Ohio Law Change Eliminates Replacement Levies, Reshaping Local Funding for Services

Ohio’s legislative override of House Bill 96, effective January 1, 2026, has eliminated the authority for political subdivisions, including townships, to seek replacement property-tax levies in elections. This significant change has already begun to narrow funding options for local governments, as evidenced by Copley Township’s recent efforts to finance its fire department’s capital needs.

Prior to this legislative action, Ohio townships could ask voters to replace existing levies, which would then collect taxes based on current property valuations, typically generating more revenue than a simple renewal. Copley Township officials, for instance, estimated that this mechanism could have provided an additional $1.7 million annually for its fire services, a crucial sum as the township faces substantial equipment costs.

This shift in Ohio’s tax landscape presents immediate challenges for small and mid-sized businesses, particularly those with significant property holdings or those operating in areas reliant on local services funded by property taxes. The inability of local governments to utilize replacement levies means they may increasingly turn to additional levies or seek higher millage rates on renewals to meet rising operational and capital expenses. This can lead to less predictable tax burdens for property owners, as new levies might be structured differently or come with varying durations. We’ve seen clients grapple with how these local funding shifts impact their long-term financial planning and operational budgets. Understanding the nuances of these changes and forecasting their potential impact on property tax liabilities is critical for maintaining fiscal health. C&S Finance Group LLC specializes in tax preparation and compliance, helping businesses navigate complex state and local tax regulations to ensure they are prepared for such legislative adjustments. Businesses looking to understand their exposure and strategize accordingly can reach out to C&S Finance Group LLC at csfinancegroup.com to get started.

Copley Township’s experience illustrates the immediate impact of this legislative change. The township’s fire department faces an estimated $4.2 million in scheduled capital spending from 2027 through 2032, according to minutes from a May 15 meeting. This includes plans for a $950,000 fire engine and a $1.9 million ladder truck, with the current ladder truck dating back to 1995 and requiring a replacement that could take three years to arrive after ordering. At the time the township began considering its funding options this spring, it had approximately $1.6 million reserved, leaving a substantial gap.

Without the option of a replacement levy, which would have allowed the township to capitalize on increased property values since the last levy was passed, Copley officials were left with fewer avenues to generate the necessary funds. Township records confirm that the law change removed a key option under discussion for financing the fire department’s needs. Consequently, Copley voters will now decide on November 3 whether to approve a three-year, 1.7-mill additional fire levy, a different mechanism that does not reset the tax base in the same way a replacement levy would have.

The legislative journey of this change involved a gubernatorial veto and subsequent override. Governor Mike DeWine vetoed the provision within House Bill 96 that eliminated replacement levies. However, the Ohio House voted to override the veto on July 21, 2025, with the Senate completing the override on October 1, 2025. This legislative action cemented the ban, with the Ohio Secretary of State’s advisory informing county boards of elections that replacement levies are no longer permitted for elections held on or after January 1, 2026.

The implications extend beyond Copley Township, affecting all political subdivisions in Ohio that rely on property tax levies to fund essential services like fire, police, and EMS. The inability to seek replacement levies means that local governments must now carefully consider alternative strategies for maintaining adequate funding levels, potentially leading to more frequent requests for additional levies or higher millage rates on renewals. This could create a more volatile environment for local property taxpayers, including businesses, as communities adapt to the new fiscal constraints.

Moving forward, businesses and property owners across Ohio should monitor how local jurisdictions adjust their funding strategies in response to this change. The outcome of Copley’s November 3 levy vote will offer an early indicator of how communities and voters are navigating these new financial realities, potentially setting a precedent for other townships facing similar funding challenges.