The Ohio House of Representatives drafted an elegant solution to one of Ohio’s thornier property tax problems – how to cut property taxes without hurting local public schools.
The House’s answer – reduce the state’s annual sales tax holiday and use those funds to lower property taxes.
Now, Gov. Mike DeWine can sign that solution into law, giving taxpayers a property tax cut starting in January.
Ohio voters and taxpayers are fed up with ever-rising property tax bills, and their frustration has reached a tipping point. Many have signed a state-wide petition to amend the Ohio Constitution and eliminate property taxes altogether.
That referendum presents a number of its own pitfalls, but Ohio homeowners now pay the eighth highest property tax rate in the country, so the sentiment is understandable and needs to be addressed.
Fortunately, the General Assembly responded to voter outcry and enacted property tax reforms.
The General Assembly passed one of the most significant property tax reforms since the 1970s, with a bill that cuts 2026 taxes by more than $100 for the average homeowner and will prevent public school levies from rising automatically without voter consent, but that also protects schools from the sudden impact of those tax cuts and lets them prepare for a new funding environment in which homeowners get a vote.
To thread that needle, the legislation smartly reduces next year’s sales tax holiday, sends the savings on to schools and cuts homeowner property taxes in 2026.
Sales tax holidays are a popular but counterproductive tax gimmick. They incentivize people with savings to time certain purchases to receive a tax break. The re-timed purchases do nothing to grow the economy, spur sales or consumption in the long run, or attract new business to the state.
Instead, they allow some businesses to raise prices temporarily because they expect consumers will still shop to get the short-lived tax discount, believing that they are getting a deal. Ultimately, such gimmickry costs Ohio needed revenue, so by reducing the tax holiday and sending the collected funds to schools, the House has offered a creative win-win that will protect school districts while fundamentally improving the property tax regime for homeowners.
By reforming the property tax rules, ending the automatic tax increases that fund schools, and subjecting future school levies to voter approval, the legislation responds responsibly to help solve a serious fiscal and civic problem. If signed into law, the bill still allows voters to raise their property taxes to fund their local schools, but school administrators will have to make their case for higher taxes and let the voters decide.
The General Assembly passed other property tax reforms, including an effort that empowers county commissioners to monitor and change ballot levies to make them more transparent, efficient, and effective. But even these and other tax improvements will fail to reduce the overall property tax burden if Ohio localities do not constrain their rampant spending.
Property taxes
primarily fund local schools, but they also support other priorities and local public services that are often redundant, grossly inefficient, or both.
The legislation will give local voters a voice assuming DeWine approves it, but it won’t tell them what to say. If homeowners keep voting for new or higher levies, local jurisdictions will have no reason to spend less or make local services more efficient. Local officials need to explore more ways to reduce government spending, consolidate government services, limit administrative overhead, and combine schools in districts with declining enrollment – but the voters need to make them.
The General Assembly, DeWine, and local leaders ignore rising property taxpayer frustration at their own political peril. The General Assembly has sent DeWine a clever but responsible way to address legitimate homeowner and school district concerns without jeopardizing the state’s fiscal or economic futures. Governor DeWine would be wise to take it.
Rea S. Hederman Jr. is vice president of policy at The Buckeye Institute.
