Ohio’s budget process reached what typically would be completion stage on June 30th when Governor Mike DeWine signed HB 96, the FY26-27 biennial budget bill. However, the Governor’s signed budget bill included 67 line item vetoes, several of which apply to property tax provisions impacting Ohio’s school districts and other local governments. As a result, Ohio’s FY26-27 budget process is not yet completed, as the Ohio House and Senate weigh whether to attempt veto overrides (which require 60% of the members in both the House and Senate) of these provisions. The House had initially scheduled 3 budget provisions for override votes on July 21st, however only 1 measure was overridden at that time. No further override votes are currently scheduled in the House, and the Senate has not yet scheduled any veto override votes.
HB 96 Main Property Tax Provisions
This OEPI memo provides an overview of the 5 main property tax related provisions in the FY26-27 budget. The first four provisions will each provide property tax relief in different ways, while the fifth provision eliminates certain types of levies and will actually lead to increased property tax burdens.
1. Carryover Cash Balance Cap
(Vetoed, not yet overridden)
The cash balance cap was first introduced in the House version of the budget requiring the county budget commission to reduce current expense property taxes for the following year by the amount necessary to reduce each districts carryover cash balance to 30% of operating expenses. Under the House proposal, 478 districts above the 30% threshold would stand to lose $3.73 billion in property tax revenue based on Fall 2025 cash balance projections. The Senate modified this provision by raising the threshold to 50% and exempting permanent improvement expenses from the threshold calculation. 258 districts have an FY25 cash balance above 50% and would stand to lose $1.361 billion in tax revenue.
Conference Committee further modified this provision by establishing a threshold of 40%. 370 districts have an FY25 cash balance above 40% and would stand to lose $2.273 billion in tax revenue. The Conference Committee version also provided for a sliding scale to reduce the impact of the cap for districts whose cash balances are below $10 million. Districts with cash balances less than $2 million would see zero reduction, between $2 and $4 million would see a 25% reduction, between $4 and $6 million would receive a 50% reduction, and between $6 and $10 million would receive a 75% reduction. Along with a provision exempting certain low spending school districts, $106 million in tax reductions are averted due to the sliding scale, reducing the impact to $2.167 billion. In most school districts the carryover balance cap would initially be a one-time reduction, however, the confusion for taxpayers and destabilization for school districts of operating right at the cash balance threshold would be ongoing.
The Governor vetoed the cash balance cap provision, and it was not one of the items scheduled for an override vote on July 21st.
2. Inclusion of Emergency & Substitute Levies in the 20 Mill Floor Calculation
(Vetoed, not yet overridden)
The Senate version of the budget included a provision that emergency and substitute levies be included in the calculation of the 20-mill floor for traditional K-12 districts and the 2-mill floor for JVSDs. Conference Committee retained this provision and included incremental growth levies, conversion levies, and the property tax portion of combined income tax and property tax levies in the floor calculation. This provision would take effect beginning with taxes paid in 2026 and would occur as each district goes through its next reappraisal or triennial update.
OEPI calculates that 190 of the 381 districts currently (as of December 2024) at the Class I 20-mill floor have emergency and/or substitute levies in place. In the HB 129 Fiscal Note LSC estimates that by tax year 2028, 237 districts will be impacted by this provision and are estimated to see a property tax revenue reduction of $127 million.
LSC notes that this tax loss is due to a reduction in the growth of school district’s property taxes and it does not cause actual negative growth for any district (i.e. districts will not get less tax revenue than they have currently, but rather will not receive as much growth as if they were still at the 20-mill floor). The loss in growth will be ongoing until the district returns to the 20-mill floor, which for many districts may take many years (if ever).
The Governor vetoed this provision, and a scheduled override vote did not take place as planned on July 21st.
3. Expanded County Budget Commission Authority
(Vetoed, not yet overridden)
The Senate version of the budget inserted a provision which allows “county budget commissions (CBCs) to reduce millage on any voter-approved tax levy aside from a debt levy if the commission finds it reasonably prudent to avoid unnecessary, excessive or unneeded property tax collections.” This provision would apply to schools and all other local governments that have voted levies in place.
Conference Committee retained this provision and added several provisions relating to “tax budgets”, including one which requires local governments to submit a stated intent to collect increased revenue due to inside millage or the 20-mill floor.
While CBCs in theory already have authority to not fully collect property taxes, in practice it is rarely exercised. Including this provision in the budget makes it far more likely that this authority will be exercised, which is problematic in several ways.
Apart from the reduced revenue collections, there are legal questions about allowing the three- person CBC to override the approval of a majority of voters who authorized the levies in question, not to mention that these very same levies required approval by the very same CBC to get on the ballot in the first place.
Furthermore, more than half of Ohio’s school districts overlap into more than one county. Voters who live in a county that is not the “primary” county of the school district are unable to vote for the members of the CBC who would have authority over their taxes and public services.
The Governor vetoed the CBC authority to reduce millage on voted levies, and a scheduled override vote did not take place as planned on July 21st.
4. “Piggyback Property Tax Exemptions
(Enacted)
The Homestead Exemption was first enacted in 1971. It currently provides a property tax credit to eligible homeowners equal to the taxes charged on $28,000 in assessed value of their property ($9,800 of taxable value). Essentially the first $28,000 in home value is exempt from taxation. You must be over 65 with an income less than $40,000 or permanently disabled to qualify.
The 2.5% “owner occupancy” tax credit was first instituted in 1979. It applies to a dwelling unit if occupied by the owner, plus up to one acre of land.
The “lost” tax revenue from both of these credits are currently reimbursed to schools and local governments by the state.
Conference committee inserted a provision to allow county commissioners to double (i.e. “piggyback”) these 2 existing tax credits, benefitting eligible taxpayers but with no state reimbursement to local governments.
According to data on the DEW website, the February 2025 Homestead Exemption amount to a $99.9 million credit to Ohio homeowners. This credit reflects the amount by which the first of 2 property tax payments for 2024 was reduced. As the 2nd payment by taxpayers for 2024 was due in June 2025, the total value of the Homestead Exemption in the 2024 tax year would be $199.8 million (double the January amount).
Similarly, DEW shows that the January 2025 (first half of 2024 taxes) 2.5% Owner Occupancy credit was $85.7 million. Thus, the total value of the Owner Occupancy credit in the 2024 tax year would be $171.3 million.
Combining the above two totals reveals that the potential revenue loss to school districts if all counties exercised the piggyback authority on both the Homestead Exemption and 2.5% Owner Occupancy credit is $371.1 million. While it is highly unlikely that all 88 Ohio counties would choose to exercise this authority, these figures do illustrate the potential revenue loss to Ohio schools is not insignificant.
This provision was not vetoed by the Governor and is now part of the Ohio Revised Code.
5. Elimination of Property tax Levy Options
(Vetoed, successful override vote in the House, pending Senate override attempt)
The Senate version of the budget inserted a provision to eliminate the following levy types:
- Replacement levies for all political subdivisions
- School district fixed sum emergency levies
- School district fixed sum substitute levies
- Combined school district income tax and fixed sum levies
November 2025 will be the last opportunity to place these levies on the ballot.
Unlike the four provisions discussed above, elimination of property tax levy options will not directly reduce property tax burdens, as eliminating replacement, emergency and substitute levies will not do anything to help homeowners with rising tax bills. Rather, the motivation for their elimination appears to be a belief that these levy types are confusing or even “deceptive” to voters.
Prior to and during the budget process, most discussions to sunset school emergency and substitute levies came with assurances that a new “school fixed sum” levy option would be created so that these levies could be renewed but voters would not be led to think there was an actual “emergency”.
However, this option was not in fact included in the budget and districts will be required to place a new current expense levy on the ballot to take the place of an expiring emergency or substitute levy. Not only will this increase confusion for voters, rather than reduce it, but in most cases voters who replace an expiring emergency or substitute levy with a new current expense levy raising the same amount of revenue will experience an increase in their taxes because the new levy will not qualify for the 10% rollback and 2.5% owner occupancy credit.
Emergency Levies
There are currently 207 school districts utilizing emergency levies, 150 of which are at the 20-mill floor. The total amount of revenue raised by emergency levies in 2024 was $979.0 million.
$574.4 million (58.7%) in emergency levy revenue is in districts at the 20-mill floor while $405.5 million (41.3%) is districts above the 20-mill floor.
$656.1 million of the $979.0 million total is for emergency levies which qualify for the 10% rollback and 2.5% owner occupied credit. This means that taxpayers would experience a tax increase of $82.0 million if these levies are replaced by a new current expense levy of the same tax revenue amount when they expire.
Substitute Levies
According to data from the Ohio Department of Taxation, there are 69 school districts with substitute levies in place.
The total amount of pretty tax revenue raised by substitute levies is $384.5 million.
$285.6 million (74.3%) of substitute levy tax revenue is in districts at the 20-mill floor while $98.9 million (25.7%) is in districts not at the 20-mill floor.
About 2/3 of substitute levies are continuing. There are 21 districts that have term-limited substitute levies. These levies raise $108.3 million.
Four of the term-limited substitute levies are not eligible for the rollback, leaving $87.5 million in expiring substitute levies that currently qualify for the 10% rollback and 2.5% owner occupied credit. Replacement of these expiring substitute levies with new current expense levies would result in an increase in property tax burdens to homeowners of $10.9 million.
Thus, the elimination of emergency and substitute levies would result in a tax increase of $92.9 million if all expiring levies that currently qualify for the 10% rollback and 2.5% owner occupied credit were replaced with new current expense levies raising the same amount of revenue.
The Governor vetoed the elimination of these levies, however, this veto was overridden in the House on July 21st. It is now up to the Senate to decide if they will attempt to override the veto as well.
Governor’s Property Tax Study Committee
Finally, in the aftermath of the budget, Governor DeWine announced the formation of a Property Tax Study Committee which is co-chaired by former legislator Bill Seitz and former Congressman Pat Tiberi. The study committee began meeting in early August and will wrap up their work by September 30th. It seems likely that their work will provide additional information for the legislature as they wrestle with the steps to be taken to address property taxes in Ohio over the next several months.