CINCINNATI — Hamilton County commissioners decided Thursday not to implement new local property tax exemptions that would have provided relief to some homeowners but cost schools, townships and other local programs more than $34 million in funding.
"We need to provide property tax relief. We need to do that. People saw a spike in their bills, and so we need to respond to that," Hamilton County Commission President Denise Driehaus said. "Pushing that down to the local governments to piggyback on what the state is doing by way of the homestead, it puts an undue burden on us and simply passes the buck."
WATCH: See how Hamilton County school districts banded together to oppose expanded homestead exemptions
The commissioners needed to decide by Thursday whether to expand state property tax exemptions at the local level. Unlike existing state programs, counties would not receive reimbursement for revenue lost from these new local exemptions.
Driehaus said the proposed exemptions would unfairly shift state responsibilities to local governments.
"Pushing that down to the local governments to piggyback on what the state is doing by way of the homestead, it puts an undue burden on us and simply passes the buck on an obligation that the state should be fulfilling," Driehaus said.
While Hamilton County would have lost $1.4 million in revenue, the broader impact on schools and other local services drove the commissioners' decision.
"The real impact is to local governments and to school districts and to our local levies," Driehaus said. "We don't want to do to our locals and school districts what the state is doing to us, which is passing the buck down the chain to try to get somebody else to pay for an obligation that should be paid for here."
Cincinnati Public Schools would have seen the largest impact, losing $7.5 million starting next year from funds the district had already budgeted.
"That amount of money equals about 66 teacher salaries or about 150 salaries and benefits for hourly employees," said Michael Gustin, treasurer and chief financial officer at Cincinnati Public Schools.
The potential loss would have compounded existing financial pressures for the district, which closed a $51 million budget gap this spring and has already reduced 100 teaching positions this year.
"It's just one more thing on top of a very tough funding environment," Gustin said. "The state continues to kind of pull back resources from the federal government. We're looking at cuts there. This would just be one more thing on top."
Gustin joined leaders from nearly every school district in Hamilton County to oppose the tax exemptions at last week's commission meeting and again on Thursday. Gustin said the districts only learned about the potential impact of the property tax exemptions last Tuesday.
"I definitely feel like today was a win," Gustin said after the commissioners' decision.
Additional cuts would have targeted support staff critical to student success, Gustin said.
"It would be some significant cuts," Gustin said. "Probably cuts to people like security, to paraprofessionals, probably cuts the extracurriculars of transportation. You get to a point where you need a teacher in every classroom, and so now you start stripping away the support system that really is so critical to our students."
Loveland City School District would have lost $527,000 under the proposed exemptions, forcing cuts to classroom support staff.
"It would be a direct impact on the staff that is supporting our kids in our classrooms," said Lynn Mangan, vice president of the Loveland City School Board. "It would probably be roughly eight to 10 positions, just depending on what areas we would have to reduce."
The cuts would have been particularly challenging for the district, which is already operating with minimal staffing levels and a high student-teacher ratio.
"We are in the top 10% of the districts in the state in terms of our outcomes for our kids. And we are very fiscally responsible. We spend less than the state average," Mangan said. "So, you know, we're proud of that, but the lack of funding coming from the state legislature is really impacting and is putting a burden on local taxes. And so these kind of unplanned, last-minute cuts make it very difficult for us to continue to be, you know, forward-looking for our kids."
Loveland City Schools has invested heavily in community transparency about spending priorities, Mangan said. Funding cuts would have meant more than a loss of staff.
"Safety protocols today are very, very different than they were just 5, 10 years ago, and so we have to keep making those investments in career readiness for our children, making sure they're safe and making sure that they're learning," Mangan said. "We no longer just walk in our schools like we used to when I graduated, and so we do have to make those investments."
Driehaus said commissioners are exploring other property tax relief options that don't burden local services, including recommendations from the governor's working group on property tax reform.
"The governor's Working Group, which I was a part of, offered 20 things that we can do to try to relieve the burden on taxpayers," Driehaus said. "The homestead expansion is one of them, but it has to be supported by the state, not the local governments."
One potential solution involves deferring tax increases for longtime homeowners who can no longer afford rising bills.
"If you're an older person and you live in your home and you've been in your home for many years and you can no longer afford your property taxes, that tax increase is deferred until the next purchaser of that property, and so we don't lose the revenue. It's just deferred," Driehaus said.
Another option would help property owners catch up on delinquent taxes.
"We're going to wipe the slate clean, let you catch up, and then start again, so that you have more of an ability to pay your current taxes," Driehaus said.
House Bill 335, currently moving through the legislature, could provide long-term relief by capping inside millage at the rate of inflation.
"You won't see the spikes in the future if that passes," Driehaus said. "These spikes that we just saw can't happen because we're capped at the rate of inflation, and so are the schools."
While school officials said they understood the burden of property taxes on homeowners, they emphasized the need for solutions that don't harm students.
"I would be excited about property tax exemptions if it also didn't mean kids losing out on things that they need," Gustin said. "There is an existing homestead and owner-occupancy tax credit that folks get, and the state actually pays for that. So state makes us whole, that is the gold standard. And so it's not a win-lose situation."
Gustin said Cincinnati Public Schools hasn't asked voters for new money in nine years, trying to keep the tax burden as low as possible while maintaining services.
"It is hard paying property taxes. I mean, no one likes that. And it's not just schools," Gustin said. "Your property taxes pay for the parks, they pay for the city, they pay for the county, the sheriff's office, Children's Services, and the library. So there are a lot of us out there, and we're all trying to do what we can with limited resources."
School officials argued that the root of Ohio's property tax problem lies with inadequate state funding for education.
"We're eighth highest in the country for property taxes, and I think we're either 46th or 48th lowest for state taxes," Mangan said. "So the state has created this problem, and we need to continue to work together to find solutions."
The funding disparity creates confusion among taxpayers about where their money goes. Mangan said that rising property values don't automatically translate to increased school funding for districts like Loveland.
"There is so much misinformation. Ohio is in the bottom, I think five states for the portion of state funding that's going to public schools, and so our state is not prioritizing public education," Mangan said. "People think that when their property tax values went up, the schools automatically got some big cash inflow. Our district is not on the 20 mil floor. We did not receive big inflationary adjustments. I think we had about a 2.4% adjustment, as we saw property values just soar. And property taxes increase, but it's not flowing to our school district."
The original state budget proposal would have cut Loveland's funding by $2.5 million before advocacy efforts protected most of their allocation.
"We were able to protect our funding and went up about .8% for this year, and point 6% so not even 1% so the state is not helping us keep up with the pace of inflation," Mangan said.
Gustin echoed those concerns about state funding levels.
"We are at a historic low for state funding for public schools, and so when the state doesn't do their share, then that falls back on the taxpayers," Gustin said.
While rejecting the immediate tax relief options, commissioners indicated they remain committed to finding property tax solutions that don't burden local services.
"Commissioners were very open to having further conversations," Gustin said. "Part of the budget bill created this artificial time pressure that they had to act by tomorrow if they wanted to do something for next year. And so I don't see that happening, and that gives us time to have a conversation."
Driehaus said commissioners will continue looking for alternatives.
"In some ways, we should wait and see what actually makes it through the legislature, but in the meantime, we're looking for solutions," Driehaus said. "But this piggyback was too much of a burden on the school districts in particular, so we didn't think it was a good option."
The proposed exemptions would have doubled existing homestead exemptions for eligible low-income seniors and disabled residents, and added up to 2.5% in owner-occupancy credits for homeowners living in their primary residence.
According to county analysis, approximately 33,700 parcels currently receive homestead exemption benefits, while about 192,500 parcels receive owner-occupancy credits.
The total estimated revenue loss of more than $34 million would have affected all county-funded programs, school districts, townships, municipalities and other taxing jurisdictions throughout Hamilton County.
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