Bill would allow local govs to provide property tax breaks to residents

Credit: JIM NOELKER

Credit: JIM NOELKER

A new bill being vetted by the Ohio General Assembly would give local governments the ability to give property tax breaks to needy residents by establishing residential stability zones.

The state legislature is vetting a wide variety of legislation to help taxpayers endure huge post-pandemic property tax hikes. This proposal differs from others in that it gives total control to counties, cities and home rule townships.

State Sen. Michele Reynolds, R-Canal Winchester, and Sen. Hearcel F. Craig, D-Columbus, co-sponsored Senate Bill 244 and the measure had a second hearing last week before the Senate Ways and Means Committee.

Franklin County Auditor Michael Stinziano gave his full-throated support for the measure and delineated its benefits during the hearing.

“This legislation was developed with a statewide coalition and the sponsors of the bill seek to create property tax relief that meets three necessary goals: provide targeted need-based relief with local control; avoid the need for any state backfill without undermining critical levy funded services and being a program that can be reasonably administered by local governments and county auditors,” Stinziano said. “We hope the General Assembly will enact this on its own or in combination with other property tax relief and reform policies.”

The bill would allow local governments to establish residential stability zones (RSZ) where qualified residents can apply for a partial property tax exemption that is equal to the percentage increase of their assessed value.

The tax exemption would be limited to homeowners whose household income is a percentage of the area median income. The bill analysis states communities can establish lower income thresholds and must take into account other asset ownership such as pension funds and trusts.

Applicants must have owned their home for at least a year, but communities can require a longer period of time. The zones expire after 10 years but may be renewed, homeowners under the age of 60 must reapply every six years.

As a result of the 2023 property reevaluation update, property values jumped an average 37% in Butler County, 30% in Greene and 34% in Montgomery County.

The hearing last week was reserved for proponent testimony.

Matthew Strauss with the Cincinnati-Hamilton County Community Action Agency submitted written testimony saying he supports the bill because it benefits local governments, the elderly, young families and developers alike.

“Personally, I also believe that Senate Bill 244 and Residential Stability Zones are a good idea because it allows county and municipal officials to tailor a program that can thoughtfully address the very specific concerns in their jurisdiction,” he wrote. “This is not a one-size-fits-all problem, so a more surgical approach will be more effective and will save money.”

Debate over proposal

When the bill was first introduced on May 7 there were some naysayers, namely Ways and Means Vice Chair Kristina Roegner, R-Hudson, who said she is not a fan of government interfering with the free market and “this is basically subsidized housing in another form, another packaging.”

“By subsidizing or in some way supporting the low- to moderate-income individuals, your intention is to keep them in their house right? Which means then they won’t sell their house,” she said. “You’re impacting the free markets, whereas if we didn’t do that and they were to sell the house, more than likely somebody of higher means would buy that house and invest in that home with nicer landscape, a new porch, a new roof thereby helping the entire community.”

Reynolds said the point of this legislation is to help people who are being forced out of their homes because of huge tax increases in the current post-pandemic housing climate.

She said she doesn’t favor tinkering with the free market either, that the bill is about “preservation.”

“We want to preserve homeownership as much as we can and the reality is because of inflation which is impacting the market there are people that are losing their homes,” Reynolds said. “They’ve worked all their lives, they have homes that they’ve lived in maybe even 30 years and are now seniors or otherwise and because of inflation, property taxes have skyrocketed and now they’re at risk of losing their home and becoming homeless.”

Unlike all of the other property tax legislation introduced in this General Assembly, this bill would not cost the state a dime, according to co-sponsor Craig.

“There would be no revenue decrease under this program,” he said. When property values increase, inside millage and 20-mill floor millage that would apply to exempted value will be foregone — similar to existing abatement programs.”

Circuit breaker testimony

The largest proposed state cash outlay for property tax relief — fiscal analysis hasn’t been done on some of the bills yet — is the “circuit breaker” method prescribed by Senate Bill 271. The $819.6 million measure also received proponent testimony during the Ways and Means Committee meeting.

The Joint Committee on Property Tax Review and Reform already took testimony on the idea. That group is a special committee tasked with making recommendations on fixing what has been deemed a flawed property taxation system.

The bill would give a refundable income tax credit of up to $1,000 for people earning less than $60,000 annually, if their housing costs exceed 5% of their gross income.

The proposal is based on a model by the progressive group Policy Matters Ohio. Zach Schiller, research director at Policy Matters has been pitching the “circuit breaker” for months as the best solution. He said more than 40% of low-income residents, earning under $22,000, would get an average tax cut of $698. Almost a quarter of those earning between $22,000 and $45,000 would get an average benefit of $620.

Bailey Williams, the tax policy researcher at Policy Matters gave testimony last week.

“It’s a policy that has been embraced by states across the country. A property tax circuit breaker, as the name implies, much like an electrical circuit breaker prevents electric current overloads,” he said. “It would reduce the load if property taxes are too high a share of income.”

Among the supporters who either testified or submitted their written support were Stinziano, AARP, Policy Matters, the County Auditor’s Association, three statewide school associations, the County Commissioners Association of Ohio, the Ohio Municipal League, the Legal Aid Society of Southwest Ohio and the Coalition of Homelessness and Housing in Ohio.

Sen. Tim Schaffer, R-Lancaster, asked why the state would pick up the whole tab when local schools and governments are receiving the property taxes and huge windfalls this year in some instances.

Sen. Bill Blessing, who chairs the Ways and Means Committee and co-sponsored the bill with Craig, said this was a cleaner approach.

“You get into murky constitutional questions about moving money around,” Blessing said. “The inside millage, there is literally nothing we can do about it because it’s in the Constitution. Rather than deal with those constitutional questions and winding up in court I felt this was a better approach.”


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