MOUNT VERNON — Local governments are fired up over House Bill 335, which repeals inside millage for political subdivisions other than townships.
Townships can retain current millage but cannot raise them above 2024 levels.
Inside millage is the amount an entity can levy without voter approval.
Republican State Reps. David Thomas and Bill Roemer introduced the bill on June 4; it had its first formal hearing on Wednesday.
Solon schools describe the bill has having a “devastating impact.”
Hamilton County officials said it would put the county in “dire straits.”
Mansfield Mayor Jodie Perry described it as doing “irreparable harm” to cities.
Local leaders agree.
The bill’s passage would cut Knox County’s budget by about 25 percent. According to County Auditor Sarah Thorne, that equates to $8 million.
“I think everybody wants tax relief, but this is a pretty scary way to do it,” County Administrator Jason Booth said.
“It could have some pretty catastrophic impacts throughout county operations.”
knox County Administrator Jason Booth
Cuts would not be equitable across county departments.
For example, if electric costs increase, the jail would face higher costs than the recorder’s office, and thus have to make steeper cuts in operations.
“We have labor contracts that go into effect for the sheriff’s office, so cuts would probably be more than 25% to offset the built-in increases,” Booth said.
“It would be a dramatic impact on public safety. You don’t get there with the little things — it’s officers.”
If the county faced a 10-percent cut, Booth said the county could cope by deferring maintenance or furloughing employees.
“But 25 percent, that’s a big number,” Booth said. “Certainly the public would not see the services they are seeing now. Services would have to be cut for that kind of an offset.”
Mount Vernon mayor testifies against HB 335
Mount Vernon has 3.2 mills of inside millage: 0.3 mills each for the police and fire pensions, and 2.6 for the general fund.
In 2024, the city collected $1.266 million.
Based on projected 2025 revenue, the city would lose $2.4 million.
“The 0.3 pays for our required contribution to police and fire pensions,” Mayor Matt Starr said.
“If this inside millage goes away, we have to find a way to fund the fire and police pensions because that’s a required employer contribution.”
Another pending bill, HB 296, raises the employer’s contribution for police pensions from 19.5 percent to 24 percent.
Starr said the 2.6 mills for the general fund pays for capital projects.
“We have a lot more flexibility with that portion, but we’d have to make decisions what sort of maintenance we do or what gets put off,” he said.
“How much of the quality of life measures do we want to cut?”
“The state continues to threaten or take away our tools but expects us to keep building.”
Mount Vernon Mayor Matt Starr
Starr testified against HB 335, which is currently in the House Ways and Means Committee.
Acknowledging the bill’s intent to alleviate property tax burdens, Starr said the bill “undermines local governance and threatens essential municipal services.”
“HB 335 does not provide a clear mechanism to replace the revenue lost from eliminating inside millage. This omission places an undue burden on municipalities, especially those like Mount Vernon with limited alternative revenue sources,” he said.
Starr also notes that Article 12, Section 2 of the Ohio Constitution gives political subdivisions the right to inside millage up to 10 mills.
House Bill 335 is more than just budget cuts
In addition to lost revenue, the bill’s passage would affect bond ratings. Counties and municipalities pledge inside millage revenue as capital for the bonds.
“For bonds sold years ago, the inside millage was pledged to secure those bonds,” Booth said. “The sales tax could be used to secure bonds, but no one knows how it affects bonds already sold.”
Another question Booth has relates to Veterans Services Offices. Ohio law states that 0.5 mills of property taxes go to VSOs.
“If we don’t get anything, how are they going to get anything?” he asked.
House Bill 335 also gives the County Budget Commission the authority to reduce future levies if a political subdivision carries over more than 30 percent of its yearly budget in reserve.
Knox County Prosecutor Chip McConville said that provision effectively uses the commission as a watchdog over carryover, especially with schools.
That, he said, could lead to local infighting over ballot issues that voters approved.
In his testimony before the House Ways and Means Committee, Starr said, “These unelected bodies should not have the power to alter local budgets, which are traditionally managed by locally elected officials accountable to their communities.”
Booth said county officials are monitoring the bill very closely. The Senate version did not include the provision to repeal inside millage.
“We have done a lot of work over the last few years to put the county in a stable position,” he said.
“They say you can make it up by raising the sales tax, but you have to go to the ballot for that. It seems they are putting it at the feet of county commissioners.”
Other provisions of House Bill 335
HB 335 combines several single-issue bills dealing with inside millage, school carryovers, and other provisions.
The bill, formally called “Property Tax Relief NOW Act,” is in the House Ways and Means Committee, which Rep. Thomas chairs.
If passed, it would become effective Jan. 1, 2026.
In addition to eliminating inside millage and giving greater authority to the budget commission, HB 355:
- Caps school property tax increases
- Allows county commissioners to add homestead exemptions in addition to state-level exemptions
- Claims to provide greater transparency in levies
- Aims to increase community awareness and involvement by requiring Boards of Commissioners to hold public meetings on new county commissioner-proposed levies
- Prohibits school districts from changing the purpose of unvoted inside millage
As of June 19, eight other state representatives have signed on as co-sponsors of House Bill 335, including Knox County representative Beth Lear.
What you need vs. what’s coming in
At a May 19 town hall on property taxes held at the Ramser 4-H Center, Rep. Thomas said the Ohio Legislature is focused on unvoted increases.
In the 1970s, Ohio separated value increases from tax increases.
“We said in the early ’70s … that we’re going to change this, and your tax bill should only really increase when you actually approve a tax increase as opposed to just values going up,” he said.
“In the past 50 years, we’ve blown a lot of holes through that protection, and that’s where our policies will be focused.”
According to Thomas, “none of these tax increases that you’ve seen over the last five years, unless you voted for them, were actually needed or forced upon our local entities.”
He said that instead of asking “How much can I get coming in,” schools and governments should ask, “How much do I really need, and can I decrease that [tax] if necessary?”
Referencing the proposed constitutional amendment to abolish property taxes in Ohio altogether, Thomas said entities can already do that.
He noted some counties increased their sales tax and lowered their property tax to offset the revenue loss. He said schools, villages, and cities can use income tax as a tool.
HB 335 gives counties the authority to increase sales tax by 1 percent, but the voters must approve the increase through a ballot issue.
Eliminating property taxes entirely
According to Thomas, property taxes generate approximately $22 billion annually. Income tax generates about $10 billion, and sales tax about $14 billion.
“So we would need to almost triple either one of those,” Thomas said of the proposal to eliminate property taxes.
However, commercial, industrial, and public utilities comprise one-third of the property tax base. Eliminating property taxes and raising either the sales or income tax shifts the burden to individuals.
Additionally, Thomas said increasing the sales tax discourages business activity. Ohio residents in border communities would likely go across state lines to buy goods, leaving their communities with no sales tax revenue.
Providing exemptions to select groups, such as fallen first responders, seniors, or military veterans, also shifts the burden to others.
