Ohio operating budget signed; includes homeownership savings program, CAT changes and other pro-real estate provisions
By Andrew Huffman, Ohio REALTORS Director of Government Affairs
Ohio Gov. Mike DeWine this week signed the state operating budget (HB 33), which marks the end of six months of negotiations among the House of Representatives, Senate, and Administration over the multi-billion-dollar spending package. Ohio’s two-year operating budget touches every facet of state government, from funding schools, providing healthcare, tax policies, and housing. The proposal appropriates approximately $190 billion in state and federal funding over the next two years and includes more than $3 billion in tax reductions as well as thousands of policy changes that will impact every Ohioan. Prior to signing the bill, Gov. DeWine vetoed 44 items.
After the budget was unveiled by Gov. DeWine in February, Ohio REALTORS worked with both the House and Senate on policies that would encourage homeownership, remove barriers to new housing construction, and develop tax policies aimed at protecting property owners. We are happy to report that the following provisions were included in the final version of HB 33:
- Homeownership Savings Linked Deposit Program – This would help homebuyers overcome financial barriers associated with purchasing a new home by allowing contributions to a savings account to be deducted from an individual’s state income taxes. Additionally, these accounts would earn above-market interest rates through a program provided by the State Treasurer’s Office.
- Right-To-List Home Sale Agreements – Language was added to the budget protecting Ohioans against long-term right-to-list home sale agreements, which lock homeowners into exclusive listing agreements in exchange for cash offerings.
- Funding New Housing Development –Ohio REALTORS supported the creation of three new programs to address the housing shortage by investing in new housing development. The State Affordable Housing Tax Credit Program, the Single-Family Housing Tax Credit Program, and the Welcome Home Ohio Program will provide over $200 million per year in funding for affordable housing projects in Ohio.
- Reducing Taxes on Small Businesses – This would exempt businesses with gross receipts under $3 million for calendar year 2024 and $6 million in calendar year 2025 from paying the Commercial Activities Tax (CAT).
- Protecting Housing Development Projects from Higher Taxes – A provision in the budget revises Ohio’s tax law to protect developers from higher taxes when they subdivide property for residential housing development.
- Removing Barriers for Housing Projects – The budget proposes to increase the threshold of signatures required to repeal township zoning plans. Currently, it takes signatures of just 8% of a township’s voters to challenge residential development projects on the ballot. The budget bill will increase this threshold.
- Defending the Ohio Housing Finance Agency (OHFA) – There was an effort to eliminate OHFA and transfer its authority to a different state agency. It was unknown how this transition would impact the services provided by OHFA and Ohio REALTORS, along with a large coalition, successfully pushed back against this change.
- Improving the Homestead Exemption – The budget will provide senior citizens and disabled Ohioans property tax relief by adjusting the homestead exemption for inflation each year.
While many positive provisions were included in the state operating budget, Ohio REALTORS will need to continue to work with policy makers on a provision added late in the process being called the “Save our Farmland and Protect our National Security Act.” This provision requires the Secretary of State to create a registry of individuals, businesses, and governments that constitute a threat to agricultural production and homeland security. It would prohibit any entity on this list from purchasing agricultural land in Ohio. The policy passed by the legislature also extended the prohibition to any real property located within 25 miles of a military base; however, that portion was vetoed by Gov. DeWine. Fortunately, the budget language does not appear to create any additional reporting requirements for REALTORS; however, we will need to work closely with the Secretary of State’s office as additional details about this new program are developed.
Additionally, Ohio REALTORS assisted in spearheading an amendment in the budget to lessen the potential increase in property taxes resulting from rising property values. The plan would have required the state tax commissioner and county auditors to use three years of sales data when determining property valuations as opposed to the most recent year’s data. The amendment would have lessened the spike in property values and thus provide relief from rising property taxes. Unfortunately, the amendment was not included in the final version of the budget and will be something we will need to continue to work on when legislators return this fall. To further examine Ohio’s property taxes, the budget did create a joint committee on property tax review and reform, which will be charged with examining Ohio’s property tax model and make recommendations on how it can be improved. The committee is required to issue its report by the end of 2024.
Another provision supported by Ohio REALTORS but that was removed from the budget would have prohibited municipalities from charging housing providers for rental registries. The provision received pushback from local governments, which is what led to its removal. We will continue to work with stakeholders to protect housing providers from exorbitant fees tied to rental registrations.
With the budget finalized, state lawmakers will recess for the rest of the summer and are expected to return in the fall to resume session. We anticipate a busy legislative schedule to close out 2023 as over 350 have already been introduced. Ohio REALTORS will continue advocating on behalf of its members to advance policies encouraging homeownership, protecting private property rights, and benefiting real estate professionals throughout Ohio.
A complete list of legislation we are monitory can be found here: Ohio REALTORS Legislative Report
