Sen. Sandra O’Brien, R-Ashtabula, who chairs the Local Government Committee where it was vetted, said “this bill flips the script to allow county auditors to have the final say on properties included in sales assessment ratio data.”
“This bill will have a small but positive effect on property valuations and by extension property taxes,” she said before the floor vote.
O’Brien’s committee met after the Senate session to consider several other House bills that would save taxpayers roughly $2.4 billion-plus over three years. Lawmakers have said they intend to get the measures passed before they break for Thanksgiving.
House Bill 186 — which caps tax increases in 20-mill floor school districts to the rate of inflation — provides an estimated $1.7 billion in tax credits statewide to property owners over three years. The credits would appear on second half 2026 tax bills.
The bill also provides a temporary $465 million offset over two years to school districts, keeping revenues steady at 2024 levels.
It would pay for this using the state’s Expanded Sales Tax Holiday Fund by canceling Ohio’s expanded sales tax holiday at least in 2026. Instead of a two-week sales tax holiday that Ohio had this year, there would be a three-day holiday for back-to-school items.
Katherine Kelich, incoming president of the County Treasurer’s Association of Ohio, outlined several “administrative and operational” concerns they have regarding their ability to implement the mid-year credits.
County treasurers are responsible for billing and collecting property taxes and she said HB 186 would increase administrative costs, create taxpayer confusion, cause complications with escrow and prepayments and a host of other issues.
With so little time before the new tax year begins, Sen. Kent Smith, D-Euclid, asked her if all 88 county treasurers could implement the provisions of the bill. The answer was no, “almost assuredly this would have to be for tax year 2026 which would be collected in 2027.”
Sen. Kyle Koehler, R-Springfield, didn’t like that answer.
“I guess I’m confused, are you saying we shouldn’t provide tax relief to taxpayers if it causes people a lot of extra work,” he said.
She said “we 100% are behind tax reform, people need the relief” but she doesn’t think their software vendors are going to be able to get the job done in time, “it’s not a matter of we’re not willing to, it is literally a software issue.”
Former Ashtabula County Auditor Rep. David Thomas and architect of property tax reform for Republican leadership told this media outlet it can be done.
“We are all going above and beyond trying to decrease the property tax bills for next year,” he said. “The bulk of the work will be done by the Department of Taxation and county auditors and I’m sure that the county treasurers will be able to serve and help the taxpayers through this change.”
House Bill 335 is also under review, it would save an estimated $620 million to $763 million over three years by capping inside millage to the rate of inflation.
Counties, cities, townships, villages and schools all share up to 10-mills of what’s called inside millage. Revenue from that source grows with value spikes and isn’t impacted by the 20-mill floor factor, so everyone will benefit from the inflation cap.
The question remains whether the bills can pass constitutional muster.
Mike Sobul, a retired school treasurer and former chief of research with the Ohio Department of Taxation, gave testimony on behalf of the Fair School Funding Plan Work Group.
He said both HB 186 and HB 335 are “at risk” of being challenged on constitutional grounds. The problem is tied to the fact 42% of the school districts in the state reside in more than one county and the counties have staggered reappraisal schedules.
“I think the problem with (HB) 335 is more immediate and more direct and that is it’s going to primarily occur in districts where they’re in more than one county, not on the same reappraisal schedule,” he said. “There’s a recalculation of the inside millage in the county going through the reappraisal, the inside millage there goes down, in the part of the district not going through reappraisal inside millage stays the same. Now you’ve got non-uniform inside millage which the constitution clearly says you cannot have.”
Thomas disagreed with that assertion as well, “if this bill is unconstitutional then the current structure of how multi-county school districts are is unconstitutional, we follow the same process that current updates and current tax rate changes have.”
Not everyone was a naysayer. Greg Lawson, research fellow with the Buckeye Institute backed HB 186 in written testimony, saying it “is one of the most significant property tax reform legislation since House Bill 920 passed in 1976″ but noted more work is needed.
“This bold departure from the status quo will immediately save Ohio taxpayers money and schools that forego property tax revenue will be made whole with funds set aside for Ohio’s expanded sales tax holiday,” Lawson wrote.
“(It is) a decisive step toward a more efficient local government structure and property tax system. That step is sorely needed to protect Ohio taxpayers from an outmoded, undemocratic system that has cost them dearly.”
The committee also considered House Bill 129, which would include emergency and substitute levies in the 20-mill floor calculation for school districts — a measure estimated to save taxpayers millions of dollars — and House Bill 309 that expands the power of local budget commissions, but no testimony was submitted.
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