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There are efforts underway to seriously reduce or even abolish property taxes in Ohio.

We take a look at how that might affect school districts, libraries, townships and cities in the Buckeye State.

That's this week in the state of Ohio.

Welcome to the state of Ohio.

I'm Joe Ingles in for the vacationing Karen Kasler.

Ohio Lieutenant Governor Jim Tressel hasn't ruled out running for governor in 2026, despite the fact that the Ohio Republican Party has endorsed tech billionaire and former presidential candidate the Grandma's Swami for governor.

Ramaswamy has also been endorsed by President Donald Trump.

Tressel, a former Ohio State University City football coach and Youngstown State University president, said he's been, quote, listening and learning and is in a fact finding course right now.

He's giving no indication as to when that course will end.

In the days leading up to the party's endorsement of Ramaswamy.

Governor Mike DeWine had urged members of the state Central Committee not to endorse in the governor's race, and Tressel himself reiterated he might run for governor just hours before the party made that decision.

Tressel said the party's endorsement of Ramaswamy isn't a big factor.

Well, I don't think an endorsement would impact, at least in my opinion, whether I would be interested in getting in the race or not.

Tressel says he hasn't hired any campaign consultants.

He said if he does run for governor, he would focus on safety and issues involving education.

Part of trestles main job right now is overseeing education and job creation efforts for DeWine.

There's a lot of talk about property taxes at the state House these days.

Lawmakers on both sides of the aisle are coming up with provisions to lower property taxes, and one citizen's group is gathering signatures to put a measure on the statewide ballot that would allow Ohioans to vote on abolishing property taxes altogether.

Howard Fleenor, an economist and tax policy analyst with the firm Howard Pfleger and Associates, recently sat down with me to talk about the impact of tax reductions or elimination proposals being floated right now.

So no property tax.

That sounds good.

I mean, what's wrong with that?

It is not a practical idea in this state that we have.

According to the most recent data, property taxes were over $21 billion.

To give you some context for that.

The state sales tax was $13.7 billion last year.

The income tax was 10 billion.

So the property tax by itself is almost as much revenue as the two largest state sources of revenue.

So it was a lot of money, and it funds a lot of services in the state of Ohio, not just schools, but libraries, county human services, township essential services, lots of other things.

In this state, we rely, we provide a lot of services at the local level that a lot of other states provide, at this through state funds.

So people probably don't realize that when they, when they pay their property tax bill, they probably don't realize what goes into it.

Right?

I always assume that right, that people don't understand.

You know, our property taxes are complicated in this state, and most people don't see their tax bill.

I think most people pay it through, through escrow.

So it's just part of their mortgage payment.

So you don't actually see all the different things in your tax bill.

You know, I now get my property tax bill and it will tell you, you know, every single levy that is on the ballot.

And I think that's good information for, you know, I, I think sending that to everybody so that they can see where their money is going, I think would be helpful in getting people to understand the ramifications of this.

This idea of abolishing the property tax, you know, there's a the trying to get it on that the, you know, before voters get it into, you know, some sort of form more voters could say yay or nay to it.

Does that make you a little nervous?

It makes me a lot nervous.

Right.

So.

And maybe I know you.

I mean, I, I know a lot about this.

Maybe I know too much about this, right?

But I just don't see, you know, like I said, you know, it's very impractical idea.

I understand the frustration that voters have.

We've, you know, we're going through a period which I hope we're at the tail end of where property values have gone up at a much higher rate than they have since probably the last time was the 1970s, so almost 50 years ago.

So people, have not have been seeing unusually large increases in their property taxes.

And the legislature, I think, has been dragging their feet about how to handle this.

There are a lot of different proposals out there, but they haven't really implemented anything yet.

So I think people are getting antsy.

I understand where this is coming from, but I you know, like I said, it's too much money and it funds too many things.

And to, you know, to just eliminate property taxes entirely.

I don't see a viable way that we can replace that money.

You know, we'd have to you know, the state sales tax would have to go up by two and a half times, in order to replace that, in order to replace this money.

And I don't see that happening.

And so the other choice is, is that you're not going to be able to provide those services.

Like I said, these are you know, these are essential local services that are at stake.

So I'm I'm very nervous, about this.

You said the other states that a lot of the funding for these things comes from the state.

Yeah.

So we, you know, Ohio is, is very big on local control, right.

And we provide a lot of services at the local level.

Through, you know, we have county, you know, the sales tax goes to, excuse me, goes to the county.

The, you know, municipalities have income taxes.

You know, the other, jurisdictions have rely on property taxes.

And so, you know, we've tried to split that burden up, but, you know, even counties get some property tax, municipalities get some property taxes.

Schools are about two thirds of property taxes, but all the rest of those services are the other one third of it.

And so, you know, I mean, you know, I think about my tax bill, you know, I've got, you know, the developmental disabilities levy, I've got a senior services levy, I've got a children's services levy.

The zoo, has a levy, the alcohol drug addiction and mental Health Board has a levy.

So, you know, there are a lot of counties that have, county health services, right?

Those kinds of things.

These are services that people rely on.

And if you live in a township, your essential services like police, fire, EMS, roads, I mean, those are all funded through property taxes.

And so, you know, there's a reason why we use property taxes, actually.

So, I mean, it's, you know, it's not by accident and it's purposeful.

And property taxes tend to be very stable over time.

They tend to not go down and they tend to not go up very quickly.

So in the last 15 years, we've seen both of those general rules of thumb violated.

We had property values actually decline after the recession in 2009, which was very unusual.

And like I said, in the last couple of years, we've had property values going up very quickly, which we haven't seen for 50 years.

Normally property taxes are stable, they go up relatively slowly, and that makes them a really good source of revenue for small units of government that can't withstand big swings in their in their revenue.

So there's a rationale to this.

It's just difficult when things are when when we're in a period where what's what, where we're outside, what's normally happens.

And that's the period that we've been in in the last few years.

Right.

Well, state lawmakers are talking about their own version of property tax relief.

They want to put a cap on how much school districts can carry over.

And the latest number is 30% of the budget.

Anything above that would go back to the taxpayers in the form of property tax relief.

Let me ask you, is that a good idea?

That's a terrible idea.

So, the you know, the the problem I have with that idea is, you know, I think I said there's a need for some property tax relief.

I think that that's pretty clear to anybody that's paying attention to this issue over the last couple of years.

That is a very illogical way to get at it, though, because what we ought to be doing is coming up with property tax relief for people whose taxes have been going up at a rate that's more than they can afford.

And what that bill does is that, you know, instead, it ties the tax relief to what the finances of your school district are.

And those are very complicated.

There's lots of reasons why a school district's cash balance may be above or below 30% at any point in time, and to use that as the way to get property tax relief.

It just it will not correlate the way it ought to with who needs the relief versus who will be getting it.

And the other problem with it is in most places, that's going to be one time money, that there will be a one time very large rebate of property taxes, and then the property taxes will go up, to where they were beforehand.

And I think that that that's going to be very confusing to people when that happens.

And so something that really gets at the root of the problem in a, you know, more targeted way is a much better idea, I think, than that idea.

Some school districts are saying that if that goes into effect and the rebate provision is successful, that they'll be in fiscal emergency and 2 to 3 years you buy that.

I do, I've looked at those numbers.

Right.

And I see we would have, you know, we would have, a couple hundred districts that would be eligible for fiscal caution, fiscal watch or fiscal emergency.

That's the fiscal emergency is the most, most severe of those.

But you know, what that means is that districts would have negative cash flow.

And that's when you liable eligible for those fiscal for those, fiscal caution watch or emergency designations.

And so what that means is in order to stay out of that, districts are going to have to put levies on the ballot.

And we already vote on local levies in this state, more than in any other state.

And you know that that's why this, this 30% cash balance thing, like I said, I thought it was a terrible idea.

And it's terrible because it doesn't match the relief with who needs it.

It provides it on a one time basis, and it's going to create havoc for school districts.

And it will probably it will almost certainly result in more school levies that are on the ballot.

And so it is just the wrong is the wrong way to do this.

To get at this problem.

But it's, it's a I mean, it is a sign that the legislature is hearing what people are saying, though, and you know, that the fact that they're trying to create a solution to it is a sign that they're listening to people.

The fact that you've got this issue going in the ballot, it's a sign that people want them to listen faster.

Right, exactly.

So, property taxes, how could they be dealt with?

Where do you go?

So there's several other ideas that are out there.

Right.

And so one of them is the idea of a circuit breaker.

Right.

Which would work taxpayer by taxpayer.

And there's 15 or 20 other states that do something like this and that, that would, you know, look at a taxpayer's income and look at their property taxes as a percentage of their income.

And when they go up to high, the state would then pay for tax relief so that you would limit their tax increase to something which is manageable for them, given given their income level.

Michigan does has a program like that that they've had for a long time.

There's a bill, that's been proposed, that would mimic Michigan's, proposal.

It would apply to not just homeowners.

It will also apply to renters.

A lot of people don't think of renters as paying property taxes, but certainly your property taxes, when they go up, will be passed through by your landlord into your rent.

That's another concern with the cash balance.

Thing is, who's going to get the benefit of the rebate on that?

It's going to be the owner of your rental property.

Will that be passed forward to a renter?

I would suspect in most cases, not.

So the circuit breaker is a good idea.

The problem with it is it will cost the state money that they'll have to pay for it.

There are a couple other ideas that would pertain to, to school districts.

There's something called the 20 mill floor, which I would say most people in this state are not familiar with at all, is that the 20 mill floor is a provision that prevents property tax rates from being reduced.

When our property values go up.

And so we have a law in this state called House Bill 920, which I also suspect most people are not familiar with.

It's been around since 1976, and the idea of it is when your property gets reappraised by the auditor every three years, when property values go up, all the voted levies that are out there for schools and all the other taxing authorities, those rates get rolled back so that the the average by the rate of the average increase, if property values went up 10%, the rates would get rolled back by about 10%, by about 10%.

So your school district, your county human service agency, your libraries, they would not get any more money from that reappraisal increase than they were getting before.

And the average taxpayer would not see an increase on their voted levies.

If your value went up more than the average, you'll get a, you'll get, a small, relatively small increase.

If your value went down, you'll actually get a decrease.

I think those people don't understand what's happening and probably just keep quiet about it and think that was a mistake, but it's not so.

But you know that that was what Ohio did 50 years ago, the last time we had property values rising at the levels that they have been lately.

And so we did something that would protect taxpayers.

The 20 mill floor is an exception to that, for it only applies to school districts and for school districts.

Your millage can't get rolled back below 20 mills.

Now, a mill is, you know, one tenth of a percent.

So 20 mills is equal to 2%.

That's the minimum millage that a school district needs in order to qualify for state aid.

So every school district has at least 20 mills in place, but the 20 and the 20 mill floor is there to make sure that you don't go below that.

The problem is that, you know, right now we've got about two thirds of the school districts at the 28th floor, and there's a variety of reasons for that.

The biggest reason, you know, according to the numbers I've been looking at, is the big increase in property taxes has caused those rates to go down.

And so, trying to come up with some way, you know, there's a bill that would limit the increase that a school district could get in their tax revenues to what the rate of inflation is being over the preceding three years, that would allow the school districts to get some growth.

And it would protect taxpayers from not having their taxes go up in an unlimited way.

That's an idea that's worth considering.

There's some ideas to change the definition of the 20 mill floor that will help about half the school districts people, and half the school districts.

It won't help people in the other half of the school districts.

It's a complicated problem, right?

But there are ways, to to get it.

There are ways to get at this issue.

Right.

I just think, you know, they're going to do something.

It needs to be something that works in an ongoing fashion.

And that 30% cash balance thing, you know, in every way I look at it, it falls short of what it should be doing.

But it is complicated.

I mean, taxes are complicated, and you see people all the time and they see these massive, school districts, you know, building more, doing more.

And they think, wait a minute, they're doing so much, you know, can't they pare down a little bit because I'm hurting here.

Where's the disconnect?

There's a real disconnect there.

So I think people feel feel that disconnect some time.

Right.

And you know, you look at the levy results from a couple weeks ago.

Right.

And you know, the last two years bond levies which normally pass over half the time have passed about 20% of the time right now.

And I think that, you know, I don't know exactly.

It probably varies from the particulars of each district that's had one of those levies on the ballot.

But I think people are saying, okay, we've just had our taxes go up because of the reappraisal values in a lot of places.

Now, you know, I've been telling school districts, if you have a bond or a permanent improvement levy, that you need to have on the ballot, good luck because your taxpayers will just had a large increase.

And I think we're seeing that surprisingly, like for operating levies just over 13 out of 24 new operating levies passed.

And that's much higher than what it's been.

We've been around 30% for the last several years.

So I you know, voters, voters are smart.

They understand the situation.

If you're coming in with an operating levy, maybe, you know, and I haven't looked to see if those are places that are at the 20 mill floor or not.

But I think, you know, always whether your school district or anybody else, when you go to the ballot, you better have a good reason for why you need the money.

And right now, you know, a lot of taxpayers have had their taxes go up.

And then when you put a new levy in front of them, they're going to be reluctant to to pass it.

And, you know, I think that's it's you know, I, I understand both sides of that issue, right, that some, you know, some of you so sometimes schools and other entities, they just they're under more pressure, to do more things.

They need more money.

Like I said, because of the way House Bill 920 works, you don't generally get more money unless you put a new levy on the ballot, or if you're in a place where you're getting a lot of new construction, you're building new subdivisions, or you're getting, businesses that are coming in and locating that will grow your tax base.

But if you're not, you can get any money in this state by going on the ballot.

And I think that voters are starting to feel, you know, what school districts oftentimes call ballot fatigue.

Right.

You know, didn't we just vote on this in the, you know, the because of House Bill 920, there's a lot of school districts where every three, 4 or 5 years you're back on the ballot again just to keep doing what you were doing before, because your tax, property taxes normally don't grow with inflation.

Yeah.

Now we're in an exception where we've got two thirds of the school districts which are which are at the 20 mill floor.

So they're getting more than the usual growth that they get.

So and in some of those high, high growth districts, there might be some more money coming in.

But that also kind of works against the whole thing too, because people see all that growth and they think, well, this person, this, this developer, this business isn't paying their fair share.

Why is it landing on me?

Right.

Yeah, that that's a complicated issue, right, of who's paying their fair share.

Right.

And so, you know, we've got you know, I mean Delaware County is one of the fastest growing counties.

You know, Ohio I mean, Union County is a fast growing, county as well.

And, you know, the school districts, they're, you know, they're getting new subdivisions.

They're adding building more homes.

They're adding more students, which means they need more buildings.

Right?

You know, the Olentangy School District, I mean, you know, for years has been the fastest or one of the fastest growing school districts in the state in so far, country in the country.

Yeah.

For them to be able to keep up with the needs in this environment is very challenging.

Right.

And so it's, you know, it's you know, the truth is that, you know, this idea of, you know, the development should pay for itself.

You know, the funding for schools is a combination of local revenue, state revenue and federal revenue.

And the truth is, when you look at it, the existing neighborhoods aren't necessarily paying for themselves.

So why should the new neighborhoods pay for themselves?

Right.

And it's a question of how the state aid formula works.

It's a question of what's going to go on with how much federal aid you're eligible for.

You know, there's a lot of uncertainty about all those things right now, and a lot of those businesses that come in, they come in with tax breaks to get them there so that that's the that's the other, factor in this, you know, that I've done analysis.

It's looked back at property taxes, excuse me, from 1975 till, you know, the most recent data we have, which is 2023, back in 1975, residential property, residential and agricultural taxpayers paid less than 50% of school taxes.

And that is now over 70%.

And there's three reasons for that, right?

One, one reason is property values have been going up.

They for home values have generally go up faster than business and commercial values.

But that's not the main reason we've made some tax policy changes okay.

That have you know that have we eliminated a business, property tax that was on, machinery and equipment and inventory that used to be at the local level and other states have moved away from it.

And so Ohio got rid of that tax starting in 2005.

And so that that property is not taxed anymore.

And then we've made some significant reductions in public utility, tax tax rates as well.

That happened around deregulation when public utilities were going to have to compete with non utilities.

And so they had to equalize those tax rates.

But both of those changes which were for good state wide perspective tax policy reasons, put more pressure on, put more of the tax burden on farmers and homeowners.

And then the final re the third reason for this is the one you mentioned, which is like abatements, right?

We we beat a lot of property.

And there's a lot of debate among economists about whether those abatements really are necessary and whether they're really worthwhile.

Right.

And you know, do you you know, there's a lot of studies that show that, you know, taxes are not even in the top five reasons why a business would locate in any given place.

And there's a lot of concern abatements, you know, within, you know, a local area, just move the property from one place to another.

So, you know, a company will that was located in Columbus will move out to one of the suburbs because there's an abatement.

It doesn't really add anything to the central Ohio area.

It just gives, you know, will it keep them in Ohio?

You know, depends on the company.

Right.

But an abatement, unless you're bringing in a completely new business or attracting a business to locate their headquarters here from another state or something, it's hard to see the value added that you're going to get.

Overall, it's kind of a zero sum game and you're just moving it around.

So you know those, you know those, those three factors have caused the tax burden, homeowners and farmers to go up significantly over the last 50 years.

And it's part of the reason that, you know, people, people, you know, that's one of the reasons why you see an initiative that's saying we need to just get rid of property taxes entirely.

Like I said, I think that's a very impractical idea.

We need them.

But I understand and the feeling that is behind that.

Well, that's it for this week.

For my colleagues at the statehouse News Bureau of Ohio Public Media.

Thanks for watching.

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we leave you today with sights and sounds from the Memorial Day wreath laying ceremony at the Ohio State House.

Have a safe and meaningful Memorial Day weekend.

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.