MOUNT VERNON — Residents are keenly aware of the surging home prices in Knox, Ashland, and Richland counties and the effect they’ve had on property taxes.
Between the 2020 and 2023 reappraisals, Knox County home values increased an average of 37%.
Ashland County saw a similar increase at 36%. Richland County came in at 28%.
Speaking at a Sept. 5 property tax relief briefing held at the Knox Memorial, Montgomery County Auditor Karl Keith said the rising values have called attention to the tax problem.
“With the price going up, the value is going up, and taxes have gone up,” he said.
“Because the values are being driven by the market, we don’t have a value problem in Ohio. We have a tax problem in Ohio.”
Thorne hosted the tax briefing, presented by the County Auditors Association of Ohio (CAAO).
Keith said the CAAO has spent the past several years examining the issue.
“It’s not easy for us to reach consensus, because we come from such a varied points of view. It’s a big state. We have urban centers and rural centers and agricultural areas and industrial areas,” he said.
However, the association came up with four recommendations. The auditors believe they are realistic, quick solutions that can benefit the greatest number of people.
Expand the homestead exemption
The legislature created the homestead exemption in the early 1970s as a way to reduce property tax bills for seniors and disabled homeowners.
For 2025, the homestead exemption exempts the first $28,000 of a property’s value from taxation. To qualify, a homeowner must be at least 65 years old or permanently and totally disabled. The Ohio adjusted gross income for a qualifying household is capped at $40,000.
Source: County Auditors Association of Ohio
Legislators revised it in 2007 and again in 2013, reinstating the income limit.
According to the CAAO, the number of qualifying homeowners has dropped since legislators reinstated the income limit.
“They put it through the means testing and never adjusted the amount that is exempt for a good period of time,” Keith said. “The new means test started in 2013 and didn’t change until 2023. … And it wasn’t retroactive.”
CAAO supports increasing the exemption amount and raising the income limit.
“One of the reasons that county auditors are advocating for a robust homestead exemption is we have an aging population that is in poverty,” said Mahoning County Auditor Ralph Meacham.
He said there is a correlation between an aging population and a poor population, and that rising tax delinquencies support that relationship.
Keith acknowledged that savings from the homestead exemption are significant. However, he said, “We think we can do better. We think the state should do better.”
Exempt properties
Meacham said the number of exempted properties that do not pay taxes compounds the problem.
Exempt properties include government-owned, churches, schools, nonprofits, or those that have abatements.
“Who’s paying the bills?” Meacham asked. “Anytime someone’s being exempt without paying property tax, someone else is paying more. Usually that is the residential.”
Meacham acknowledged that some abatements are good if they bring business and prosperity. However, in some areas, abatements are playing an increasingly large role in a county’s budget.
Expand the owner occupancy credit
The CAAO recommends increasing or reinstating two other homeowner credits: the owner occupancy credit and the 10% rollback.
“These things were put in place in the early ’70s. They’re statewide, they’re state funded. But they haven’t been touched since the ’70s. They haven’t been increased,” Keith said.
“People have seen their value go up, their taxes go up, but the relief that they’re getting from them has not gone up.”
The owner occupancy credit provides homeowners a 2.5% discount if they own and live in their home.
The 10% rollback, officially known as the Non-business Tax Credit, reduced taxes on residential and agricultural property by 10%.
Previously, the state of Ohio subsidized these credits and used sales and income tax to pay the taxing entity (for example, a school or library) the amount due.
However, these credits no longer apply to new and replacement levies approved in November 2013 or after. Homeowners must pay this portion of property tax instead of the state.
Keith said that eventually, the 10% rollback will disappear completely.
“We’d like to see that reinstated so that it continues, and we’d like to see the 2.5% credit double,” he said.
“These types of things don’t require a constitutional amendment or anything like that. The mechanics and infrastructure investment are already in place. We just need to change them.”
Montgomery County Auditor Karl Keith
Limit 20-mill floor
About two-thirds of property taxes in Ohio go to schools.
Delaware County Auditor George Kaitsa said many residents’ frustration stems from a provision in the tax code known as the 20-mill floor.
In the early 1970s, the real estate market was similar to what it was starting in 2020 and moving forward. The state legislature passed House Bill 920, known as the tax reduction factor.
The reduction factor adjusts tax rates at each appraisal cycle so that the amount of tax collected from voted-in levies remains the same. This is known as the effective tax rate.
“So when there’s a 20% increase in values, then the tax rate is reduced by 20%, so the net effect on homeowners is flat on the tax bill. Great, great concept,” Kaitsa said.
However, in 1978, school districts were concerned that they were not keeping current with inflation. The legislature enacted the 20-mill floor, which guaranteed that districts would receive no less than 20 mills in property taxes if rates were lowered due to a reappraisal.
“In my view, aside from what we need to do with the homestead exemption, addressing the 20-mill floor is the most consequential change that we can make with respect to property tax.”
george kaitsa, delaware county auditor
Kaitsa noted that school districts are not doing anything unethical or underhanded when it comes to the 20-mill floor.
“This is a benefit that’s been granted to the school district by the legislature,” he said. “Our concern is that this 20-mill floor has gotten out of control because of the uncontrolled prices in the real estate market.”
The CAAO does not want to eliminate the 20-mill floor. Instead, it proposes to tie increases to inflation rather than the uncontrolled increase in property values.
An unvoted tax
According to the CAAO, of Ohio’s 615 school districts, more than 460 are at or near the 20-mill floor.
“Our position is that, first of all, this is a tax,” Kaitsa said of the extra $350 “windfall” in the above example.
“Our recommendation is that we need that 20-mill floor, but instead of allowing that increase based on the real estate market, base it on inflation, which would be more in the range of 4 or 5%.”
New tax relief programs
The CAAO’s fourth recommendation is a “menu of targeted tax relief.” This includes tax deferrals, income tax credits, or abatements based on a homeowner’s inability to afford their rising property tax burden.
Lake County Auditor Chris Galloway cautioned county commissioners against creating a piggyback homestead and owner-occupied credit because there is no “backfill option.”
“There’s no supplement of those dollars, unlike with the homestead at the state level where the state picks it up and pays those entities,” he said.
“It’s a trap ultimately by the legislature to get the counties to implement homestead programs while they then slowly watch levies erode and eventually disappear. Then it ultimately ends up on each county.”
The importance of the legislature acting
Galloway said the citizens’ initiative to abolish property taxes entirely grows out of frustration due to legislative changes over the past 35 years. Those changes have reduced local governments’ revenue to one option: property taxes.
Examples include eliminating the inheritance tax, which Galloway acknowledged was probably the right thing to do. However, it reduced local government revenue.
Additionally, revenue reliance flipped from commercial to residential.
“Through extensions and credits and various other programs, we’ve flipped that, so now residential is picking up 60% and commercial 40%,” Galloway said.
“That creates folks who are angry enough about their tax that they have decided that the Chernobyl option is the way to go. And I assure you that if this were to get on the ballot and pass, it would be Chernobyl.”
He said consequences include massive government layoffs, online schools, bond defaults by municipalities at every level, and the effect on pension systems.
“So when I say something like it’s Chernobyl in Ohio, I mean it. There’s downstream results,” Galloway said.
“The need for property tax reform is huge right now so that the folks in Ohio don’t feel like the only way they can send a message to Columbus that they want relief is to blow it all, because the effects of that would be beyond insane.”
Knox County’s Thorne agrees.
“The property tax crisis is a pressing issue impacting homeowners across the state,” she said. “The County Auditor’s Association is committed to finding real solutions that will provide much-needed relief for millions of Ohioans.”
She encourages property owners to contact their state representative and senator to ask them to support CAAO’s proposals.
Galloway, who serves on Gov. Mike DeWine’s property tax reform work group, believes that the committee will recommend, with tweaks, most of the items that DeWine vetoed in the recent budget bill.
DeWine asked the group to issue its recommendations by Sept. 30.