New Ohio property tax reform bill would refund unneeded tax revenue to homeowners

Ohio House lawmakers are vetting a new property tax reform measure they’ve dubbed a “catch all” bill meant to remove frustrations taxpayers have voiced and potentially give some homeowners a small tax credit.

House Bill 608 cosponsor Rep. Chris Glassburn, D-North Olmstead, told the House Ways and Means Committee not all property tax reform is going to be monumental.

“These aren’t the grand changes or groundbreaking ideas that this committee has become experts in handling, but that doesn’t mean they’re not significant. Dozens of issues, small and large, have led us into this property tax crisis. As we make reforms, there will be unintended consequences that occur, and we’ll need to do even more fixes like this,” he said and later added, “Simply put, this bill represents a collection of several small provisions that will make life better for our residents.”

There are six “tweaks” to the property tax system in the “catch-all” bill. One is a cash-in-hand proposition, if county auditors choose to deploy it, according to the House Republican leadership’s property tax guru Rep. David Thomas, R-Ashtabula County, who cosponsored the bill.

County auditors perform all sorts of financial functions for the taxing entities within their jurisdiction and are allowed to charge for some of the services. Some have chosen to return excess Real Estate Assessment funds to the taxing entities that have paid them. The bill would allow direct credits to owner- occupied taxpayers.

“Depending on what the costs are for actual reevaluation, what the actual expenses are, could be just about right or more in revenue than what’s necessary for those services, much like the budget commission,” Thomas, the former Ashtabula County auditor explained.

“It’s not so much that an individual homeowner paid more than they should, they paid the correct amount in their property taxes, but it’s actually the auditor, not through his fault, just through lower expenses collected more than was needed.”

According to the nonpartisan Legislative Services Commission bill analysis, following a reassessment, REA funds in excess of $5,000 are supposed to be returned to the taxing authorities that paid them. The disbursements are to be “applied ratably.” Thomas told this media outlet this provision in state statutes is “not one that is enforced or widely known.”

This news outlet reached out to the County Auditors Association of Ohio to see how/if the various counties are applying the REA refunds, but they don’t have any data.

Rep. Dan Troy, D-Willowick, asked Thomas how counties would go about returning money to individual taxpayers and whether it would be scaled to property value or uniform.

Thomas said it would be an equal disbursement countywide to owner- occupied property owners, likely on the next year’s tax bills if the bill passes.

Some county auditors locally say the bill as presented is flawed. Warren County Auditor Matt Nolan said if they refunded per the bill language, taxpayers there might receive a $50 credit, but it wouldn’t be proper. “There is no real functional way to give that money directly back to the taxpayer.”

“The bill fails to understand how the real estate assessment fees are calculated. There is not a fee applied to each parcel, it is a percentage-based system that comes out of the total collection, not off an individual parcel,” he said.

“The percentage changes depending on how much money is brought in, but it isn’t computing that each parcel paid $50 in fees. If we were to give a credit back to taxpayers from that, it would effectively be redistributing money from one taxpayer to another which would be challenged immediately.”

Montgomery County Auditor Karl Keith said this bill “misleads” people into believing they are getting a tax break, but the amounts are minimal and not everyone would get it. He said he has “budgeted pretty close to the vest” so he has only refunded taxing jurisdictions once before.

“We did distribute surplus funds after the last revaluation in 2020, we distributed $5 million back to the jurisdictions,” he said.

“If we were to do it as this legislation is suggesting, only giving money to the owner- occupied property owners — who of course aren’t the only ones who paid that bill — they would get approximately $37. That’s what they would have gotten in 2020, it would have been wrong to do that but that’s what they would have gotten.”

He criticized the proposal saying it is “unfair and inequitable” because it only refunds money to owner-occupied taxpayers, not commercial property owners and renters — indirectly — who also pay the REA fees.

Thomas defended the bill saying homeowners need relief more than businesses.

“I think it is a very equitable way to equally distribute among all of the owner- occupied properties the overage. That actually then helps those who probably have more of a need for tax relief,” he said. “For example, we did some things proportional to value in our other bills but this is one way that we’re trying to target those at the lowest income and lowest value spot.”

Current practice
The auditors in our local counties have handled the current law a little differently: They have the discretion.

Butler County has returned more than $27 million to local taxing entities — $2 million- plus annually — since 2008. Auditor Nancy Nix said she doesn’t collect the full percentage she could, to cover her costs and “by making conservative spending decisions” routinely returns the leftover funds.

There were 105,070 owner- occupied properties for tax year 2024 and Nix returned $2.68 million to local entities. Based on that information Nix said the ballpark amount of a possible credit would be $25.55 per household.

“The Butler County Auditor’s office has always strived to maximize the return of unused funds to the taxing districts for which they were collected,” Nix said.

“While returning collected property taxes directly to homeowners would seem desirable, it sounds like this legislation has problematic issues.”

Greene County Auditor Kraig Hagler hasn’t sent money back because “we always refund it by not collecting it.”

“Greene County collects well below the allowable percentage for REA and we adjust it annually if needed, to not keep a large balance,” Hagler said. “The REA fees are deducted from the political subdivisions at settlement and our lower fee rate allows for more tax dollars to go to the subdivisions hopefully helping them with funding.”

Clark County Auditor Hillary Hamilton told this media outlet based on her last REA refund of $1 million, taxpayers could expect roughly $32 if the bill passes.

Other bill aspects
Here are the other provisions contained in the catch-all bill:

• Requires that tax bills are delivered 30 days prior to the due date instead of 20 days;
• Allows taxpayers to pay their bills quarterly or monthly instead of biannually;
• Requires county auditors to notify taxpayers about any changes to their property’s value at least 30 days prior to issuing tax bills;
• Authorizes taxing authorities to reduce or terminate an existing property, income or sales tax after voters approve a new or adjusted levy;
• Increases residential land property tax exemptions from eight to 10 years.

State lawmakers passed $3.8 billion in property tax relief last year that taxpayers will realize over the next three to four years. The county auditors are still trying to implement those measures.

“The legislature passed five property tax bills last year that county auditors will be working our way through for the next couple of years,” Nix said. “We’d like to get through these current processes before adding more legislation and layers of complexity.”