Ohio Senate passes bill limiting school districts from challenging property values
COLUMBUS, Ohio – The Ohio Senate passed a bill that would hamstring school districts from challenging property values at county boards of revision.
House Bill 126 passed 24 to 7, along party lines.
The bill now heads back to the House for a concurrence vote on changes made in the Senate. The House isn’t likely to meet again until early next year.
Under current law, school districts can challenge property values. Property taxes pay district salaries and classroom expenses. Most districts that testified on HB 126 said they rely on real estate records, loan records and other data to either ask the board of revisions to increase the assessed value or fight the commercial property owners’ attempts to lower their values.
HB 126 would do the following:
-Prohibit school districts from initiating complaints at the county boards of revision. Only the owner of the property could file complaints.
-Allow districts to file counter-complaints when property owners are trying to lower their assessed values, but boards of education would have to approve the counter-complaints first.
-Prohibit school districts from appealing boards of revision decisions to the Ohio Board of Tax appeals.
-Prohibit school districts from entering settlements with property owners.
Sen. Louis “Bill” Blessing, a Cincinnati-area Republican, said the bill will result in a shorter, less costly and simpler adjudications on property tax disputes.
Some law firms and Columbus School District in particular are too aggressive in challenging property. Ohio is one of a few states that has allowed districts to appear before boards of revision. Michigan, Indiana and West Virginia don’t allow school districts to challenge values, Blessing said.
“I have a stack of 38 complaints against residential homeowners in a single school district here,” Blessing said. “It is most definitely being done against residential properties. Many of these residential properties that we have here is for valuations under $200,000. That is the middle class.”
Blessing said that business development experts testified that Ohio’s process discourages investment.
“Frankly, if the auditor is valuating everything in a lowball fashion the answer is simple: Elect a new auditor,” he said.
When districts settle with property owners, they don’t report to the state the extra money they receive, Blessing noted. The amount of state funds a school district receives is based in part on property taxes.
“We could call this phantom valuation,” he said.
However, Sen. Sandra Williams, a Cleveland Democrat who opposes the bill, said that most districts that testified on the bill don’t challenge residential values unless there’s at least a $50,000 difference between what the county assessor believes a house is worth and what the school district believes it is worth. School districts are often pursuing commercial properties that sell for millions more than their valuation, she said.
Williams noted the value of many commercial properties can be concealed through drop-down limited liability companies. Instead of selling a property to another company, a company will sell the property through an LLC, evading real estate taxes and shielding increases in property values from county assessors.
School districts need to be able to initiate complaints, she said.
“Why would (commercial property owners) ever file a complaint with the board of revision saying they want a higher value?” she asked.
Sen. Nickie Antonio, a Lakewood Democrat, said that it is obvious, based on testimony she heard, that some school districts abuse the board of revision process. There should be guardrails for school districts but HB 126 goes too far, she said.
She said that Ohio’s reliance on property taxes to pay for schools makes it necessary that they defend the property tax base.
“My fear is the losers in this whole process will be our children who are going to school,” she said.
School districts say that HB 126 will result in reductions in property taxes, especially on plants and commercial buildings, which will amount to millions a year. Homeowners and small business property owners will have to make up the difference in more levies and automatically increased millage.
Sen. Teresa Fedor, a Toledo Democrat, said that lawmakers received memos from associations representing county auditors, county treasurers and county commissioners in opposition to the bill.
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Ohio school districts could be barred from arguing over property tax changes
Read More: Ohio Senate passes bill limiting school districts from challenging property values