CHICAGO — For the first time in more than 40 years, Ohio will stop subsidizing property taxes for new levies, a move that could make voters more reluctant to approve borrowing requests.
The state has traditionally paid 12.5% of local property taxes as part of a long-term rollback program in place since 1971. The program calls for the state to pay the first 10% of a property tax bill as well as 2.5% for owners who live in their homes.
Gov. John Kasich and the Legislature opted to stop the practice for any voter-approved new or replacement taxes as part of the new two-year budget that took effect July 1. The state will continue to make the payments for existing levies.
The budget also restricts eligibility for a senior citizen homestead subsidy.
Issuers asking for voter approval of borrowing will have to tack on at least 12.5% to the estimated cost to the taxpayer, and more for the senior exemption.
The state spent $1.1 billion in 2012 to pay for the rollback, and about $700 million for a senior homestead exemption, according to a report in the Toledo Blade.
The state's move will make it harder for local governments and school districts to raise badly needed funds, a school representative told the Columbus Dispatch.
"It's not that schools will get fewer dollars for new levies you pass, but it will make it a harder sell for people to vote for levies because any new levy is not going to include the property-tax rollback, so that means the taxpayer is going to have to pay more than he previously would have," Damon Asbury, director of legislative services for the Ohio School Board Association, told the paper.