“The ballot initiative could have disastrous effects on (the city of Vandalia, Butler Twp., and the school district) and would have severe outcomes, causing the state to seek alternate ways to fund government functions, including the possibility of a significant increase in the state income tax and/or sales tax,” the city of Vandalia said in a statement to the Dayton Daily News Monday.
The proposed ballot initiative would prohibit taxes on all real property, to include land, growing crops, and permanently-attached buildings, structures, and improvements.
If approved by voters, the constitutional amendment could result in a loss of $23 billion in property taxes across the state, according to a presentation given during the joint meeting this month by Patrick Schwartz of Highbridge Consulting on behalf of the city of Vandalia.
The loss of property tax revenue could lead to an increase in statewide income and sales tax rates to recoup some of those lost dollars, Schwartz said.
“In 2026, the Ohio income tax will be a flat 2.75%. Many municipalities have local income tax rates at 2.5%. That adds up to a total of 5.25%. If property taxes are eliminated, income tax rates could soar as high as 11% to 15%, or more,” Schwartz said in the presentation.
In Ohio, property taxes fund services like schools, emergency response, and infrastructure.
The elimination of this tax would likely lead to further reliance on legislative support for school funding, and would affect police and fire departments, city services, libraries and parks, and more, Schwartz said.
“Funding will need to be replaced somehow,” he said.
Four property tax regulation bills were signed into law by Gov. Mike DeWine last month, the proposals for which were an effort by state lawmakers to preempt the property tax elimination effort.
“I have to say that the threat of a ballot initiative is part of the thing that’s driving this,” Ohio House Speaker Matt Huffman told the Ohio Capital Journal in October.
Ohio House Bill 129, HB 309, HB 335, and HB 186 were signed into law by DeWine on Dec. 19.
HB 129 aims to slow unvoted property tax growth and provide more predictability for taxpayers and school districts.
House Bills 186 and 335 aim to limit tax increases that result from future growth in property values.
HB 309 expands authority of County Budget Commissions to reduce or modify local property tax rates the commissions deem excessive or unnecessary relative to local needs.
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