The Ohio House is close to passing a major property tax cut that also would decrease future school funding by billions of dollars for most districts in the state.
The House Ways and Means Committee on Tuesday approved House Bill 186 and House Bill 335, which together will cut future taxes for property owners in many Ohio school districts by as much as $2 billion over three years, according to estimates from legislative researchers.
The bills cap the degree to which taxes could rise in the future based solely on increased property values, although only in qualifying communities. HB 186 affects taxes collected for public schools specifically, while HB 335 affects a portion of taxes collected for all local governments.
If a school district or local government entity’s revenue grows faster than inflation, property owners there would get a discount on their future tax bill. (HB 186 also would give a future discount to property owners whose taxes have risen faster than inflation since 2022.)
HB186 and HB335’s effects would apply in 80% of communities though. Generally speaking, qualifying communities are in less populated areas where voters have approved fewer local tax levies. More populated areas would not qualify for the caps and future discounts. That because such area were not affected as much by spikes in property taxes due to how the state’s property tax formula works.
The bill is scheduled to be headed to the House floor on Wednesday for a final vote, according to state Rep. Bill Roemer, a Summit County Republican who chairs the Ways and Means Committee. He called the bill the most significant overhaul to state property tax law in decades.
If the full House passes the bill, it then would head to the Senate for approval before landing on Gov. Mike DeWIne’s desk for his signature.
The bill follows years of study and legislative inaction. Lawmakers frequently say the spike in property taxes – triggered by the marketwide increase in property values – is the top issue constituents complain about.
The tax cuts would be phased in over several years, first showing up on tax bills in the second half of 2026 and fully taking effect in 2028.
Republicans add hundreds of millions in one-time state funding for schools
School officials previously gave pointed testimony opposing HB 186, saying its future funding cuts will result in immediate budget shortfalls and teacher layoffs.
In response, Republican lawmakers changed the bill on Tuesday to set aside $330 million in extra state money for school districts. The money would be distributed as one-time payments to help schools absorb any cuts the bill causes in 2026. The money would come from a state fund used to reimburse local governments for lost revenue resulting from state sales tax holidays.
One of the bills’ sponsors, Rep. David Thomas of Ashtabula County, described the new state funding plan as a compromise. It follows longstanding criticism from school officials and Democrats who say the state has shifted too much of the school funding burden onto property owners.
“I think this is the correct and good middle path so school districts have some time to plan,” Thomas said.
The change was enough to win bipartisan support for the bill. Three of the committee’s four Democrats voted “yes,” joining all eight Republicans. Committee Democrats said the rest of the chamber might not be so supportive, though.
“It was time for the state to get some skin in the game,” said Lake County Democratic Rep. Dan Troy. “I guess this is progress.”
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Republicans target ‘20-mill floor’
The bills’ tax cuts are targeted at property owners in school districts where tax rates are at what’s known as the 20-mill floor — a term that describes the minimum tax rate for schools under state law. In those districts, property owners have faced the state’s steepest tax increases in recent years, as rising property values pushed up bills without voters approving new levies.
Conversely, districts in more densely populated areas where voters have approved higher property tax rates – including many urban and larger suburban districts – are likely to be above the 20-mill floor. This means the bill wouldn’t have any effect in these communities, which include nearly all Cuyahoga County school districts.
Roemer, the committee’s chairman, said these communities didn’t see the “astronomical” increase in unvoted taxes that communities at or below the 20-mill floor, because the state’s tax formula dampens the effects of increases in these communities.
