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New tax credit to benefit seniors

The bill bolsters existing property tax credits for seniors.
Thursday, June 2, 2005 | 12:00 a.m. CDT; updated 1:06 a.m. CST, Tuesday, February 24, 2009

 

The Homestead Preservation Act has been in the works since Sen. Chuck Gross, R-St. Charles, knocked on the door of an elderly man. Gross was canvassing a neighborhood, attempting to pinpoint the concerns of his constituents.

 

“Yes, there is something you can do for me,” the man said.

 

That was 1993.

 

After passage in 2004, the bill underwent a cleanup by the House of Representatives during the 2005 legislative session in response to the concerns of county assessors and local municipality lobbyists.

 

The Homestead Preservation Act provides credits for real estate property tax to qualified senior citizens, age 65 and older, and disabled individuals, provided their taxes increase more than 5 percent in an assessment year or 2.5 percent in a non-assessment year.

 

The legislation overlaps the Missouri Property Tax Program, better known as the “circuit breaker,” which allots tax breaks for individual senior citizens whose income is less than $25,000 and married couples whose household income is less than $27,000 per year.

 

The Homestead Preservation Act effectively extends the circuit breaker credit to senior citizens whose income does not exceed $70,000 per year.

 

Tom Schauwecker, Boone County assessor, said the Homestead Preservation Act does a good job of picking up where the circuit breaker left off.

 

Lois Shelton, executive director of the Boone County Council on Aging, said most of her agency’s clients are of the lower income bracket, making substantially less than the Homestead threshold and are already protected under the circuit breaker credit, she said.

 

“They had to draw the line somewhere, but what would you do about the little old lady who makes $26,000 a year?” Schauwecker said.

 

The Homestead Preservation Act provides a tax credit for senior citizens so long as adequate funding is provided in the budget. So far, the budget for the program is not in place.

 

Finding money in an ever-tightening budget could prove difficult.

 

“It’s all about priorities,” Gross said. “We have some programs that are going to get more funding and some that are going to get less.”

 

After the Department of Revenue calculates the total value of the credits statewide, the governor will make suggestions to the General Assembly on the budget’s available expenditures.

 

According to fiscal notes provided by the Committee on Legislative Research Oversight Division, total appropriations, including administrative costs and the tax credits, are estimated at $1.4 million for the 2005 fiscal year.

 

If the General Assembly cannot designate the full recommended amount, the credits will be pro-rated accordingly.

 

Martha Hicks, advocacy chairman for the Silver-Haired Legislature said they are not concerned with the state’s ability to fully fund the act.

 

“When you get right down to it, not many things are guaranteed down there in terms of the budget,” she said. “But where constituents are concerned, the legislature always comes through.”

 

The legislature is shielding the act, in case of inability to pay, with the county assessors as a first line of defense.

 

“As assessors, we don’t have any control,” said Shawn Ordway, president of the Missouri State Assessor Association and Cole County assessor. “But we’re the point of contact so we would bear the brunt of the backlash.”

 

Tension between local and state officials regarding the original act eased with the passage of a clean-up bill that shifted some of the burden back to the Department of Revenue.

 

Ordway said the total dollar impact of the credit will be less than people think.

 

“There would have to be a substantial tax increase and accordingly a substantial credit for this to make a large impact,” he said. “There is no actual loss in property tax revenue because the state is making it up with the appropriations.”

 

Funding for the tax credit resembles the Foundation Formula, which depends on the competition for the state’s resources. School districts and local municipalities also lobbied against the original bill, fearing loss of property tax revenue.

 

“Property taxes are primarily levied by the local municipalities and the state has no real interest,” Gross said. “Anything we did, they were concerned about the potential impact it might have on their revenue and funding stream.”

 

The Silver-Haired Legislature is working to carve out its own stake in property tax relief. The group is forming a grassroots effort to add property assessments as one of their priorities for the fall.

 

“Sen. Gross worked overtime getting this passed, but the first thing I tell people is it is not a cure-all for all of our ills,” Hicks said. “It is only a tiny step in the right direction, but at least we’ve got our foot in the door.”

 

Silver-Haired Legislature represents the needs of senior citizens and has an interest, Hicks said, in protecting seniors’ ability to stay in their homes.

 

“Older people who have built on the outskirts of town are especially susceptible to increasing property taxes when new development forces an increase in their property value,” Hicks said. “They can’t afford it, and they can’t afford to stay in their homes.”

 


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