by: Andy Jesson, AOF Policy & Communications Intern
Over the past few months, the Ohio House of Representatives has discussed passage of multiple bills regarding property taxes paid by Ohioans. House Bill 263 and House Bill 344 are two pieces of legislation seeking to change how much Ohioans pay in property taxes in certain situations, with House Bill 263 targeting older adults and House Bill 344 the elimination of replacement levies.
State Representatives Hall and Isaacsohn introduced House Bill 263 last September. If passed, the legislation would freeze property tax amounts for older Ohioans who own homes, ensuring individuals often on a fixed income do not pay a larger property tax bill year-over-year. House Bill 263 is currently in the Ways and Means committee, with 25 cosponsors and widespread bipartisan support. On February 6, 2024, the Ways and Means committee met and House Bill 263 was heard for a fourth time. During the committee hearing, Representative Hall introduced a substitute bill with four key amendments to the original legislation.
Amendments to House Bill 263
Lowers the maximum allowable income from $70,000 to $50,000 per year
Lowers the minimum age requirement from 70 to 65
Lowers the maximum allowable home value from $1 million to $500,000
Lowers the required length of residency from 10 years to two years
Both Representatives Hall and Isaacsohn noted that the changes made were in response to feedback received from Ohioans across the state, and the changes in requirements, particularly lowering the age requirement by five years, will greatly increase the number of older Ohioans able to participate in the property tax freeze, as will reducing the number of years an individual needs to live in their home prior to becoming eligible for the freeze. Following a period of questioning among lawmakers, the substitute bill was accepted by the Ways and Means committee without objection.
In a different initiative, State Representatives Mathews and Hall introduced House Bill 344, legislation that would eliminate replacement property tax levies in Ohio. Replacement levies differ from renewal levies, as the former allows the jurisdiction to benefit from increased property values between the time the levy was originally passed and when it is replaced. In simpler terms, the use of replacement levies results in homeowners paying a larger bill if their property value has increased since the levy was first passed. Replacement levies are not tax rate increases but are intended to account for growth in the value of properties over time. They are used throughout the state to fund townships, schools, libraries, and more.
Proponents of the legislation view its passage as key to eliminating confusion among voters regarding a levy’s effect on their tax bill, while those against House Bill 344 have expressed concern over taking away one of the few methods jurisdictions have to pay for vital community resources. Currently, House Bill 344 has been introduced and referred to the House Ways and Means committee, where four hearings have now been held in regards to the legislation. During the February 6 House Ways and Means committee hearing, Representative Hall introduced a short amendment to House Bill 344 that was passed without objection, and the public was given the opportunity to testify on the legislation. The elimination of replacement levies represents one of multiple different controversial initiatives by legislators targeting crucial sources of revenue for the state and local communities. In recent weeks, legislators in the House and Senate introduced legislation that would eliminate state income tax for Ohioans over the course of the next decade.
Breakdown of Revenue Sources for State & Local Governments
Passage of House Bill 344 or legislation eliminating the state income tax both present challenges to the future ability of state and local governments in Ohio to fund public services. During the House Ways and Means committee hearing on February 6, State Representative Lear expressed concerns levied by local leaders about the implications of House Bill 344 on not being able to keep up with expanded service needs for rapidly-growing communities in Ohio. As shown in the chart above, property taxes represent significant funding for state and local governments, especially at the local level. For the vast majority of local communities across the country, property taxes represent the single largest source of revenue. Increasingly, the uncertain future of tax revenue in Ohio has been used as a potential barrier to passing legislation. During earlier discussion surrounding House Bill 263, State Representative Troy noted the likely cost of implementation of House Bill 263 as a concern in light of efforts to eliminate the state income tax.
Though neither House Bill 263 nor House Bill 344 have been brought before the entire General Assembly as of yet, both are important to watch for the future of property taxation in Ohio, both from the perspective of the taxpayer and local governments. More broadly, the next few months hold the potential to be critical to understanding the long-term outlook for the funding of health and human services across the state.