Should Ohio eliminate the Property Tax?

Greg Lawson of The Buckeye Institute discusses how it could be done.

Episode Transcript

Speaker 1 (00:00):
Over to the Legacy Retirement Group dot com phone line,
we find Greg Lawson from the Buckeye Institute. Greg, good morning.
Rising property taxes in Ohio becoming a huge problem. A
lot of folks are going to be taxed out of
their homes if they're on a fixed income, or they're
elderly or disabled and don't have a lot of new

(00:20):
income coming in. Ohio ranks eighth in the United States
for the property tax burden, and it's becoming a problem,
and there has been a grassroots I guess solution to
abolish the property tax in the state of Ohio.

Speaker 2 (00:37):
Your thoughts, Well, first of all, I think that this
is a major issue. It's a major problem. People are frustrated,
and rightfully so, they feel like people aren't listening, politicians
aren't listening, and they want to have action taken immediately.
You know, you've got situations where the most egregious situations,
of course, are where you've got fixed income seniors've paid

(00:58):
their mortgage off, they own their house, or at least
think they own their house. Of course, I think a
lot of people wonder, well, how much ownership do you
have if somebody could just take it right out from
underneath you. If you spend thirty forty years doing everything
the right way and then because of these decisions with
local tax levies, you're priced out. But it's also making
it hard for starter families and to get going to

(01:22):
get into the right kind of places, the schools and
everything else. So it's a wholesale problem that hits all
kinds of residents here in the state of Ohio, and unfortunately,
there's no easy solutions. I will say this. There's this
amendment that you were just describing. They're going to start
gathering signatures they just got to approve last week to
abolish property taxes. That is not a good idea. That

(01:44):
is going too far. We need a dramatic, maybe even
radical reform in some ways, but that doesn't really solve
the problem in a lot of ways, because what you're
actually going to do is keep the fundamental issue still intact.
Property taxes are downstream of the structure of local government.
Quite frankly, and put simply, we just have too many

(02:05):
local governments. We are going to have to start looking
under the hood of the car and dealing with how
we structure our local government and making it more efficient.
You get rid of the property tax. That doesn't necessarily
solve that problem. All it does is shift how the
taxes are paid. Or you really do have a problem
where you've got services.

Speaker 1 (02:23):
Well, and we talk about, you know, public schools being
funded by property tax a more and more so public
safety or police and fire. I mean, we've got to
operate somehow. What about like a what about a cap
some sort of circuit breaker in place where it's not
tied to like rising property values which have gone up

(02:43):
tremendously in the last couple of years, and in some
recent assessments, people's home values rose on the top end
thirty thirty five percent. Thus their taxes go up too.
But what if we kind of unlink those and cap
it based on maybe as a percentage.

Speaker 2 (02:59):
Of in Well, there's definitely discussions about that. There's a
whole bunch of bills going on at the state House,
and some of them are dealing with concepts like expanded
homestead exemption for like seniors or disabled Ohiolands or military veterans.
This concept of the circuit breaker is out there. I
think there's a bill out there that would do that,
where it would be a percentage of income. Certainly that

(03:21):
would create immediate relief, But there is a challenge to
that because if you just have a circuit breaker and
there is no state money involved, then there's going to
be a loss of revenue for a lot of the
different local government bodies that use property tax if the
state comes in. And that's what most of these proposals do,

(03:43):
by the way, is they basically say the state will
backfill any of the lost revenue that the locals have,
and that's expensive depending on how you know, how big
is the exemption, what is the percentage of income that
you hit the trigger at. You could have the state
spending a billion plus dollars or more of state general
money to do that, and of course the state has

(04:04):
other spending medicaid, there's the state share of K twelve education,
So that's not an easy thing to do. So it
certainly would provide relief, but there are problems with that
and it's not cheap.

Speaker 1 (04:17):
Why do property owners continue to foot this bill and
it keeps going up? I mean, whatever happened to the
lottery or casinos kicking in some money to help fund
public schools.

Speaker 2 (04:30):
Well, it's very complicated, first of all, and part of
the reason we have spikes is because we had historic inflation.
So I do want to be real clear, we had
near forty year highs of inflation coming out of COVID
and with all the Biden inflation and everything else, So
we had a real problem and that is certainly a
key piece of what led to these really really high spikes.

(04:51):
But the broader problem, the deep seated problem, is all
these layering of taxes, and it comes back because of
decades of decisions that have been made. Wordly, what it
is is that the way the state funds schools is
it funds school districts that can't raise revenue at the
local level. Basically, there's constitutional litigation on this question, and

(05:12):
one of the key points was, hey, if you've got
all kinds of different levels of property tax capacity, some
districts simply can't raise the money at the local level
and that creates an unconstitutional, unfair and unleveled playing field.
So the state has said since these cases, there's the
cases back in the late nineties and early two thousands,
that we're gonna fix that because we're going to come
in kind of a little bit like Robin Hood and

(05:35):
we're going to give to the property tax poor districts
more money from the state level, and they do that. Actually,
that is how the school funding system basically works. It's
extremely complex. That's the basic concept. The problem is when
you have property to values rise and taxes rise, that
actually is in the formula and counts against what the

(05:55):
state would give. So the higher your values are, the
more the formula says locals are able to pay at
the local level. And then if that isn't complicated enough,
we have a whole complicated thing about how we reduce
taxes by something that's called reduction factors, so you don't
actually necessarily it reduces the amount over time. And then

(06:19):
the state also has subsidizes districts because there's a property
tax rollback for renewal levees when you go back to
the levee to get it going again. So if that
makes your head spin hearing me talk about it, yeah
it should, because that is just scratching the bare surface
of how complicated this situation is.

Speaker 1 (06:36):
And that's part of the problem. And we need somebody
to come in and simplify this. Let's simplify it and
give I mean taxpayers should get something in return for
their taxes, right, I mean taxpayer funds should serve taxpayers.
So in the and I get police and fire. But
in the instance of schools, and specifically in Columbus, I

(06:57):
mean that's a failing school district. Greg. They're not doing
their job, but yet they want money. And there was
this whole story I don't know a few weeks ago
about public schools carrying over their budgets and their balances
up to thirty plus percent from year to year. And
there's some people throwing a flag on that, Greg because
they're saying, well, the school is not a piggy bank here.

(07:19):
They're not spending their money wisely. At some point, should
we point the finger at who is using these tax
payer dollars and ask them to be a little more
financially sound and efficient when they spend their money.

Speaker 2 (07:31):
Well, short answer is absolutely yes, as something that is
critically important. Now, there are some good reasons why some
school districts would want to have a certain amount that
carries over, because if you don't have enough, that actually
hurts you in the bond market. So if you go
out to do like a capital improvement thing and building
new buildings or renovating, you can get deemed by the

(07:54):
capital markets if you don't have a certain level of carryover,
so there is a some logistic. But when you're starting
to talk about districts that go into the fifty plus
percent even and there are some that go over one
hundred percent, now you got yourself for a prom because
there's a difference between being physically prudent, which I think
we do what school districts to do, and essentially hoarding
the money because of course it's not really their money,

(08:16):
the taxpayer's money, and if you're holding onto that for
long periods of time, what you're essentially doing is taking
money out of people's wallets or purses and holding on
to it for yourself, and that's not what we want
to do. So I think we do need to have
some kind of a guardrail on there, whether it's there's
a proposal in the state budget right now that livemit's
at to thirty percent. That may not be the right number,

(08:39):
probably might be a little bit higher, but there should
be some kind of a limit, and there need to
be some guardrails on here so that the districts are
spending wisely. But I do wanted to say one thing
that's really important for people to hear out there. People
do vote. I mean they vote a lot less right
now because of par tax spikes for new levees. But
people have been voting for levees for a really long time,
right people also so have to have make some choices,

(09:02):
and we need to have those strong grass groups efforts
at the local level where folks are holding their school
boards or other local government bodies, city officials, township trustees.
What have you accountable? You can't give any local government,
you know, a blank check and say yes to all
these levees, because as that happens. If you look that

(09:23):
Franklin County auditor Mixins Giano has an incredible website where
you can look up your property and see how many
levees are on your property. It'll list them out and
you've got probably over twenty of them on yours and
some of these go back to the seventies and you
keep renewing them, or some of them are permanent. But
the bottom line is, look at the new ones, look
at the ones at somebody, your other residents around you,
your neighbors are voting for this. Taxpayers need to stand

(09:47):
up and say we want something done more efficiently, and
we need to stop saying yes to everything and start
demanding that local governments look at how do we share services?
Do some local governments I mean, you know this is
sort of a third rail in some place, but can
we do some consolidation to save costs? What do we
need to do to deliver services now that people want,

(10:08):
but not have all these layers of government? Because again
I kind of come back to my core point I've
been screaming as from the rooftops actually ever since I've
been at the Buckeye Institute. This is a local government problem,
and it's a structure. It's how many layers we have.
It's how many bodies can levy taxes, it's how often
they have to go to the ballot. This is why
this is. This kind of created a foundation so that

(10:30):
when the inflation came, you had yourself a perfect storm
and had this really very cumbersome and painful tax increase.
But you got to get at the structure government. We've
got to cut back at how much, how many layers
we have at the local level. Well, we're not going
to solve this problem