Evidence before Expansion: Tax Credits Need Time to Implement

MACo Associate Director Barbara Zektick testified before the Senate Budget and Taxation Committee on February 7, 2018 in opposition to Senate Bill 427, “Property Tax Credit – Elderly Individuals and Veterans – Eligibility”.

This would expand a recently established property tax credit to all elderly individuals in a county over the age of 65 that have also lived there for 25 years. Currently, the credit only would apply to those over the age of 65 that have lived in the same house for at least 40 years. This is potentially a large expansion of the number of people eligible for the credit.

The four counties that have implemented the current optional property tax credit have received far more people making use of the credit than they had originally anticipated.

As counties seek to work out the impact in the reduction of property tax income, the effects of an expansion of that credit at this time could have further significant effects on the ability of many counties to adapt.

From MACo Testimony:

With more residents making use of the 2016 credit than initially anticipated, the
impact of the reduction in property tax income is still being explored by county governments. Expanding the credit eligibility further widens that gap – meaning counties would have an additional deficit of property taxes to contend with when they haven’t had time to adjust to the current higher-than-projected credit usage.

Further, it is unclear whether counties have authority to limit the applicability of their individual credits under this broader enabling authority. Even if they do, however, officials will most certainly receive pressure to expand their existing credits, regardless – which they simply do not have the means to accomplish at this juncture. Counties request that they receive more time to administer this credit as-is and analyze its impacts before broadly expanding the nature and scope of this tax credit.”

Follow MACo’s advocacy efforts during the 2018 legislative session here.