Proposed Addition to Homestead Tax Credit Would Negate the Program

MACo Associate Director Barbara Zektick testified in opposition to House Bill 1445, “Homestead Property Tax Credit – Calculation of Credit for Dwelling Purchased by First-Time Homeowner”, before the House Ways and Means Committee on March 6, 2018.

This bill would add first-time homebuyers to property tax savings under the Homestead credit and phase out the savings over five years.

The Homestead credit acts essentially as a cap on assessments of an owner-occupied space to manage the increase in property taxes. The inclusion of all first-time homebuyers, including those from out-of-state, would burn an estimated $85 million hole in county budgets. Additionally, it would stop counties from expanding the already existing credit and hurt general services provided by the counties because of the deep fiscal impact.

From MACo Testimony:

MACo opposes this bill because it compromises the basic nature of the Homestead Property Tax Credit, and threatens a severe fiscal impact to county budgets. The Homestead Property Tax Credit acts to essentially cap assessments of owner-occupied residences, so that a resident’s tax bill does not increase too substantially over the prior year. It provides consistency for taxpayers who live in and own their homes. Nearly every county has exercised their authority to lower their caps, providing security to homeowners beyond that which is required by the State.

MACo understands that the sponsor of HB 1445 is considering requesting an amendment to this bill to provide a county option to enable this expansion. However, it deserves noting that no county has expressed interest in implementing this. This is because it undermines the purpose of the credit’s inception, and because the extent and unpredictable nature of its fiscal impact are so substantial. Even as an option, this bill would run contrary to the program’s basic goals.

HB 1445 subverts the main policy goal of this longstanding and successful homeowner program.”

For more on this and other legislation, follow MACo’s advocacy efforts during the 2018 legislative session here.