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GOP legislators push the budget into conference committee.

And a Republican lawmaker talks about sending $3.5 billion in property taxes back to homeowners and away from local entities that use that money for schools, law enforcement and other services.

That's this weekend.

The state of Ohio.

Welcome to the state of Ohio.

I'm Karen Kasler.

Republican senators passed their version of the two year state budget on a mostly party line vote on Wednesday.

The budget includes a 2.75% flat income tax and $600 million in unclaimed funds for the Cleveland Browns Dome stadium project in Brook Park.

It also includes money for the final two years of implementation of the Fair School funding plan.

But at 2021 levels so not fully funded, it would also limit school districts to cash balances of 50% of their budgets, with the rest returned to property taxpayers.

While the House budget has a 30% carryover cap.

this is a very exciting and bold budget.

It clearly displays the Senate's intent to support families, children, life, economic growth, and the delivery of health care services and education.

But Democrats say the budget has a long list of losers, including public school and university students, libraries, working families needing affordable childcare for those in Medicaid expansion, food banks, local governments and democracy with the elimination of the Ohio Elections Commission.

who are the winners?

Well, simple wealthy tax dodgers and corporate welfare recipients.

The budget cuts their taxes, funds their stadiums.

And I'll do what all it did.

My other cost of it was paid for by gutting every single safety net in the state.

This budget reveals the true Republican agenda tax cuts for the wealthy, funded by cuts to programs, help working families, children and vulnerable populations.

Every eligible budget is voting against our house, children against our most vulnerable residents, against the future of our state.

We can't stand by.

While this budget dismantles the key to progress and abandons the basic responsibilities of government the idea that Republicans help their wealthy friends and donors through policy and budgets has been a talking point for Democrats for decades.

But Republican leaders pushed back this time.

I feel really compelled to talk about the disparagement of wealthy, successful business people by the other side of the aisle.

This is ridiculous.

These are the people who are creating jobs, creating value, buying property, hiring people, and giving to charities in a big way.

So let's just be be careful about disparaging billionaires or highly successful people.

They are an important part of our economy.

They pay most of the taxes.

my caucus did not speak disparagingly about any of the wealthy or billionaires in our state.

We're happy they're there.

We're happy that they're investing.

What we talked about was giving billionaires money from Ohioans that they don't need, frankly.

All Senate Democrats and Republican Bill blessing voted against the budget.

The House then voted unanimously to send the budget to a conference committee to work out the differences.

The only dissenting vote was former Speaker Jason Stevens.

The budget deadline is June 30th.

Governor Mike DeWine vetoed 44 budget items two years ago, 14 in the budget before that, and 25 in the first budget he signed.

Members of the Ohio Democratic Party's executive committee did as expected, and picked former state lawmaker Kathleen Clyde, who was endorsed by former U.S.

Senator Sherrod Brown, to chair the party.

At one point, there are five potential candidates for chair, but in the end, only Tammy Wilson remained to run against Clyde.

Democrats have not won the governor's office since 2006, and Republicans have won 83% of statewide races since 1994.

As a former statewide candidate in Ohio, we have time.

And we are working hard to make sure we fill out that ticket and have a candidate in every race.

And, we have a lot of great talent and great candidates to choose from, and that's a good problem to have.

And we'll be looking forward to seeing that ticket fill out and running a strong ticket against the Republicans and their, their slate and their, problems that they brought our state.

It is property tax time for many homeowners, and the shock of those bills has people both floored and hitting the roof.

There are more than two dozen pieces of legislation that would deal with property taxes and levies that have been introduced this year by Republican and Democratic state lawmakers.

One unveiled last week has raised serious concerns for schools, local governments and municipalities.

Those entities are legally allowed to levy up to ten mills, or 1% of a property's value, known as inside millage, without going to the ballot.

The bill, from Republican Representative David Thomas, would eliminate inside millage, which he says will save homeowners about $350 for every $100,000 of property value.

But that could mean a loss of $853 million for county governments, just under $2 billion for schools, and $654 million for municipalities.

I talked with Representative Thomas this week.

So if your bill passes, $3.5 billion will be returned to property taxpayers from what's known as inside millage from county governments, from municipalities and from school districts, unless voters approve those ten mills.

So your bill would also exempt townships, by the way, that's a big win for taxpayers.

But what about those county governments, those municipalities, those school districts that are going to lose all that money?

How do they make that up?

Yeah.

So inside millage is kind of that baseline level of taxation that we've had for right, about 100 years or so.

It's always been there that ten mills or 1% of your property value is applied directly to your value as it goes up.

So we wanted to look at what's been causing all of our spikes, all of our increases over the last five years and address the tax system attacking really what's there?

20 mill floor schools and inside millage.

These local entities have been getting inside millage.

They've seen their tax revenues increase tremendously over the last five years.

They've had quite a lot of windfall essentially.

And so the question then is should that really be all in the backs of the property owners, or can we try and rebalance our actual revenue coming in to try to share the burden and the harm.

So your counties have sales tax, for example, your schools have income tax in these villages.

Income tax, they can shift if they'd like.

Or they can also look at their expenditures.

Everything's grown tremendously over the last five years.

Do we need to kind of have a rebalancing that too?

Now townships cannot bring in other revenue besides just property tax.

That's why we exempted them.

But those entities that will lose this revenue, it's a direct correlation to what we've all been paying much more in.

And it's a forcing of the question of how should revenues be coming in and what are our actual expenditures.

When you talk about replacing that revenue, when you mentioned like sales taxes.

So you want to act quickly on this.

So property tax owners get relief in January with their next bills coming out.

But if communities put, say, a sales tax on the ballot in November, that wouldn't go into effect until April, they wouldn't start getting that money until June.

What do they do in the meantime?

When that money has been removed, taken away and refunded to taxpayers?

Have you been on the Department of Taxation website to see the time frames?

Those people don't know that.

Just doing some research.

No.

You're correct.

So our our initial request or what I think our little government should be looking at first is essentially how much revenue do we really need.

So first there should be looking at decreases in spending.

If you need the revenue though, what this plan would have is that the voters should have the say over how much revenues coming in inside millage is not voted.

If they were to ask for a property tax levy, the voters would have their say.

If they were to ask for a sales tax, the voters would have their say.

So timing is going to be a little bit tricky for some of these entities where if you pass it in November or if the commissioners by through vote can actually implement a sales tax with a lot of other people, they wouldn't receive the revenue coming in until the second quarter of next year.

Nearly every county that I have at least looked at their budgets for have tremendous amounts of current cash on hand.

Part of the reason they have the cash on hand is because of the spikes and the windfalls that we've seen on the property tax side, so they have that money there to essentially keep them going throughout that first, especially that first quarter, second quarter as well.

There's there's plans there.

Most counties have actually set up.

I was part of it in Ashtabula, kind of solvency funds or kind of savings accounts, essentially where some of the Covid money with some of the property tax money for kind of this exact purpose.

So I'm not really too concerned about that timing period, because counties will get through.

What I'm really concerned about is the property owners and what their bills are going to look like.

For a third of the state, that's increasing again by 30% in January of 2026.

If we don't do something bold like this, we're going to have a third of Ohioans seeing their property taxes spike again after we've been through five years of this.

And that's certainly not sustainable.

When you talk about the cash reserve the counties hold, there's also cash reserves at school districts hold.

And there's provisions in both the House and Senate versions of the budget to cap that at 30% in the House budget, 50% in the Senate budget.

Doesn't that make school districts potentially really financially questionable if they lose this inside millage and also they can't hold anything, be beyond a 50% or a 30% cash reserve?

Yes.

So schools also have a different time period.

Their, fiscal year is a, school year, not a calendar year like other fiscal years.

So that I think will definitely be part of the conversation as part of the broader kind of understanding of, you know, where all the different pieces of our tax reform coming in.

We certainly don't want to see any insolvencies.

We don't want to see, you know, any bankruptcies, for example, of our local governments.

But we also can't see, again, what we have experienced over the last five years is going to the ballot for sales tax increases.

Income tax increases.

Isn't that kind of an uncertain way to run a local government or a school district?

Oh yeah.

So one of the positives for government about property taxes is a very certain tax.

You know, how much is coming in the the biggest downside to property tax payers though, or that when you pile everything on top of each other on the voted side, but then especially when you have your UN voted increases, it's extremely uncertain for the taxpayer.

So diversifying, being able to bring those different buckets of revenue helps the taxpayer tremendously.

And some of that revenue can be a little bit uncertain.

You know, sales tax is not guaranteed.

Income tax is not guaranteed.

But frankly, neither is property tax moving forward, if we don't do something strong to be able to respond to the taxpayers needs, you talk about income taxes being an option, and there are about a third of school districts that have income taxes.

Most municipalities have income taxes.

Republicans have talked about eliminating the state income tax.

Won't that make it harder potentially, that argument of why the income tax should be eliminated, at least at the state level, to pass income tax increases at the local level.

So I always tell my taxpayers, don't you want to keep your tax dollars local in your own community?

You never really want to send money down to Columbus and hope that people like me send it back to our home area.

You'd rather keep that income tax, for example, in your your school district, in your city or village, you know where it's going.

You have control over it.

So the less that we can bring into Columbus and the more that we can keep locally in my mind is a good tax policy.

You've talked about cutting services and kind of streamlining services, and we've heard this conversation for many years about how there's lots of taxing authorities and lots of communities that have the ability to tax people.

And couldn't they team up in some ways, some communities are doing that.

But there's an argument that, for instance, teaming up with police that's going to hurt people who live in those communities because it's going to stretch police way too thin.

It kind of defunds the police.

What do you what do you think about that?

So we have to look at, the tax structure.

That's the current crisis right now.

That's phase one.

And then phase two is essentially how are we actually spending our money at the local level and where are those services going?

So the easiest way to say it is we can't afford a ladder truck in every township.

It's just impossible.

One of my counties has a township police department almost per township.

It's just not sustainable.

Now the taxpayers want to prioritize that.

Nothing in our bill.

Nothing prevents taxpayers from still funding, still supporting their local services, and we just want to give them the choice to do so and not have these automatic increases, the automatic tax amounts being charged to them without a say of the voters.

So they want to prioritize their police departments, usually police and fire levies, whatever form they are, pass for that exact reason because we want those services.

I think that's a perfect use of the democratic form government, where we get to decide where that money goes.

But we can't just keep spending and spending and spending.

There has to be some recognition of that.

Are you concerned at all about levy fatigue?

Because, I mean, Ohio is a state, has the most school levies in the country.

And if you're talking about putting more levies not only for schools but also for police and fire, for libraries, for all the other things that are funded by property taxes, are people going to get tired of those and reject them outright?

It's very possible.

We're looking at the data right now.

You know, most people still actually vote for their levies.

A majority of levies, new renewal, all those different things, they still actually pass.

And there's a whole questions about, you know, why is it the case and what's that like.

But I think especially for looking at trying to rebalance our revenue streams, and if we're looking at income tax levies and sales tax levies, I think folks will be more open to those because it doesn't keep putting that burden on the same person.

And folks will be especially open to things if they're also seeing decreases in government spending to, counterbalance or to essentially come together with the it.

Ask at the levy box, there's a big thing out there that a lot of folks are concerned about, and that is a proposed, constitutional amendment that would eliminate property taxes across the state.

That's in the signature gathering phase.

So it's not going to the ballot that we know of any time soon.

But I want to ask you if indeed most local governments and schools do lose this money through your bill and through the inside, the elimination of inside millage, and they have to go back to the ballot and all of this works toward frustrating voters.

Isn't it more likely that voters will go ahead and approve that constitutional amendment if they see it?

And that would throw the whole system completely in chaos?

I think the most frustrating thing to voters correlates to them as taxpayers and correlates to them as taxpayers.

Getting a bill in January that went up tremendously higher than what they thought it should go up, or what they even approved.

And they're asking, why are my taxes higher?

Why am I paying this amount?

Why is it all of a sudden, why is it this high?

So that to me is the biggest frustration piece when it comes to just Ohioans across the state.

And I know the folks that are pushing the constitutional amendment pretty well.

I totally sympathize.

They've seen the legislature over the last five years taking small steps or doing small things, but not not really addressing their overall frustration and concern.

And they're seeing this problem only escalating and getting much, much worse.

So in my mind, giving voters the say, having a whole bunch of levies on your ballot, for example, where you get to decide, the voters will see that they'll respond to it, how the they'll actually, I guess, be affected by this whole process is their bottom line of what they see in their tax bill, and how that will actually impact how they approach local government, how they view what their funding should be coming from and what services they should actually need.

But you're right.

The voters are tapped out.

They're done.

So we either do this type of bold, strong action now or the patient dies and we start from scratch.

So do you think your bill would actually prevent that constitutional amendment from going forward?

I think it'll still be on the ballot.

And the bill isn't meant to try and stop anything or prevent the bill is essentially we have a lot of catch up that we have to do.

So this is essentially responding to the folks have said, you've done nothing for five years.

I joke, I've had five months to help with five years issues.

This is essentially to give the voters we know we care here is a strong decrease, here is more power to you as voters.

And here's how we're reforming the system moving forward so that the last five years cannot happen again.

Isn't there an issue here with the balance and the burden on property taxpayers at the residential and agriculture level versus business taxes?

I mean, 25 years ago, they were about the same.

The burden was about the same on business taxes and on residential and agricultural taxes.

And now it's completely shifted.

Now it's a 32.5% business and 67.5% residential and agriculture.

Isn't that part of the problem here, too, that the burden is more heavy on property taxpayers who are homeowners and farmers rather than businesses.

So one of the aspects to property taxes is that every property obviously pays.

You've got residential, agriculture, commercial and public utility.

All four of those kind of come into one pot and that's the total amount of revenue the government receives.

And you're right, over the years, essentially our residential and our agriculture values have increased tremendously.

Those are typically in areas and districts.

Obviously, most of our state's rural, most of our state is heavily residential or agricultural versus commercial.

If you look at school districts or local entities, around Columbus, for example, or around some of our major commercial areas, obviously the balance is different.

Statewide, when we look at what makes up most of our local government entities, it is your residential communities who obviously then have a higher portion of of the of the the account because they have a higher portion of the value.

So that's almost a rebalance that we need to happen statewide, which is part of the reason why local government funds part of the reason why, you know, state share of school spending, for example, that helps to rebalance out some of that by taking revenues from your heavier commercial areas.

But the bigger issue, I think, for the point is when we have the reliance on the property side, you're heavily overburdening and harming those who are most impacted by property versus if you're able to rebalance and have roughly equal shares from the other two, you're spreading out the harm that's most impacted by the property side.

Will that mean businesses that don't pay income or sales tax, you know, won't be contributing to those buckets?

That's correct.

Now, granted, their business owners, their business employees, especially the small business side that's mostly in those rural areas, they will then benefit, just like our seniors who wouldn't be paying the property tax because there's an income tax, for example.

So it's two parts.

One, trying to reshuffle and rebalance how we're actually funding our services to relieve those who are most impacted, and then to looking at just how much are we totally actually spending?

And there has to be some type of decrease to that.

Local entities are not doing that on their own.

We have to step in and help the taxpayer.

When you talk about most of the state being rural, a lot of the state is lower income in both urban areas and rural areas, and a sales tax would hit those people much harder.

A sales tax is more regressive.

Is that something that you're concerned about?

Yes.

If we just had sales tax.

So if property tax were to go away, our sales tax would have to be about 20%.

I worry about that.

That gets back to the same issue of having one bucket of revenue that you rely too much on.

Greatly harms and impacts the people that negatively are affected by that.

And so if we're not spreading it out, and if we moved all the property over to sales tax, you wouldn't be hearing for calls for property tax relief.

You'd be hearing for calls for sales tax relief.

So it's just a matter of which pocket are you pulling from if we're not even in them out.

There are rural areas that would have a much higher sales tax needed if they're local entity one to replace from the property tax side that that's why we can't do something statewide, because every area, my area is heavily tourist focused.

If we have a sales tax that's actually majority paid by people who don't live in my county.

So, you know, every entity can be a little bit different with how best they want to fund their services.

And I think if we were to do something statewide to replace or to change, that would have negative consequences depending on which area of the state is actually more harmed by that form of revenue.

And you just introduced this bill, so you probably haven't had a whole lot of time to talk to people who would be.

And I have, I have I'm though I'm thinking the communities that would be affected by this have reached out to you.

We reached out to them, before even we introduced the bill, we scheduled meetings with all the state associations.

I've been on the phone consistently since last Wednesday of all my different local commissioners or city folks.

What are they telling you?

So they're they're obviously concerned.

It depends on how strong of an issue they believe the property tax crisis is.

If they see the property tax issue as, concerning as a red alarm, something's going to happen majorly.

They, they get where we're coming from.

They understand we got to do something strong.

If the local government official doesn't really see the property tax issue as, as all that concerning, they're just seeing the state coming in and saying you can't collect this revenue anymore.

So there's two different kind of camps, that have kind of, you know, thought about how best can we they know the intent.

They know the goal.

They know we got to do something.

But they are looking at because this is a fundamental way of changing how we're funding our local entities.

And this is a fundamental response to the taxpayer crisis that we've had over the last five years to have.

You talk to Speaker Matt Hoffman and House leadership about this.

How does he feel about so this is the House proposal.

This is what, we as the speakers behind it, this is what we as the House want to do, you know, now is essentially conversations with the Senate seeing where where can we fall?

This is our big response to what's happened over the last five years.

Could this be in put it into the budget and conference committee?

I mean, I would like to see however we can do it.

It happen as fast as possible.

Should have been five years ago.

It would have prevented everything that we've seen over the last five years.

Second best time is now.

An analysis by the state's major school group shows the elimination of nearly $2 billion in inside millage could mean the potential loss of nearly 20,000 teachers, or around a fifth of the state's teaching workforce.

Thomas also has a bill that would require 60% voter approval for school levies, which he says would show appropriate community support for a tax issue.

And that is it for this week for my colleagues at the Statehouse News Bureau of Ohio Public Media.

Thanks for watching.

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Support for the Statehouse News Bureau comes from Medical Mutual, dedicated to the health and well-being of Ohioans, offering health insurance plans, as well as dental, vision and wellness programs to help people achieve their goals and remain healthy.

More at Med mutual.com.

The law offices of Porter, right, Morris and Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at porterwright.com.

Porter Wright inspired Every day in Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.