Step taken to lower potential 42% hike in property values
Amendment part of the newly published Ohio Senate budget.
Butler County state legislators say a “milestone” has been reached in fixing the 42% average property value hike now that Sen. George Lang’s amendment is part of the newly published senate budget.
Lang filed an amendment to the senate’s version of the new biennial budget a couple of weeks ago and it is in the spending plan submitted Tuesday that is up for consideration for a full vote of the senate. The house already passed its version.
“What we’ve accomplished so far is just the first hurdle along the way, we still have several hurdles to overcome,” Lang told the Journal-News. “The fact that we got it in the budget is a major milestone, but the work’s not done, we have to make sure that it stays in the budget, make sure the house votes for it and ultimately we’re going to have to work with the governor to make sure this is something the governor signs off on as well.”
Lang’s amendment to the budget bill takes away — a solution crafted by Butler County Prosecutor Mike Gmoser — the state tax commissioner’s discretion in ordering property value increases. It involves changing the word “may” to “shall” in the law, when it comes to the data compiled and calculated for the triennial update.
The law change would force the tax commissioner to weight all three years of the reappraisal equally, which would bring the average 42% value increase down to around 25%. It also gives considerably more power to county auditors, who are the ones in the trenches and know first-hand what is going on in their communities. The tax commissioner relied heavily on exorbitant housing sales last year.
State Rep. Thomas Hall introduced a standalone bill a couple of weeks ago that mirrors Lang’s amendment so hearings can be held to explore “unintended consequences.”
Properties statewide are reappraised every six years — a much more detailed process that examinees every property countywide — and property values are updated every third year based on sales data and the shifts are reflected on tax bills the following year. The auditor’s office is in the process of the triennial update.
What’s the impact on governments and schools?
The Legislative Services Commission note that compares the house and senate budget bills reads the fiscal effect of the provision “will likely result in property tax revenue losses to school districts and local governments, of a potentially sizable but undetermined magnitude.”
Hall told the Journal-News this move, if it becomes law, would impact a portion of local government and school revenues — he hasn’t seen the fiscal impact estimates yet — but the primary concern right now is “all about protecting the Ohio property owner.”
“Right now we’re focused on taking care of the taxpayer in these very uncertain times with inflation,” Hall said. “We have taken steps in the budget to look at the more sustainable funding models for public education and local governments have been very fortunate in recent years to have large surpluses of cash coming from the federal and state levels.”
Commissioner Don Dixon — who spearheaded the “call to action” that rallied everyone to find a solution to the huge property value increase — said in response to the fiscal impact comment, “Here’s the bottom line this can’t go on, they might not get a 42% but they’re still looking at a 25%.”
“They can either come to the table and give some relief to the taxpayers or I’m going to keep pushing everybody we can, and getting as much support as we can, and were going to go ahead and make a real change,” Dixon said.
Usually, value hikes don’t automatically trigger tax increases to the same degree. There are mechanisms in place to ensure taxpayers are generally protected from huge value hikes. Voted levies are capped at the amount taxpayers approved. Unvoted taxes are allowed to be collected up to a certain level, by Ohio law. That level is 10 mills for governmental bodies and 20 mills for schools.
When a school district reaches the 20-mill floor, the millage will not decrease any further, which causes a school district to collect additional funding as values increase. The 20-mill floor only applies to operating levies, not bond, permanent improvement, emergency, or income tax levies.
The schools collect 55% to 72% of property taxes and County Auditor Nancy Nix said only two of the school districts, Lakota and Fairfield, haven’t hit the 20-mill floor so roughly that twothirds of the residents countywide will likely see hefty tax increases.
Some schools favor the law change
Lakota Schools Treasurer Adam Zink told the Journal-News he likes the threeyear average because “stability is very important” for the taxpayers and entities providing services like the schools. He said it would “smooth out large peaks and valleys.”
He pointed to the Great Recession in 2008 when the real estate market crashed, “just like you have right now a 42% potential increase, just go back to 2012, you probably could have seen a 42% decrease.” He said he values consistency for budget planning purposes. He plugged a “conservative” 22% increase in his budget.
“We’re all a part of this community, we all want to be good stewards of the tax dollars,” Zink said. “Nobody wants to see a giant increase just because, ‘look at us we got a ton of money.’ We still want to manage this the way we feel is appropriate to educate these kids. We want what’s best for everybody.”
During a second summit between local leaders and state lawmakers last week, Lang told the group this is just a band-aid to stop the bleeding, “what I would ultimately like to do is to say they shall do the three-year weighted average or the most recent year, whichever is the most advantageous for the taxpayer.”
Lang and Hall differ on whether that qualified language will make it into the final budget passed by the legislature.
“Doing that is a big lift, that’s a long-term project,” Lang told the Journal-News. “That’s not something we can get done quickly in the budget bill. What we have done, we have proposed a Band-Aid to stop the bleeding, and it buys us time to work on a long-term, what I hope is a much better fix on a go forward basis.”
Hall told the Journal-News he plans to make every effort to push the stronger bill in this budget cycle. The budget deadline is June 30.
“We are working right now to get a first hearing on the bill and to also amend the bill to make sure the taxpayers are the top priority in these decisions,” Hall said.
He said his bill was sent to the Ways and Means Committee — he is a committee member — and a hearing could be held Tuesday.