On Oct. 22, the Ohio House of Representatives passed House Bill 186, a measure designed to prevent sudden jumps in property taxes. The bill was passed along with House Bill 335, another property tax relief proposal. Both aim to fix problems left by the current property tax law, House Bill 920.
According to the Ohio Capital Journal, House Speaker Matt Huffman (R-District 78) touted that Ohio will save over $2.4 billion between the two House bills.
In 1976, Ohio enacted HB 920, giving Ohio property owners some relief from inflation. The law limits how much money local governments, such as cities, municipalities, villages or townships, can raise through outside millage. This is done through a reduction factor, which is determined by Ohio’s Office of Taxation every year.
A mill equals $1 for every $1,000 of taxable property value. In Ohio, county auditors reappraise property values every six years. The assessed, or taxable, value is 35% of the property’s appraised value.
The assessed value determines how much a local government can collect in property taxes. Governments can collect up to 10 mills without voter approval, called inside millage. Any tax increase beyond that requires voter approval and is called outside millage.
The reduction factor from HB 920 only applies to outside millage. Therefore, even if property values rise with inflation, the amount of taxes collected from outside millage stays the same as what voters initially approved. Taxes from inside millage, however, can increase with inflation.
HB 186 focuses on the portion of property taxes that fund local school districts. The bill caps how much money school districts can collect from property taxes, limiting increases for school districts affected by what is known as the 20-mill floor.
The 20-mill floor ensures every school district collects at least 20 mills from property taxes. If a district does not have enough voted millage to reach that level, extra mills are added automatically to meet the 20-mill minimum.
Districts above the 20-mill floor have already passed levies that allow the government to generate funds from taxpayers, but those at the 20-mill floor rely on unvoted taxes to reach that funding level.
HB 186 aims to ease the financial pressure this system places on property owners. It would prevent school district taxes from increasing faster than the rate of inflation. The change would mainly affect districts on the 20-mill floor so homeowners would not see sudden spikes in their taxes.
State Rep. David Thomas (R-Jefferson) said the state would cover any funding gaps for school districts until their next property reevaluation. After that, local voters would decide through levies how much money their schools should collect from property taxes.
Athens County Auditor Jill Davidson explained the potential impact HB 186 will have on Athens schools.
“The schools are held somewhat harmless, but that would only be for that first year,” Davidson said. “My understanding is, going forward, the schools will lose that benefit of the backfill.”
State Rep. Elgin Rogers Jr. (D-Toledo), who initially was a co-sponsor for the bill, voted against it when it made its way to the House floor Oct. 22. He said the bill’s effects would mostly impact homeowners in districts that are already on the 20-mill floor.
Rogers also pointed out voters would have more control over school funding should HB 186 and HB 335 become law.
“If you think your school is doing great, or you think your school should not be receiving the money, now your citizens and homeowners and voters will have a direct link to approving levies or rejecting levies based on that,” Rogers said. “Voters who are experiencing levy fatigue are more likely to not vote for levies when they’re going back and forth each year to try and generate money.”
HB 186, along with HB 335 and three other property tax bills, is now in the Ohio Senate. If passed, the legislation will go to Gov. Mike DeWine, who can either sign the bill into law or veto it.
