A statewide coalition wants to amend Ohio's constitution to end property taxes. A Greater Cincinnati county auditor says it could have a big impact on the county's small municipalities and school districts.
Butler County Auditor Nancy Nix recently released data showing the impact the proposal could have there.
"Ohio townships would be hard pressed to continue to operate fire/EMS services, road and bridge improvements, police protection and pay their debts should the property tax be eliminated," a release from Nix's office says.
That release said eliminating property taxes without replacement funds would cause "complete devastation" to local governments.
What proponents of abolishing property taxes say
Groups like Citizens for Property Tax Reform say homeowners are struggling under the weight of big tax increases. Those have come in part because property values have gone up many places.
Citizens for Property Tax Reform co-leader Keith Davey said during an appearance on Cincinnati Edition last week that state lawmakers haven't responded quickly enough to the problem of rising property taxes.
"We feel as though, because we haven't had any substantial relief from the state, we have to eliminate it totally and push the legislature into some meaningful reforms," Davey said.
But Nix says it would be hard to find a suitable replacement for those funds on the proposed amendment's one-year timeline.
Property taxes provided about $24 billion to school districts and local governments last year. In Butler County, Nix's office says those entities received about $660 million from the tax. Roughly $393 million of that money went to the county's school districts. Another $114 million went to townships and villages.
Those loses would lead to significant cuts in services like police and fire without replacements, Nix's release says.
Davey says that's not the intention of the constitutional amendment.
"Our group and the groups around the state aren't advocating to defund anything," Davey said. "We're just asking the state to institute measures to let schools, fire departments, EMS, fund their expenses through other means that aren't attached to our homes."
Unintended consequences?
But those other means could present big problems too. Nix's data suggests it would take a sales tax rate of almost 15% to replace property tax revenues in Butler County — a rate well above the state's limit of 8%. That burden would likely fall hardest on lower-income residents of the county, who generally pay a larger proportion of their income into sales taxes.
Even if the state stepped in and funded the education portion currently covered by property taxes, Butler County would still need a significant increase in its sales tax to cover the rest unless another tax, such as income tax, was increased.
"To make up that $24 billion in property tax revenue, you're looking at doubling sales and income taxes in Ohio," State Sen. Louis Blessing III (R-Colerain Twp.) told Cincinnati Edition.
Blessing also pointed out removing property taxes could cause unintended consequences. Meant to help lower the cost of housing, the move could actually spike housing costs by removing a barrier to speculating on property and holding it. Right now, property speculators — people who buy property with the aim of reselling it for a profit — have to pay property taxes, even if their properties aren't in use. Eliminating the tax would make speculation that much less expensive, Blessing said.
The effort to abolish sales tax still needs to get enough signatures from Ohioans to end up on the ballot. Groups will need to get roughly 414,000 signatures from across the state to do so.
Nix's release suggested state lawmakers adopt other reforms instead of simply eliminating property taxes altogether.
The County Auditor's Association has been advocating for a series of changes for roughly a year. They include expanding the homestead exemption that gives people of retirement age a break on property taxes, expanding a tax credit for people who live in homes they own, putting caps on how much extra revenue school districts can get due to reappraisal of property values, and creating other specific opportunities for tax relief.
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