OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
S.B. 308 Bill Analysis
135th General Assembly
Click here for S.B. 308’s Fiscal Note
Version: As Introduced
Primary Sponsor: Sen. O’Brien
Effective date:
Mackenzie Damon, Attorney
SUMMARY
▪ Requires that emergency and substitute tax levies be included in the calculation of a
school district’s 20-mill floor for property tax purposes.
▪ Prohibits a school district from shifting the purpose of its unvoted property tax millage in
a way that would increase the district’s tax revenue.
DETAILED ANALYSIS
The bill modifies two components of the property tax law. First, the bill changes the
calculation of the 20-mill floor that guarantees school districts a certain level of property tax
revenue. Second, the bill prohibits a school district from shifting the purpose of its unvoted
millage in a way that would increase the district’s property tax revenue.
Changes to school district 20-mill floor
Continuing property tax law applies a “tax reduction factor” to real property, with the
goal of preventing property taxes from increasing at the same rate as property values. Basically,
each year when property values increase, property tax collections are adjusted downward so that
taxing districts receive the same amount of revenue they received in the previous year. These
reductions are converted to an “effective tax rate.”
The tax reduction factor, under the Ohio Constitution, cannot apply to unvoted, or
“inside” millage, or certain other types of operating levies, like fixed-sum levies, i.e., levies
intended to raise a fixed amount of revenue each year.1 Examples of the most common
voter-approved fixed-sum levies include two that may be levied by school districts − emergency
and substitute levies. Emergency levies allow a school district to collect a fixed amount of money
1 Ohio Constitution, Article XII, Section 2a; R.C. 319.301.
November 12, 2024
Office of Research and Drafting LSC Legislative Budget Office
every year. Substitute levies collect a fixed sum in their first year, and then collect increasingly
more in each later year based on the district’s increased valuation due to new construction and
improvements.
There are some exceptions to the tax reduction factor – one of which is the 20-mill floor,
which guarantees that a school district’s effective tax rate for operating expense levies cannot
fall below 20 mills. Instead, the tax reduction factor can only reduce a school district’s operating
levy collections to 20 mills – once that “floor” is reached in a school district, the reduction factor
cannot reduce effective rates any further. Consequently, any growth in property tax values will
produce a corresponding increase in taxes from those 20 mills. If property values increase 35%
in a school district that is “on” the 20-mill floor, homeowners will generally see a larger tax
increase than in other districts that are not on the 20-mill floor. The tax increase will very likely
be less than 35%, since the tax reduction factor will still apply to other local tax levies (e.g., county
and township levies), but since school district levies typically make up a majority of a
homeowner’s property taxes, the 20-mill floor will have a significant impact.
Under continuing law, a similar 2-mill floor applies to joint vocational school districts
(JVSDs).
The bill
Under current law, the calculation of a school district’s 20-mill floor includes only inside
millage used for operating expenses and voted, fixed-rate operating expense levies. Fixed-sum
levies are not included in the calculation, even if the revenue from those levies is used for
operating expenses.
The bill requires that emergency and substitute levies be included in the 20-mill floor
calculation. These levies will continue to be excluded from the tax reduction factors, since that
mechanism cannot reduce the amount of money raised from such levies. The effect of the
change, for school districts that currently levy an emergency or substitute levy, is to increase the
total millage that is compared to the 20-mill floor. If the district was previously on the floor, the
new calculation may push the district above the floor, with the result that the district will not see
full revenue growth from its voted levies that are affected by the tax reduction factor until the
district falls back to the 20-mill floor.2
JVSDs are also authorized to levy an emergency or substitute levy, even though it appears
that currently none of them do. Regardless, the bill also includes any emergency or substitute
levies in the computation of a JVSD’s 2-mill floor.
Under the bill, three other types of less common fixed-sum school district levies continue
to be excluded from the computation of the 20-mill floor:
▪ A growth levy, which collects a fixed amount in its first year, and then an additional
percentage or amount of revenue in each following year.
2 R.C. 319.301.
P a g e |2 S.B. 308
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
▪ A property tax that collects a fixed amount each year, levied in combination with a school
district income tax.
▪ A conversion levy, which may no longer be submitted to voters after 2014, though existing
levies may be renewed. This levy allowed school districts above the 20-mill floor to repeal
and re-levy their taxes in excess of the floor as a single fixed-sum levy, with the express
purpose of dropping the district onto the 20-mill floor.
The bill’s millage floor changes apply to tax years beginning on and after the bill’s 90-day
effective date.3
Inside millage changes
Under the Ohio Constitution, property taxes must generally be approved by voters, with
certain exceptions. One of these exceptions is that taxing authorities may, collectively, levy
unvoted property taxes that do not exceed 1% (10 mills) of a property’s true value.4 Typically
referred to as inside millage, these taxes may be levied for one or more of several purposes,
including operating expenses, debt, and certain special purposes.5
The bill prohibits a school district from changing the purpose of its inside millage in any
way that would increase its real property tax revenue. This effect could be achieved if a district
specifies that its inside millage currently used for operating expenses (and, therefore, included
in the district’s 20-mill floor) will instead be used for permanent improvements (and,
consequently, excluded from the floor). As a result, the district would experience revenue growth
both from its other 20-mill floor levies and from the inside permanent improvement millage.6
Under current law, if a school district proposes any change in its inside millage usage that
would increase taxes levied by the district, the district must hold the public hearing on the
proposed change. The bill maintains this requirement for an inside millage change, other than a
change in the levy’s purpose, that would result in a property tax revenue increase. This meeting
requirement would, for example, still apply to a situation in which the district is proposing to levy
an increased rate of inside millage.
The bill’s prohibition applies to inside millage authorized for tax years beginning on and
after the bill’s 90-day effective date.7
3 Section 3(A).
4Ohio Constitution, Article XII, Section 2.
5 R.C. 5705.04, 5705.05, and 5705.06.
6 R.C. 5705.314.
7 Section 3(B).
P a g e |3 S.B. 308
As Introduced
Office of Research and Drafting LSC Legislative Budget Office
HISTORY
Action Date
Introduced 08-13-24
ANSB0308IN-135/ts
P a g e |4 S.B. 308
As Introduced


Statutes affected:
As Introduced: 319.301, 5705.314