Ohioans paid $16.7 billion in property taxes last year, and those high property taxes are not leading to lots of spending by schools but instead are making up for low state spending on K-12 education. That’s the conclusion of a report from the state’s leading school funding expert and a Republican former state budget director.
The report concluded Ohio has dropped to 45th in the nation in the state share of K-12 revenue from 35th a few years ago. But the state has the eighth highest property tax rate in the nation, and those who are the most hurt by those bills are the least able to pay them.
The report comes from Dr. Howard Fleeter from the Ohio Education Policy Institute, a nonprofit research group that prepares reports for education interests, and Dr. Greg Browning, who was Republican Gov. George Voinovich’s budget director.
"Ohio has found its fragile system of reliably funding and delivering local services to be pushed near the breaking point in recent years," the authors wrote. "Ohio has hit a real property tax tipping point."
The authors pointed to the atypical escalation of home prices and property tax bills, a state economy that's been growing relatively slowly, cuts that have reduced state tax collections and local property tax levy increases.
They also wrote state actions such as lowering taxes and cutting the Local Government Fund "has been done at a price"; less state spending and support for local governments and public services. And the authors noted higher property are harder for Ohioans to pay, with per capita income below the national average.
The pressure has been building on Ohio homeowners for a while. The report noted that in 1975, home and farm owners paid 46.1% of school property taxes, while businesses paid 53.9%. In 2023, that had shifted to 67.5% of the property tax share paid by residential and agriculture taxpayers, while 32.5% was paid by commercial owners. Local governments have offered property tax breaks or exemptions to spur economic development. In 2004, the value of property with abatements was estimated at $5.7 billion. In 2024, that had ballooned to $26.6 billion, an 82.2% increase.
Fleeter and Browning listed some options that they wrote would maintain the stability of the property tax system while helping taxpayers struggling to pay bills. But some options would require the state to pitch in and reimburse schools and local governments for lost revenue.
They suggested a property tax circuit breaker for people with incomes under $70,000, with the state making up the estimated $520 million loss to schools and local governments; a property tax freeze for senior citizens, costing the state $211 million, or an expansion of the homestead tax exemption for senior citizens and people with disabilities – but the authors didn't have a cost estimate on that.
Other options that don't involve state contributions but would reduce the amount of money coming to schools and local governments are limiting revenue growth in certain districts or limiting the residential property tax rate to 1% of a home's value for low-income Ohioans. The report also said lawmakers could create a new homestead exemption that could be put before local voters and a state study of property tax abatements and exemptions.
