ... taking the time to analyze this issue properly, especially because it effects local governments and local schools.”
Shannon Cox, Montgomery County Educational Service Center superintendent, said the bill is a “permanent fix for a temporary problem.”
Cox said the legislation would complicate school finances by setting different limits on different districts for how far they can lower voted millage rates. She argues the state could use the rainy day fund to offset the increases, or use a tax cut for property owners.
At the same time, Cox says there has to be a solution to protect older citizens living on fixed incomes.
“We want our elderly community members to stay in our community,” she said. “They have been long advocates and staples in our community.”
Credit: Nick Graham
Credit: Nick Graham
Long-term solutions
HB 187 has always been called a “band-aid” solution to “stop the bleeding” while the legislature works on lasting tax reform. Lawmakers have already made a start as part of the biennial budget, when they established a property tax study committee. Many opponents of HB 187 said the study committee is the first place to start with tax reform.
“We need a comprehensive total review of the property taxes instead of doing these things piecemeal here and there,” Troy said during a House Ways and Means Committee meeting. “Because there are ramifications and there are reverse reactions that take place by a lot of these things.”
Rep. Bill Roemer, R-Richfield, who chairs the Ways and Means Committee, told the whole House on Wednesday HB 187 has a three-year sunset clause precisely so taxpayers won’t suffer while they work on solutions.
“We’re going to have an opportunity to study this, it gives us a runway to be able to do that,” Roemer said.
The state budget also indexes the homestead exemption to inflation, which benefits seniors and disabled veterans. Hall and Rep. Dani Isaacsohn, D-Cincinnati, also introduced legislation known as the 70 Under 70 Plan that protects seniors from increases in property taxes by implementing a property tax freeze for certain owner-occupied homes.
There are a couple other bills that tweak the homestead exemption, these bills attack property tax relief for the most needy, like the elderly and veterans but they are still in the committee hearing process. The Ohio Homeowners Relief Act, is now the only measure that can possibly offer relief for taxpayers next year.
“They have a chance of passing the House,” Hall said. “They don’t have a chance of becoming law and becoming in effect for next tax year.”
County auditors’ proposal
The County Auditor’s Association of Ohio proposes three different approaches to mitigate the tax impact of current sky-high property appraisals.
“While repeated band-aids and pet bills have made Ohio’s property tax bill incredibly complicated, at its heart, there are only three pieces to it. There are values. There are rates. And there are state credits,” Nolan testified during a committee meeting. “The CAAO opinion is that the only realistic and proper options at this point in time are to quickly adjust the rate or state credit side of the equation.”
Nolan outlined the possible options:
- Using ARPA or rainy-day funds, the state could grant a property tax credit to each property owner who sees an increase in their taxes as a result of the increase in values. This approach would apply to the vast majority of residential property tax owners who will see an increase in their taxes in 2024 solely dues to value increases.
- Apply the difference in taxes as refundable income tax credits. This would allow for the bills to go out as normal but apply a credit to all individuals who pay income tax, and own property, in Ohio.
- A cap on the amount of increased revenue that can come from 20-mill floor provision for school levies to no more than the annual inflation rate.
According to Pete LuPiba, communications director for the Ohio Office of Budget and Management, the state has $3.65 billion in the budget stabilization or “rainy day” fund, but it “is a reserve set aside during good economic times to solely protect the state’s operating budget from cyclical changes in revenues and expenditures which may occur during economic downturns.”
As for federal pandemic relief funds, there is a cash balance of $2.7 billion, however, “this amount has been fully allocated in accordance with appropriations made by the General Assembly.”
Tierney reiterated the purpose of the rainy day fund.
“While I don’t disagree with some people’s sentiments an unexpected increase in property tax is a rainy day, it’s not the rainy day that this fund was statutorily established for,” Tierney said. “Additionally it’s been this administration’s philosophy to use one-time funds on one-time expenditures, so using the rainy day fund for something that might have an ongoing expense, it’s not fiscally conservative, it’s not fiscally a smart thing to do.”
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