Ohio's Property Tax Revolt A Problem Years in the Making
Over the past 50 years, a series of state tax law changes shifted who pays for Ohio's public schools. Businesses and the state government now pay less. Local homeowners and farmers pay more. This page explains how that happened — and what it means for school funding at Liberty-Benton.
State tax policy decisions made over five decades have shifted the burden of funding Ohio public schools away from the state and businesses — and onto local residential property owners and farmers.
School Property Tax Burden by Payer Type — Ohio, 1975–2024
% of total school property taxes paid by each category | Source: Ohio Dept. of Taxation / OEPI calculations
Residential & Agricultural
Business (Commercial Real)
Business Tangible Personal Property
Public Utility Tangible Personal Property
DeRolph v. Ohio: Court-Ordered Reform vs. Today's Reality
At DeRolph (1997–2002)
~40–44%
State share of K-12 funding
Ohio Supreme Court ruled school funding unconstitutional 4 times. State was ordered to fix "overreliance" on local property taxes. Ranked ~35th nationally in state share.
➔ State share fell since court order
Today (2023)
~30–32%
State share of K-12 funding
Ohio fell to 45th nationally — 11.2 percentage points below the national average. The problem DeRolph identified has grown significantly worse.
Executive Summary: Key Legislative Turning Points
Nine key decisions — made over 50 years — shifted more than $1 billion in annual school funding responsibility from businesses to homeowners and farmers. At the same time, more than $1 billion in state education dollars was redirected toward private school vouchers.
1976 — The Protection That Had a Flaw
HB 920: Ohio's Inflation Shield
A 1976 law designed to protect homeowners from rising property taxes — but with a critical loophole called the "20-mill floor" that left two-thirds of Ohio school districts fully exposed to the post-COVID housing surge.
Gov. James Rhodes signed HB 920 because home prices were rising fast and homeowners were seeing bigger tax bills every year. The law created rules that stop school districts from automatically collecting more money just because home values went up. Instead, if home values rise, the tax rate drops — so the total bill stays about the same. The unintended consequence: Ohio now holds more school levy elections than any other state. The law also created the "20-mill floor" — a point below which this protection no longer applies. Districts below that floor have no shield when property values spike. By 2023, 409 of 612 districts (66.9%) were below this floor.
1997–2002 — The Court Said Fix It
DeRolph v. Ohio: Overruled, Then Ignored
Ohio's highest court ruled four times that the state's way of funding schools was unconstitutional — because it leaned too heavily on local property taxes. Instead of fixing the problem, the state cut income taxes, reduced school funding, and let things get worse over the next 25 years.
The Ohio Supreme Court ruled that Ohio's school funding system was unconstitutional. The court ordered the state to fix this, ruling against the state four times between 1997 and 2002. The state never fully fixed the problem. In 2002, the state paid about 44% of all school costs. By 2023, Ohio's share had dropped to about 31% — placing it 45th out of 50 states, more than 11 percentage points below the national average.
2005–2019 — The Business Tax Bargain Schools Lost
TPP Elimination & the CAT Promise
In 2005, Ohio eliminated the property tax that businesses paid on their equipment and machinery. The state promised to replace that money for schools. It did — for a while. By 2019, the replacement payments stopped entirely. The gap left behind was filled by homeowners and farmers.
Before 2005, Ohio businesses paid a property tax on the equipment, machinery, and goods they owned (TPP). In 2005, HB 66 began phasing it out. By 2011, businesses paid zero. To replace the lost school funding, the state created the Commercial Activity Tax (CAT) and promised to pass some of that money to schools. But the replacement payments were phased out completely by 2019. The gap left by the eliminated business tax was picked up by homeowners and farmers.
2009–Present — A Smaller Prize Than Promised
Casino Taxes: $66 Per Student Per Year
A 2009 ballot measure promising casino tax revenue would transform school funding delivered roughly $66 per student annually — far short of the original projections.
Ohio voters approved four casinos in 2009 after being told that 34% of casino tax revenue would go to schools. By 2023–24, the average school district gets only about $66 per student per year from casino taxes — roughly the cost of one textbook — against operating costs. Policy Matters Ohio found that casino revenues fall far short of replacing what schools lost from earlier state tax policy changes.
2005–2025 — Two Decades of Rate Reduction
Income Tax Cuts: Who Benefited?
Over 20 years, Ohio repeatedly cut its state income tax. The result: the state brought in less revenue, paid less toward schools, and left more of the cost to local property taxpayers.
In 2005, Ohio cut income tax rates by 21% across the board. More cuts followed in nearly every state budget after that. The FY2024–25 budget set a flat income tax rate of 2.75% for most Ohioans. That lost revenue mostly benefited higher earners. From 2005 to 2025, state revenue growth lagged cost of living increases, pushing more of the school operating burden onto local levies.
2013 — A Quiet Change That Compounds Over Time
HB 5: The State Stopped Paying Its Share
Before 2013, the state of Ohio helped pay part of every homeowner's property tax bill through a subsidy called a "rollback." Starting in 2013, any new levy passed by voters permanently lost that state subsidy.
What the rollback was: Since the 1970s, the state of Ohio paid 12.5% of every homeowner's property tax bill directly to the school district. This was called the "10% rollback" plus the "2.5% owner-occupied credit."
What changed in 2013: HB 5 ended this state payment for any new or replacement levy passed after November 2013. Homeowners now pay 100% of every new dollar instead of 87.5%, slowly locking school districts into fixed-income traps.
2020–2025 — The Match That Lit the Fire
Housing Market Shock: Supply vs. Demand
A post-COVID housing surge drove property values to historically anomalous levels — exposing a structural flaw in HB 920 that left many homeowners with no protection from automatic tax increases.
After COVID, home prices across Ohio surged at a rate never seen before. HB 920 was built to handle slow, steady increases — not 30–35% jumps. For the 409 school districts below the 20-mill floor, that protection was already suspended, resulting in direct tax bill increases relative to local valuation spikes.
2025–2026 — The Legislative Response
HB 129, 186, 309 & 335: Relief for Homeowners, Pain for Schools
Four new laws signed in December 2025 limit how much school property tax revenue can grow, changing how tax floors are calculated.
In response to property tax bill surges, the Ohio legislature passed a major legislative adjustments package in late 2025. While seeking to offer immediate safety valves for agricultural and residential real estate portfolios, the structural compression introduces long-term operating limitations across base property metrics.
Looking Forward — The Path Ahead for Public Education
Structural Imbalances & Funding Realities
The permanent shift toward a localized funding model leaves districts heavily exposed to regional economic volatility.
As the structural changes from five decades of legislation solidify, the responsibility for sustainable K-12 operational budgets settles firmly onto local tax footprints. For districts like Liberty-Benton, tracking baseline valuation shifts against the legacy mechanics of older code platforms remains vital to educational program protection.
The Fiscal Reckoning: What This Means for Ohio Schools
Based on FY26 Spring Update Financial Forecasts filed by districts in Spring 2026 and LSC fiscal notes on HB 129, 186, and 335.
92%
of Ohio's 660 school districts projecting deficits by FY2029 (605 of 660 — ODEW FY26 Spring Forecasts)
219
districts projecting Fiscal Emergency — deficit exceeds 15% of annual revenue; state takes financial control
210
districts projecting Fiscal Watch — deficit is 8–15% of annual revenue; must file a recovery plan within 60 days
176
districts in Fiscal Caution — deficit is less than 8% of annual revenue; early warning status
55
districts with no projected deficit — just 8% of all 660 Ohio school districts
$2.5B
estimated revenue reduction over 3 years from HB 186, 335 & 129 combined (to schools & local govt)
FY2029 Projected Status — All 660 Ohio Districts
Source: fixohioschools.org, using ODEW FY26 Required Spring Update Forecasts & ORC Chapter 3316 thresholds. Pre-levy scenario — no new levies or additional state funding assumed.
How Much Revenue Do the 2025 Laws Reduce? (From Ohio Legislative Service Commission)
Law
What It Does
TY2026
TY2027
TY2028
HB 186
Caps revenue growth at inflation after reappraisal; takes back some 2023–24 reappraisal gains
$360M state offset
~$567M avg/yr ongoing
-
HB 335
Caps growth of the property tax that doesn't require a public vote
$135M
$248M
$378M
HB 129
Changes tax floor rules; moves ~237 districts to a position with less revenue protection
$162M
$223M
$224M
HB 309
Lets county officials reduce voter-approved tax rates
unknown
unknown
unknown
Combined Losses
Combined HB 335 + HB 129 losses to school districts
$297M
$471M
$602M
Ohio's Per-Pupil Spending vs. the Nation
Source: FY2022, Ohio Legislative Service Commission
Ohio ranked 22nd in the country for how much it spends per student (FY2022, Ohio Legislative Service Commission). But it ranks 45th in how much of that comes from the state — meaning local homeowners are filling the gap through property taxes, not the state.
⚠ Implementation Status — May 2026
The Ohio Department of Taxation has not yet released the figures needed to calculate the exact impact of the 2025 property tax laws on each school district. School finance expert Chris Mohr, MBA, RSBA, CGFM: "Uncertainty is the only certainty."
Where Does the Burden Go From Here?
Without changes to how Ohio funds public education, the cost will keep shifting onto residential property owners. Here are the forces driving that outcome.
🔄 The Levy Cycle Trap
Property tax revenue growth limits and rising costs put school districts on a "fixed income" — continuously seeking additional levies simply to maintain current service levels. The math points toward structural operating deficits for most districts within a decade.
🏫 Vouchers Draw From the Same Pool As Public Education
Ohio's EdChoice voucher programs cost $1.095 billion in FY2025 — drawn from the same state funding pool (foundation aid) that pays for public schools. As voucher costs grow, less state funding is available for public schools serving 88% of Ohio students, increasing their dependence on local property levies — and on homeowners.
⚠ Big Risk: Constitutional Amendment & HB 420
Two proposals currently moving in Ohio would not fix the property tax problem — they would eliminate property taxes entirely, with no plan to replace the money and no transition period for schools and local services that depend on it.
🔧 What Would Actually Help
There are practical steps the state could take to address the real problem:
Increase the state's share of school funding to at least the national average.
Allow schools to tax business income — Ohio school income taxes currently apply only to wages earned by residents, leaving out business profits, investment income, and rental income.
Expand the Homestead Exemption — the simplest, most targeted relief for homeowners with fixed incomes.
Detailed Legislative Timeline: 1971–2026
Every significant legislative event with sponsors, impact ratings, and structural changes.
1971
10% Non-Business Credit & Homestead Exemption Created
Sponsor/Authority: Gov. John Gilligan
residentialstate◆ Moderate Impact
1976
HB 920: Property Tax Limitation Act
Sponsor/Authority: Gov. James Rhodes
legislativeresidential▲ High Impact
2005
HB 66: Business 10% Rollback Repealed (Commercial Only)
Sponsor/Authority: Rep. Bill Harris; signed Gov. Bob Taft
businessresidential▲ High Impact
2013
HB 5: Rollbacks Eliminated for New & Replacement Levies
Sponsor/Authority: Gov. John Kasich
residentiallegislative▲ High Impact
2025
HB 186: 20-Mill Floor Inflationary Cap & Retroactive Clawbacks
Sponsor/Authority: Reps. David Thomas, Bill Roemer, and Jim Hoops; signed Gov. Mike DeWine, December 19, 2025
residentiallegislative▲ High Impact
2026
ODT Reappraisal Schedule Changed — Districts Lose One Year of Value Growth
Sponsor/Authority: Ohio Dept. of Taxation administrative action, announced January 15, 2026
legislativestate▲ High Impact
2026
Constitutional Amendment to Repeal Property Tax — Ballot Petition Underway
Citizen petition drive. Proponents state 2025 reforms are insufficient.