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The DeWine administration sends kids out to buy intoxicating hemp to show lawmakers the need to pass regulations on it.

And a committee formed to look into property tax reform has its first meeting just as some homeowners are getting big tax bills.

That's this week in the state of Ohio.

Welcome to the state of ohio.

I'm Karen Kasler.

Republicans in the house have so far not moved on changes to the state's voter approved recreational marijuana law, which went into effect last month.

While Governor Mike DeWine has been pushing for those changes, including suggesting the House passed them when they were in session last week to override his veto on a bill affecting trans youth.

He's come forward for a second time this month to say he wants rules on intoxicating hemp, also known as Delta THC, which is legal in Ohio.

DeWine showed off some Delta eight THC products bought by 215 year olds and listed by his Department of Public Safety director Andy Wilson.

DeWine says lawmakers need to pass rules quickly to stop sales of Delta eight gummies and other products that he says are targeted at kids.

We cannot local police cannot do anything.

I cannot do anything without action by the by the state legislature.

Senator Huffman I know, is working on a bill to regulate Delta eight.

There's been a question in the General Assembly as to whether or not this should be part of the marijuana bill or whether it should be a separate bill.

Candidly, I don't care.

I'm just asking the legislature to take to take action so that we can get these products off the shelves.

The bill from Republican Senator Steve Huffman, who is a doctor, would limit sales of Delta eight to Ohioans over 21 and make it available only at licensed dispensaries.

That's in addition to a Senate bill that would allow existing medical marijuana dispensaries to sell regulated products to non-medical customers within 90 days and would limit households to six plants.

That passed the Senate last month, but has not moved in the House.

The Ohio Supreme Court has unanimously ruled the state can freeze $8 billion in assets owned by Sam Randazzo, the former chair of the Public Utilities Commission, who's been indicted in the corruption scandal involving First Energy and Republican former House Speaker Larry Householder.

Randazzo transferred $4.8 million in properties in early 2021, not long after he resigned as PUC chair.

Days after the FBI raided his home.

First Energy admitted in a plea deal in 2021 that it paid Randazzo a $4.3 million bribe.

The Supreme Court said Randazzo got a hearing after his assets were frozen so he could not object to a decision to freeze his assets without a hearing.

Randazzo has pleaded not guilty in the case in federal court, and it's the end of the road for funny, punny one liners at some states, including Ohio.

I've been putting up on electronic signs on freeways.

Ohio has gotten attention for signs such as Life Is for Jill.

Drive Safe and visiting in-laws.

Slow down, Get there late.

But the Federal Highway Administration updated its manual, saying pop culture references or humor should be put in the rearview mirror and no longer used because some people might miss the point.

ODOT is taking new sign suggestions at zero deaths that Ohio dot gov.

A committee to look into changes to property tax laws was created by the state budget last year.

Last week it met for the first time and it comes at an opportune moment for homeowners who may be seeing their property tax bills coming in with huge increases.

There are several property tax related bills that have been proposed, but changing the law is complicated because of how property taxes are tied to school funding and other issues.

A critical element is House Bill 920, a 1976 law added to the state constitution in 1980.

House Bill 920, also called the millage rollback, was intended to protect homeowners from on voted tax increases.

It says if a property's value goes up, the percentage of tax on it goes down.

Freezing the dollar amount paid by homeowners so operating levies don't grow as property values increase.

While that's good for homeowners.

It means Ohio schools get the same amount of money and have to go to the ballot more often with levies.

The bills proposed this session include House Bill one, which would create a flat two and three quarter percent state income tax and make major property tax changes.

That's been stalled since last April.

Another House bill would provide property tax relief for seniors that's passed the Senate.

But there are big changes from the House version.

To get an overview of this complex issue and what the committee will be looking at.

I sat down with Republican co-chair Senator Bill Blessing.

A lot of dueling concerns here.

You've got homeowners are concerned about the value of their homes.

They're concerned about what they're paying.

They're concerned about what they're willing to increase that through levies.

Schools, of course, are concerned about whether they can pass levies.

If they don't, then cuts at schools can have an effect on homeowners values.

Then you've got businesses who are trying to avoid certain payments to do economic development.

How do you address all of these dueling concerns?

That's a lot of questions and one there.

So, I mean, just looking at what the actual problem is, you know, you have these reevaluation years and our biggest counties, for the most part, Franklins one of them, Hamilton's another, are going through that reappraisal process.

And, you know, for those looking at houses in the past couple of years, you know, certainly through the pandemic have noticed a skyrocketing, you know, housing market where housing has gotten much more expensive than it has in the past.

Much more quickly.

And because of that, the valuations which are supposed to reflect the true value of homes, you know, have gone up and consequently so property taxes.

But it's kind of a misnomer in the sense it's not even if your home's value went up by 40%, your taxes typically are not going to go up 40%.

You know, it's a combination of inside mills which will grow with inflation.

And as well as, you know, if you happen to be in a in a school district that is on the 20 mill floor, that will impact it.

But there are a number of proposals out there in the general Assembly.

House Bill 187, which was a three year average.

That then became a modified homestead exemption bill.

There's a 70 under 70 bill in the House.

I can't remember the number for that.

That's true, 63 to 63.

There's other proposals as well.

But I think those are the ones that are trying to address this issue.

So trying to address an immediate concern, though, there are many long term concerns that probably need to be looked at.

And that's what the committee that you're part of is going to try to do, though you have a timeline here that you're trying to work within.

What is that timeline?

So referring to the property tax valuation committee, whatever, I can't remember the official name.

It probably will have its work wrapped up somewhere between March and June.

The idea is that it would do a deep dive in the property taxation system overall.

When you talk about House Bill 187, which was to provide some property tax relief for seniors, there have been some changes made.

Schools would not be reimbursed except up to about half of that value that's going to be saved by seniors.

Is that correct?

For 187 as introduced or.

As as it is right now?

So as it is right now, Yes.

So the way it is right now, that homestead exemption currently is currently constituted.

The state funds 100% of that.

The state would still continue funding 100% of that, but this modified part of it so increasing it from 25 to 35000, as well as expanding it to, you know, the middle class, but scaled down, of course, to 75,000, that would be a 5050 reimbursement.

So the locals would do half the state would do half.

The reason for that was because of the skyrocketing valuations.

A lot of the school districts and local governments over time stand to do quite well with the amount of revenue that comes in.

So the thought was to do some sort of sharing of the burden, if you will.

On House Bill 187.

That one's kind of sitting out there.

Are there differences between the House and Senate on how that should proceed?

Absolutely.

I think the House would like to continue with the three year evaluation average, which was the original thrust of the bill.

The Senate.

I don't want to speak for the Senate generally, though we did, I think, get that out unanimous or close to it.

Obviously, we like the homestead exemption.

You know, we passed it that way.

But there are senators who would like to see the three year valuation average.

So really it is between at this point Huffman and Stevens and, you know, the inner circle and what comes out of conference committee.

So that what's wrong with the three year average?

I mean, what would happen if that would go forward?

And then certainly longer term, that money would eventually come back into play?

Sure.

So it gets down to the matter of what what got us here and what are we going to do to solve the problem.

And I kind of feel like the three year average is sort of, you know, putting gasoline on to a fire.

And what I mean by that is the real problem here is, yes, taxes are high because valuations are high, valuations are high because home prices truly are high.

So what you want to do is ensure that the housing market doesn't continue to rage.

And in fact, it would be nice to see home prices and rents actually fall, which by extension over time valuations and then property taxes would then fall.

The reason that the two things that can be done in order to do that are increasing the housing supply because we've had an under build since the great financial recession as well as going after the institutional housing investors.

And I think between those two things, that would be the best remedy.

Long term, short term, doing that.

Homestead exemption targets low and middle income seniors on fixed income who are truly the most vulnerable populations with respect to inflation.

The reason why the three year valuation average isn't that great of an idea is in the sense that it reduces valuations.

And because of that, every everybody's property taxes will then go down.

But what happens is, is when you have a fixed amount of housing, really like in the moment, you have more and more money now chasing the same housing stock.

It's just going to inflate housing prices.

And then after three years, when that three year valuation average legislation runs out, because remember, it's temporary.

You've made the problem worse and then boom, you've just jumped back up the true value.

And I think that is a major problem.

The property tax burden has shifted dramatically away from business and commercial taxpayers and onto residential and agriculture tax payers since 1975.

Residential property made up 48% of the school's tax base then.

Now it's 72%.

That's a result of a lot of different factors here.

But essentially this has been good for businesses but bad for homeowners and agriculture property owners.

Absolutely.

And that, I think, is is the the result of not just the state, but I think the locals are involved with this, too.

And, you know, I apologize.

It just came out this morning.

Jim Weicker had an article about this, the number of, you know, how abatements are impacting Franklin County.

I think Franklin County Auditor Michael Stone Zino had some comments on that.

What can be done?

But overall, what's happening is with these various abatements, Community Reinvestment Act, you name it, it's reducing the property tax base and schools, counties, local political subdivisions.

You know, they need X amount of money.

You know, if that pie is shrinking, the rate that they have to levy to get the amount of money that they need has to go up.

So what's happening is the property tax burden is shifting onto those folks who haven't gotten abatements.

And that is another major problem as to why property taxes are so high.

And we I'm hopeful that that property tax committee will address that because again, that's the other issue outside of, you know, the housing supply and social housing investor issue.

Because certainly tax abatements are local tax abatements, but they are authorized by state law and Republican lawmakers have been okay with tax abatements on businesses.

They've updated the laws recently even.

Yes.

And I think that they are going to have to take another look at that.

And it's encouraging with that committee.

You know, myself, Representative Tom Young was also concerned about the abatements and exemptions and how they're impacting this.

So I'm hopeful that there is that there's a shift in thinking with respect to the amount of exemptions and whatnot that are doled out at the state level.

And I certainly know that that's the case at the local level as well.

And to put a number on that, the state says $9.2 billion was exempt from taxation because of abatements offered by local governments, which are authorized by state law.

I want to ask you about the institutional investors that you mentioned this.

There are a lot of companies, entities that are buying up what is essentially limited housing stock and how is that affecting what's happening in terms of value and what can you even do about that?

I mean, you can't stop them from buying, can you?

Well, there's ways to get at that.

But yeah, so what's what's going on is they will target certain neighborhoods that are typically lower income neighborhoods as the so-called or maybe not even that what you would normally think of as like starter homes at one at one time, like the small, you know, Cape Cods or ranches and whatnot that were built, you know, forties, fifties and sixties after World War Two.

And, you know, folks in the housing community that try to defend them will say, well, there's such a small percentage overall, you know, in the state, well, you know, past three or four years, 20% or more of the purchases have been by these institutional entities.

In addition, the neighborhoods that they target, they targeted target them heavily and they will, you know, outbid anybody that they can trying to get a hold of these properties.

And as you can imagine, that massive demand in that concentrated area jacks up the the prices of homes in that area and consequently the valuations.

And actually, now that I think about it, that would spill over into, you know, if you happen to be a senior in that community, your valuations are going to go up because of that activity.

Now, there are a number of things that, you know, I have pushed to try to get at these guys, whether it's Senate Bill 76, which sought to, you know, basically say, look, you can only own 50 homes in a in a single county.

And if you do beyond that, there's a tax on that such that it would force you then to start selling these these homes.

The idea was it was sort of an antitrust in spirit, Bill, that nobody should own that many entities or should own that many homes because of the ill effects that it has on its political economy.

And it also shed some light on, you know, how they operate, You know, with 90 plus LLC, and nobody can really get an idea who owns what.

But I think, you know, going forward, you know, this is going to be an issue that I think the General Assembly is going to have to deal with at some point as they start seeing home ownership rates drop and what that means for a while.

You referenced this earlier and this gets to specifically what schools are dealing with here.

The committee is going to look at the 20 mill floor, which is really complicated for people to understand.

But basically it would restrict the revenue growth for districts that are at the floor.

And about half of those districts are poor districts.

So won't this just mean more levies that they will have trouble, if not very, very difficult, almost impossible to pass?

So if we lowered the floor, yes, I think that would be very problematic.

I don't think there's any will in the legislature for that.

And you know, the reason that a lot of these districts are on the floor is because of these rising valuations that have dropped the effective millage down to that 20 mills.

And the reason that that 20 mill floor was in place is because of the school funding formula.

There was the thinking that it needs to be sort of shared between, you know, local and state.

You got to pitch in, some will pitch in some as well.

And when it comes to what you can do with things like the 20 mill floor and Phantom revenue and all these things, House Bill 920, all of these things that are part of the discussion on school funding and property taxes, are you limited on what can be done by the Constitution?

And is there a possibility that you're going to have to amend the Constitution to do some of the things you want to do?

No question that then that exact question was asked in committee about that.

And, you know, I think it was Sam Benham with Lacy didn't have the greatest answer in terms of what would start boarding up against the Constitution and what wouldn't.

But but no, you're absolutely right.

And as you can imagine, trying to do something, you know, legislatively at the same time that you're doing it, you know, you're putting something on the ballot to be put into the Constitution is a tremendously high bar.

And if we were going to do something like that, it would have to have broad bipartisan support, not just in the General Assembly, but amongst Ohioans generally.

But, you know, the thing is, with all of this, that six years ago nobody was really talking about this sort of thing.

And it just goes to show you that only because of, you know, sort of the housing market issues and then this being downstream from that that we're hearing about it today.

So I really question the need to do really major changes in this, even though it's complicated.

That may be, but it does tend to work.

It's just because of the housing market that we're in.

The situation that we are.

And I think a lot of the focus has been on homeowners.

And what they're paying is they're seeing these big property tax bills come forward.

But you've suggested that schools are really losing here potentially twice, not only because there's a funding formula that makes them look wealthy than they are in some respects, but also levies and the difficulty that some districts have in passing levies.

Yeah, so that's that.

So I don't have I asked Lacy for some research on that because I, I don't know to what extent there may be, you know, property tax exemptions that, you know, were somehow not included in the school funding formula.

What that means the school funding formula will look at how wealthy a district is, not just income, but also, you know, your property valuation.

But if you're if there's an exemption that somehow being given.

But is not included in that the district is seen as wealthier than they otherwise would be.

So what happens is, is then the state doesn't give them as much money because they're wealthier.

But by the way, you're not going to get that local money either because that exemption is in place.

And if that sort of thing exists, we definitely need to rectify that.

But I don't know that that's going to be that like it's going to be that big.

Because if it were, I mean, I'd like to think the schools would be screaming at us at this point.

So with your committee trying to wrap up work somewhere between March and June, I mean, we're halfway through January right now.

So is is that a timeline that makes sense?

And what are the goals that you're trying to reach anyway?

So I think, you know, at least for me, I can't speak for I think the committee generally, the thought was to do a deeper dive and property taxation and see where, you know, we could get some consensus on some fixes.

For me, it is to sort of shed light on the issues that brought us here, which again, were we're housing the property tax base, erosion, things like that.

That long term put us on a healthier trajectory.

Is there agreement among the members of the committee that you're on about what the goals are and what the timeline is, what you're trying to put together that will come forward later this year?

Yeah, I think there's there's some consensus, but not a lot.

And or they might have different approaches to accomplish the same thing.

But I mean, that's to be a that's to be expected to some degree with, you know, different political parties on the committee as well as different philosophies within each political party.

But again, I think I think members are trying to keep an open mind as to, okay, let's hear everybody out.

See what we can work on and then where that leads us going forward.

Bottom line for homeowners, is there relief coming?

Are there changes coming in the next few months or is this just going to be a long term process where there's going to be a lot of talking about it, but nothing much changes?

Now, there could be I mean, to do a broad based, you know, property tax cut here, I think would actually exacerbate the problem, as I had mentioned before.

So I think if we were going to do anything, we were trying to target it towards, you know, low and middle income seniors.

Again, they're the the most vulnerable.

But one of the reasons that we decided not to do the three year average is because it through the valuation process into complete disarray, wasn't just the Franklin County auditor that complained about that.

But, you know, the Warren County auditor as well.

So there was, you know, bipartisan opposition to that.

With respect to the auditors throughout the state.

I'm just thinking of school funding and how many years we talked about school funding being unconstitutional.

It took how long for the Patterson bill to come forward and become this fair school funding formula.

And I mean, it takes a long time to deal with these complex issues.

That's right.

And that's actually another issue with respect to school funding that, you know, you talk to some of the the gurus of school funding like like a mike Sobel, for example.

You know, that formula that works does run into problems when you have skyrocketing valuations.

So when you think of the school funding for the best way to think of it is you have the base cost which largely is composed of teacher salaries and then you have the local capacity amount which is subtracted off of that, and that is based on how wealthy a district is.

Well, if your base cost is relatively fixed and yet your local capacity amount is rising because it's composed, 60% of which is composed of property valuation, it's rising.

And I think it's actually starting to push more districts into the guarantee.

So, I mean, this problem isn't just affecting, you know, homeowners and what they're paying on their property taxes.

It's greatly impacting, you know, the school funding formula.

So there's there's there's a lot at stake here for us to get this right.

So far, there's no website for the committee and no date for its next meeting.

And that is it for this week for my colleagues at the Statehouse News Bureau of Ohio Public Radio and Television.

Thanks for watching.

Please check out our Web site at state News dot org or find us online by searching the state of Ohio show.

And please join us again next time for the state of Ohio.

Support for the statehouse news bureau comes from medical mutual dedicated to the health and well-being of Ohioans offering health insurance plans as well as dental vision and wellness programs to help people achieve their goals and remain healthy.

More at Med Mutual Rt.com.

The Law offices of Porter Wright Morrison, Arthur LLP.

Porter Wright is dedicated to bringing inspired legal outcomes to the Ohio business community.

More at Porter Wright Rt.com Porter Wright inspired every day.

The Ohio Education Association, representing 120,000 educators who are united in their mission to create the excellent public schools.

Every child deserves more at OHEA.org.