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Billions more in investment from Google.

But is there enough electricity for that?

And high property tax bills have been coming in with the high temperatures to lawmakers.

Talk about possible solutions this weekend.

The state of Ohio welcome to the state of Ohio.

I'm Karen Kasler.

Google has announced another $2.3 billion investment in central Ohio in addition to the $4.4 billion the tech giant has invested in Ohio since 2019.

Three of Google's 17 data centers nationwide are in New Albany, Columbus and Lancaster.

But the state's biggest electric provider says project like these are huge energy draws.

So those tech companies need to have more skin in the game.

State House correspondent Sarah Donaldson has the story.

Central Ohio's becoming quite the hub for facilities like these, but they have the potential to put serious strain on the electric grid and other natural resources.

When a place gets some momentum, the momentum keeps coming.

And so there's a good combination of a talent pool here, an affordable business climate, affordable land.

And then it just kind of, builds on itself.

Google is just one of the big names with data centers that dot central Ohio.

But it wasn't the first, and it likely won't be the last.

According to tracking site Back Stoll, Columbus is the site of 71 data centers already across 31 tech firms.

Congressional and local leaders listen to the latest investment announcement in the middle of a week long heat wave Tuesday morning, in the shade of a tent with standalone air conditioners buzzing in the background.

Lieutenant Governor John Husted says the heat is just one reminder of the potential pressures the facilities can put on a region announced from Microsoft and AWS and meta.

They're all demand a lot of electricity, and they demand a lot of water for cooling, on days like this.

And so we have to have a balance.

The electricity demands alone are staggering.

We are literally in constant communications with AEP.

American Electric Power Ohio President Mark Reiter says e will double its peak demand in the state by 2028, largely due to data centers.

Because of that, it put a pause on any new contracts with possible projects more than a year ago to avoid damaging the electric grid.

We saw, where this was headed, and we did not want to, compromise the integrity of the grid.

Now it's proposing levying a tariff on the facilities, making them commit to paying 90% per month of the energy they say they'll use, even if they use less.

Ryder says that would cover the costs of constructing new extra high voltage transmission lines to accommodate them.

Trade association the Datacenter Coalition says it's still reviewing API's proposed plans.

But in a statement, a spokesperson said it has, quote, concerns with any utility proposal that singles out a specific industry, does not reflect a public or transparent stakeholder process, and could have a significant impact on data center and digital infrastructure investment.

In the meantime, interested tech firms have been signing on to a waitlist with AEP and it's long.

So in the context of New York City, with a peak demand of 12GW, we have nearly three New York cities, with interest, in central Ohio.

Google's announcement wasn't for new data centers, just investments in what already exists or is under construction.

And it was already under contract with AEP.

You know, Google's been here.

They're a great customer.

They have delivered on their commitments from a, energy requirement perspective.

And Google says it wants to be in on the discussion because if there's more energy, central Ohio grows more.

And, that's good for the community.

It's good for us, too.

So part of it is we just want to lean into the issue.

Houston says they have to.

The Public Utilities Commission of Ohio is currently considering the tariff proposal out of AEP.

Sara Donaldson, Statehouse News Bureau.

Property taxes are still a hot issue with the second half of the year bills coming due to House.

Republican lawmakers have proposed putting an amendment before voters to limit property tax increases to 4% per year.

Sponsors Scott Whigham and Beth Lehrer said it would work like a throttle on property tax increases, which they say have soared 30% in some areas.

Backers of the amendment say it isn't likely to come about this year because a supermajority of lawmakers would have to pass it by August 7th to put it before voters in November.

And it's just one of more than a dozen pieces of legislation that seek to deal with property taxes.

Introduced this session on expanding the homestead tax exemption, giving credits to certain lower and middle income property tax payers and renters, freezing the property tax for seniors, eliminating replacement school levies, and changing the lookback that's used to review property taxes to three years instead of one year.

a joint bipartisan committee created in the two year state budget has been hearing input on those bills.

And what led up to the situation, Ohio.

And now with a hot housing market, home values soaring, more levies on the ballot than in any other state, and the Ohio Association of Realtors, with a 2022 study showing 1 in 6 homes in Ohio, is selling to a corporation.

Republican Senator Bill blessing co-chairs that committee.

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 onto a fire.

And what I mean by that is the 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, 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, 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 agricultural taxpayers since 1975.

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

Then now at 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 agricultural 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 Siano had some comments on that.

What can be done?

But overall, what's happening is with these various, abatements, Community Reinvestment Act tips, 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 on to 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, an institutional 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, you know, abatements and exemptions and how they're impacting this.

So I, I'm hopeful that there's 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?

So.

Well, there's ways to get at that.

But, yeah.

So what's, what's going on is they will target certain neighborhoods.

They're 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, 40s, 50s and 60s, 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 3 or 4 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 Ahold 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 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 that should own that many homes because of the 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 LLCs 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 homeownership rates drop.

And what that means for Ohio.

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 valuation patterns 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 LSC didn't have the greatest answer in terms of what I would start putting 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.

Democrat Dan Troy was the House member who suggested a committee to look into property tax law changes in the previous General Assembly.

He's now on the committee.

His idea inspired.

I think we have to realize that, property taxes, unlike income taxes, which some of my colleagues have said, let's get rid of the state income tax.

we've had a graduated income tax in this country since 1913.

It's a fair method of taxation because if you make more money, you pay a little bit more.

If you don't make that much, you're not burdened as much.

Property taxes does not address that.

You can be property rich and income poor.

And so what we really need to do is kind of keep those those tax revenues coming in at the state level, but use a lot of those dollars to buy circuit breakers for people on their property tax, drastically increase the homestead exemption, help those people that have difficulty to pay.

And we can do that with state money, but we can't do it if we're just going to basically, jettison a lot of this state revenue.

I mean, so so I'm hopeful that we can, you know, look at that and say, let's, let's bring property tax relief and let's bring tax relief to those that really need it.

There are a couple of bills that would do some of that targeted tax relief or temporary quick relief in a way.

You've got house Bill 187 providing three years of property tax relief for seniors.

263 A property tax freeze for homeowners over 70 making under $70,000 in income.

The 70 under 70 plan, 270 for another homestead tax exemption for certain long term homeowners.

But Senator Bill blessing, who's the co-chair of this committee, which, by the way, this was your idea, this committee, he has said that, there might be a problem in making these short term changes when really long term issues need to be addressed.

And he's worried about the impact of these short term changes.

So how do you get quick relief for homeowners who are looking at their tax bills now and saying, I can't afford this or I'm concerned?

Well, I think and that was one of the purposes of the committee is, first of all, the first part of his education.

First of all, we have got to understand how this system works.

We need to educate ourselves, the public, as to how this system works and then figure out, you know, what is the fairest method to do that we should not do it piecemeal.

We should basically say that, you know, we're going to create a permanent, inflationary, increasing, circuit breaker for those people who are struggling and want to remain in their homes but really don't have the wherewithal to to, you know, address their property tax burden.

I think we can also impact on the spending side.

That property tax burden by the state may be picking up a little bit more and stop shifting more and more responsibility back to the local governments on some of these very important programs that are very contributory to what we consider a civilized society.

and also, maybe take a look at, as I've said before, and I co-chaired a commission about 12 years ago on local government reform and collaboration.

Maybe we need to look at some consolidation or some, streamlining of a lot of our local governments to say, let's not keep trying to fund the service model the way it exists today.

Maybe let's change the service model to reflect the realities of the fact that we just can't keep banging on people for more and more property taxes.

That's interesting, because that's an idea that, former Republican former Governor John Kasich talked about when he was cutting the local government fund is streamlining local government and consolidating services.

And here you're talking about.

Well, I just think it makes I mean, I'm, I'm, I consider myself a conservative Democrat.

But I've said that the problem with so many governments is that there's so much overhead in the government.

You gotta have a director, you gotta have a payroll person, you gotta have a legal counsel, you gotta have an office, you gotta have, H.R.

person and all that and all of that overhead is not getting any services to the citizens out there.

We need to maybe consolidate some of that overhead into more centralized approaches so that we can get more dollars out there on the front line to provide the services that the citizens really need.

The property tax burden has shifted dramatically away from businesses and commercial taxpayers to residential and agricultural taxpayers since 1975.

Then residential property made up 48% of the school's tax base, now at 72%.

That's a result of zero out the tangible personal property tax.

And, that's on businesses there.

Also exemptions like $9 billion worth of exemptions that, are offered by local governments.

The state often also offer some exemptions as well.

But Senator Blessing has said he's concerned about that.

But that seems to be the way that Republicans in particular have talked about keeping business here and bringing business here.

Other states have these incentives.

We have to do them, do well, as I said in this morning's, committee, we had a meeting.

I said, now let's go back to when enterprise zones were enterprise zones were Ronald Reagan standing in the middle of the South Bronx in the 1980 campaign, saying, we need some sort of government program that creates economic opportunity in an area like this that normally would not happen to, to allow economic opportunity for the citizens who live in an area like this.

And these things should really be be reined in so that they, they all have to meet the but for doctrine, but for the existence of this tax abatement, this economic development cannot happen.

I think right now, these things are these things should be used in extraordinary circumstances.

They are used across the board.

I mean, it's it's, you know, they're used in areas that really aren't struggling.

And so, so yes, we definitely have shifted so many property taxes are going to be paid.

But what has happened here is more and more of those property taxes have been shifted to the homeowners burden and less and less to the business concerns.

I mean, I think somebody said 21% of the business property in Ohio is exempt from property taxes.

And so I think we really need to and all of the county auditors that came in from around the state to testify, Democrats and Republicans, all said that is a significant problem.

The amount of money that is removed from our taxable base certainly requires us to be a little bit more, that, you know, demanding and on homeowner property taxes.

The upshot of all that is pretty much that taxpayers, more as more taxpayers are exempt, that makes a smaller pool of taxpayers who pay and therefore they're paying more.

Right?

Yeah, that that's the case with any taxation.

You know, I mean, it's like a win win.

I, you know, we're we're starting to what concerns me by getting rid of the state income tax and getting rid of the commercial activities, taxes.

I've been doing government for a long time, and I like the diversified revenue stream.

So I put all my eggs in one basket, and we start putting all our eggs in one basket.

You know, we're going to be very dependent on that.

So I think what what you have to do is you have to make sure that the, you know, the application of the taxation is uniform and as fair as possible.

I think that is I mean, nobody, nobody likes taxation, everybody hates taxation.

But unfortunately, if we want to provide the services that we consider essential to a civilized society, we're going to need some level of revenue to to do that.

And I think it's imperative for us to make sure that we do that as fairly as possible, and then we make sure the load is nobody's overburdened, but make sure nobody's under burden.

Senator Blessing has said one of the biggest problems here is that the housing market is out of whack, and housing needs to be dealt with in the property tax question.

There is just not enough supply to go around and that's driving up costs.

So how on earth do you fix that?

Especially if you're trying to do something fairly quickly?

Well, I think representing plastic fields, rising property values are going up is because we do have a shortage of housing and all that.

So I but I think you have to be careful, you know, sometimes when we have a shortage of housing, someone says, well, let's just create this huge community reinvestment area so that they'll build more houses because they'll be tax exempt for the next 15 or 30 years and stuff.

The problem with that is that, you'll hear all of the statistical data that says raise for every or every dollar in taxes that residential property pays.

It utilizes about $1.4, in, in services, government services.

So, you know, to give tax abatements for residential development, I don't think is a wise, situation because you're creating more demand on, on tax, spending entities, the schools, a lot of the other programs in that.

So I think that, you know, we just need to, you know, ensure that, you know, we can we can generate more affordable housing in the state of Ohio.

you know, and I think that's one of the problems.

I mean, there's quite a bit of housing going on, a development in my area.

But, you know, when someone you look at some of the prices there, they'll say is this, you know, is this really affordable housing?

So I think that's that's part of the issue.

but I don't think that's a solution.

And then if we, you know, if we really grow the housing market, it's going to take care of, property tax value because we, you know, we want people once you've made the mayor just a single investment you probably make in your lifetime and a new house you want, you want that investment to, to inflate and value and all that.

we just have to somehow say that, we ought to make sure that while we're that inflation is taking place, that somehow your property tax burden is protected or modified, so that, you're not paying commensurate with that increase in value.

Blessing tells me the finance staffers working on that committee have also been tied up with the $4 billion capital budget, likely the largest in state history, which should be voted out next week.

Blessing expects the committee to regroup with the goal of releasing recommendations in July or August.

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

Thanks for watching.

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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.

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The law offices of Porter, right, Morris and Arthur LLP.

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

More at porterwright.com.

Porter Wright inspired Every day in 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.