Committee adopts revised measure to limit how much additional revenue schools can collect

The Ohio House Ways and Means Committee has adopted a revised version of legislation that would determine the amount of additional revenue school districts can receive.

House Bill 186 includes an Inflation Cap Credit, which ostensibly prevents tax bills from exceeding the rate of inflation, a move that proponents say would save taxpayers $1.7 billion.

Currently, school districts must receive at least 20 mills or 2% of their district’s property value in taxes. Districts cannot fall below 20 mills, thanks to a provision known as the “20-mill floor.”

Roughly 500 school districts across the Buckeye State have reached the 20-mill floor. Critics argue that the “20-mill floor,” combined with rising home values, has resulted in ballooning property taxes that taxpayers don’t have a chance to vote on. The Inflation Cap Credit would limit the amount of “additional revenue” that school districts at the 20-mill floor receive.

“This stronger version of HB 186 to not only limit future unvoted spikes in property taxes but also provide a decrease in bills for homeowners in 20-mill floor schools is vital to our effort to help taxpayers,” state Rep. David Thomas, R-Jefferson, said in a release. “We should all be able to agree that spikes in unvoted property taxes are bad and limits in future growth are reasonable.”

However, school districts can ask voters to approve new tax levies to cover a district’s expenses.

According to an analysis from the Ohio Legislative Service Commission, “each year when property values increase, property tax collections are adjusted downward so that taxing districts receive the same amount of revenue they received in the previous year.” However, there are some exceptions, such as the 20-mill floor.

“Consequently, any growth in property tax values will produce a corresponding increase in taxes from those 20 mills,” the LSC concluded in an analysis of the legislation. “If property values increase 35% in a school district that is ‘on’ the 20-mill floor, homeowners will generally see a larger tax increase than in other districts that are not on the 20-mill floor.

“The tax increase will very likely be less than 35%, since the tax reduction factor will still apply to other local tax levies (e.g., county and township levies), but since school district levies typically make up a majority of a homeowner’s property taxes, the 20-mill floor could have a significant impact,” the LSC said.

In prepared testimony earlier this year, Lawrence County Auditor Paul David Knipp

“If HB 186 caps local revenue growth at inflation without adjusting how valuations are reported to DEW, school districts face a funding shortfall from both state and local sources,” Knipp said. “This ‘double whammy’ will inevitably force districts back to the ballot to request new levies—the exact scenario this bill was designed to avoid.”

Lawmakers advanced HB 186 as the property tax reform group, which Republican Gov. Mike DeWine appointed, finalizes its recommendations.