Could Ohio Make Property Taxes Unconstitutional? Should It?

Ohio Attorney General Dave Yost’s office has received a proposal to insert a new Section 14 into Article XII of the Ohio constitution. This proposed amendment seeks to abolish current and future real estate taxes.

For many months, Ohio’s Butler County and Hamilton County deed holders have been pressing state lawmakers to expand property tax relief. Now, the Ohio Citizens for Property Tax Reform want a constitutional amendment, to end Ohio property tax outright. But does changing the state constitution for something like this make sense? And would it provide relief — or just kick the financial can to another place down the road?

Just How High Are Property Taxes?

As shown by research by Realtor.com and discussed by Bankrate, last year the median U.S. property tax bill went up nearly 3% year over year, and is now $3,500 annually. Ohio’s taxes are particularly steep. Other states with notably high property taxes are Connecticut, Illinois, Iowa, Nebraska, Kansas, Michigan, New Hampshire, New Jersey, Pennsylvania, Texas, Vermont, and Wisconsin.

When you move into any state, check its property tax rate, and then look to the township and find out how they handle taxation. Real estate websites give property tax estimates for each home address. The calculations are based on where the home is and what its value is.

Remember that the taxes may be reassessed (nearly always upward) once the deed changes hands. Major home improvements made by the seller can also cause the local tax assessor to raise the property tax rate for a home. How do local tax assessors know when to reassess a property? They have their ways! They track permit requests for major home upgrades. Sometimes they dispatch drones to spot construction.

Many states offer exemptions or rebates for disabled homeowners, seniors and those who have lost their spouses, veterans and people in active duty, and residents with low incomes. And in many locations, those who pay property tax on a primary residence can easily apply for a homestead exemption on a percentage of their home’s worth.

DIY tax relief? Learn more about how not to overpay your property taxes.

Now, Montana Taxpayers Say They’re Fed Up

People in Montana are rebelling against their property tax burden, too. They’re soundly rejecting school funding hikes that have appeared on their ballots. That’s a rarity anywhere in the nation.

As much as they want their local schools to flourish, Montana deed holders report feeling drained by inflation and tax hikes. Across Montana, taxes have typically doubled — right along with property values.

With voters now balking across Montana, conditions are primed for a major property tax revolt.

George Ochenski lays things out in the Daily Montanan:

With a $2 billion state surplus the Republican legislative supermajorities and governor had the opportunity to ease the crushing tax burden on homeowners. Instead, they opted to give very generous tax breaks to corporations — and now they have a tax revolt on their hands. 

Ochenski points out that the Republicans used to denounce the Democrats’ habit of calling for more taxation. But now, public frustration over tax hikes “applies to both parties.”

What Are the Possible Pitfalls to Abolishing Property Taxes?

Property taxes turn into funding for key local services. Schools, parks, libraries, emergency responders…sidewalks, roads, bridges and tunnels… All of these projects get funded by property taxes.

There’s no state anywhere in the country, at this time, that doesn’t have property taxes. But it’s the local governments that impose the bulk of property taxes. As property values rise with inflation, the property assessments are hiked accordingly. This can happen annually, or every few years.

A new assessment for a given property can also occur when the deed changes hands. This can take a serious bite out of a household’s finances.

And yet, almost everywhere, home buyers want school systems to do well. Good school systems are reflected in the prices sellers can put on their homes. People tend to accept related tax hikes, because they’re essentially good for property values.

Will ending property taxes yet raising other taxes ease the stress on Ohio households? Probably not. If there are no more property taxes, government would need to hike sales taxes or income taxes to replace lost revenue. Other forms of taxation may lack the dependability of property taxes. So, it can be hard to replace property taxes by other means. Schools and key public services will suffer in the scramble for funds.

What’s Next for the Ohio Constitution?

The next steps in the proposed amendment process will look something like these:

• The Ohio Ballot Board must certify the proposal.

• The petitioners will need to go out and get their petition signed by at least 10% of the voter number that participated in the most recent governor’s election. This means hundreds of thousands of voters must offer their signatures. A minimum number of voters must sign on from at least half of Ohio’s counties.

• The Secretary of State of Ohio will need to verify the names of the signing voters well in advance of the next regular or general election.

• The proposed constitutional amendment will then be put on the election ballot. Voters then get a chance to vote on the proposal.

If the ballot measure passes, it will make a big impact. Home property values are high. So are the taxes. The loss of that revenue stream would, as noted above, create a scramble for public funds. Ohio residents know this. Consider that in Ohio’s May election, voters approved all 13 proposed library tax levies. This suggests that Ohio deed holders aren’t up for an all-out tax revolt.

Yet the rebellion in Ohio could lead to policy changes. Remember what unfolded when North Dakota launched its own bid to abolish property taxes. That bid failed, but the governor placed a 3% limit on tax hikes, and lawmakers upped the available tax credits. As of this year, North Dakota offers a $1,600 credit. The legislation was introduced by North Dakota lawmaker Mike Nathe, who said: “We’ve more than tripled the credit from what it was, from the $500, and it’s a sustainable program.” 

Where there’s a will, there’s a way.