County auditors review complexity of system for property tax study panel

Hannah News Service 

Lawmakers reviewing Ohio’s property tax system spent nearly two hours quizzing county auditors about the ins and outs of reappraisals, Board of Revision (BOR) challenges, abatements and exemptions and potential reforms during a hearing Jan. 24. 

County auditors and the Board of Tax Appeals (BTA) presented a detailed overview Jan. 24 of the processes for administering property taxes in Ohio to the Joint Committee on Property Tax Review and Reform, created in the biennial budget, HB33 (Edwards). The hearing lasted about three hours in total. 

Testifying on behalf of the County Auditors Association of Ohio (CAAO) were Union County Auditor Andrea Weaver, Franklin County Auditor Michael Stinziano, Cuyahoga County Board of Revision Administrator Ronald O’Leary, and Athens County Auditor Jill Davidson. Testifying for the BTA was Executive Director Kathleen Crowley. 

Sen. Louis Blessing (R-Cincinnati), co-chair of the committee, lauded Davidson for her summation of the effects of tax expenditures in the property tax system: “Local government services come with associated costs, and a larger tax base translates to a lighter burden on each property owner. However, the continuous expansion and augmentation of various exemptions mean that fewer individuals are contributing to the same services, resulting in a higher cost for each of them.” 

“Amen,” said Blessing after reading her testimony back to her.  

Blessing asked the auditors for suggestions to ease the administration of their duties. 

“What are some of the obstacles that make your job more difficult, and how can the state help?” Blessing asked. 

Davidson spoke in favor of greater simplicity, and also asked the General Assembly to be mindful of the effects of deadlines and timelines that are outside auditors’ control – like the need to wait for a local board of elections to certify levy results before auditors can submit abstracts. 

“I do believe if the Department of Taxation was better funded, better staffed, it would make our jobs easier,” said Weaver. 

Blessing also asked the auditors their thoughts on addressing “dropdown LLCs” – situations in which a property changes hands via the sale of an LLC that owns the property, which avoids conveyance fees and also leaves auditors without accessible sales data to use in valuations. 

Sen. George Lang (R-West Chester), however, said putting property into an LLC can subject the property to other types of taxes. 

Stinziano said the lack of sales data makes it more difficult for auditors to do their jobs; the law is silent as to these scenarios, so it would be helpful for lawmakers to provide clarity, he said. 

O’Leary said a new mortgage being taken out on a property is often the “red flag” that alerts auditors that one of these LLC transfers has taken place. 

Rep. Bride Sweeney (D-Cleveland) asked if lawmakers should be looking at targeted relief for people who will potentially be driven from their homes because of property tax hikes, or changes to the entire property tax structure. 

Davidson said it’s likely a combination of both, but said generally auditors do not want lawmakers to compromise the valuation process. “I don’t believe we have a valuation problem,” she said. 

Stinziano’s testimony laid out how the just completed mass reappraisal -- done every six years, with a triennial update three years into that cycle -- affects property tax bills. For Class I properties – residential and agricultural – the total value change in Franklin County was more than 39 percent, but the total tax increase was 6.1 percent. Circumstances vary widely by property owner, though, he said. The average increase from tax year 2022 to tax year 2023 for owner-occupied property was $306, “a meaningful but manageable change over the year with a $25 per month impact.” However, about 12 percent of homes saw their tax bills increase at least $1,000, while 27 percent saw increases from $500 to $1,000. But, 26 percent of homes saw a decrease in tax bills. 

Blessing cautioned against pursuing any kind of broad property tax relief without first boosting the supply of housing. 

“I think it’s important to note that would actually make things, at least in my mind, significantly worse, and it would be at the expense of local governments, absent housing reform and a marked increase in supply,” Blessing said. “What has been left unsaid is that it will be a boon for investors and corporate landlords … a bunch more money would be dumped into a system with a relatively fixed supply of housing, which means real estate prices will go up, which is the exact thing that got us into this situation.” 

Rep. Bill Roemer (R-Richfield), the other committee co-chair, asked about the level of Board of Revisions complaints seen recently, saying he’s heard contrasting reports of unusual highs and lows from different counties. 

O’Leary said last year saw one of the lowest number of filings, which he attributed to a strong property market. Even if people don’t like the higher tax bill, they are confident in their ability to sell for a higher price, he said. 

O’Leary also said the number of BOR filings modulates based on the reappraisal cycle; immediately after the most recent six-year mass reappraisal, the county saw about 14,000 filings, whereas last year there were fewer than 1,300. 

Rep. Tracy Richardson (R-Marysville) asked how often BOR complaints seeking a reduction lead to an increase rather than a decrease in tax liability. O’Leary said it’s fairly rare in his county. Weaver said it happens when the BOR process turns up additional information about the property, noting she employs licensed real estate agents who have access to listing service data. 

“People will build a barn and not tell us,” Weaver said. “Oh, by the way, they have a fully finished basement they haven’t told the county auditor about.” 

Rep. Dan Troy (D-Willowick) asked about the wisdom of having the auditor sit on the BOR, given the office’s role in determining the values being challenged. “We want you to second-guess your own opinion,” he said. 

Weaver said her role on the BOR is to “gently educate” the taxpayer. 

“I’m the only one that knows anything. Seriously, the other two [officials] are very siloed in what they do in county government. I know how that value was reached. I know the techniques that were used,” she said.  

Weaver added that sitting on the BOR gives her and her staff the ability to engage with taxpayers on whether the county has the right characteristics listed for a given property, since they do not inspect the interior of properties. 

“It’s more of a conversation, and we rarely ever make a decision in front of the taxpayer. We need to digest what was shared in the hearing,” Weaver said. 

Rep. Tom Young (R-Centerville) asked about fraud in applications for the homestead exemption, and whether county auditors should be held accountable for that. 

Roemer asked Crowley the relationship between the county BOR caseload and the BTA caseload. Crowley said she would expect a drop in BOR cases to be reflected in the BTA caseload, but cautioned that is not necessarily a true reflection of the workload. Filers are becoming “more litigious,” she said, with more extensive motion practice and use of discovery, making cases more time-intensive. 

Weaver said her office double- and triple-checks applications, but she has advocated for the state to take on the job of researching applicants’ eligibility since it is a state-created credit. Weaver said her office does not check for applicants’ ownership of properties in other counties unless they have a specific reason to do so. 

“Do I believe the auditor’s personally responsible for an oversight? No.” Weaver said. 

“We don’t have access to other folks’ books,” added Davidson, noting some who try to game the system will keep properties under different names, making it difficult to catch the fraud. 

O’Leary said in his experience people improperly claiming the owner-occupied tax reduction is a larger problem than fraud in the homestead exemption. 

Troy got contrasting answers when he asked if county budget commissions should have greater power to reduce levies for jurisdictions sitting on large reserves. Weaver said she believes commissions already have that power, but Davidson said she’s been told her county budget commission lacks that power, and she suggested lawmakers clarify that section of state law. 

Troy asked Crowley for suggestions on how lawmakers could help the BTA with its work; she said the BTA relies heavily on its expert attorney examiners, so having a higher budget for staff costs would be helpful, she said.