OBM Issues Memo on Proposed Property Tax Elimination Impact

The Ohio Office of Budget & Management (OBM) has issued a memo outlining the potential impact of a proposed statewide ballot initiative that would eliminate all property taxes throughout the state of Ohio; which would negatively impact a critical source of revenue that currently supports schools, police, fire departments, emergency services, and other critical services statewide. memo provides a high-level summary of the impacts of such an amendment; if the issue makes the ballot, OBM will provide a detailed analysis in accordance with Ohio Revised Code Section 3519.04.

While the State of Ohio does not collect property taxes, Ohio’s cities, counties, counties, townships, and school districts have long depended on them to pay for the services residents rely on every day. Today, property taxes, including real property and public utility personal property taxes, generate about $24 billion each year for local governments across the state. To put this into perspective, that’s equal to the total revenue from Ohio’s state income and sales taxes combined.

Replacing this budget deficit would require either an increase in state income tax or sales tax. According to analysis by the Tax Foundation, income tax rates across Ohio would need to quadruple or more, reaching 11–15 percent statewide, to replace local property tax levies. OBM, after consulting with the Ohio Department of Taxation, estimates that replacing local property tax would require state sales tax rates approaching 15–18 percent, significantly higher than any other state.

The Ohio Council will closely monitor information regarding this proposed ballot initiative and will keep Ohio Council members informed of any changes or developments.