A not-so-funny thing happened last week in the O’Bannon Administration’s desperate attempt to find some money for the State Budget. Officials were plowing desperately through various accounts and funds to determine if there were any accounting inaccuracies or other mistakes that might reveal that some extra money existed. You’ll never guess what they found.

In a stunning announcement, the Governor declared that, for the past 16 years, the State had been overpaying property tax relief to homeowners. You see, each of us homeowners is entitled to a homestead credit. The state, up until last year, provided an 8% credit to each of us. That means our property taxes were reduced by 8%, and the State reimburses local government for their loss of revenue (property taxes are a purely local source of revenue). Last year, that credit was increased to 20%, to begin with this year’s property tax bills, as part of the overall restructuring of state taxes by the Legislature. It was to be paid for by the 1% increase in the State sales tax.

Well, the Governor’s people found that there had been an accounting error for many years, and that homeowner’s had been getting too much of a tax break since 1986. As a result, the Governor has announced that the State would begin reducing Homestead credit reimbursements to local government by 4-6%, starting immediately.

What will be the result? Well, property tax bills will have to be recalculated by local government, because this loss of state payments to them will result in a property tax payment from all of us. And when bills finally reach the mailboxes, homeowners will find that their property taxes have increased by 4-6%! This totally undermines the property tax relief that last year’s restructuring sought to achieve. Further, it puts additional strain on homeowners at a time when the economy is hurting, and families have had to tighten their belts to make ends meet.

Meanwhile, the State will earn an additional $287 million dollars! So, is there any hope that homeowners can avoid this new hit to their pocketbooks? Perhaps. Many House and Senate Republicans, myself included, want the State to acknowledge that the level of property tax relief provided over all these years via the Homestead credit has become a part of the tax code. By writing a new law, this “additional” homestead credit will become permanent, and that $287 million dollars would stay in homeowner’s pockets, where it belongs. After all, the State has gone through nine state budgets with the belief that the Homestead credit was just right. Local governments have made the credit a part of their budgets, and so have homeowners. To change this now, just to avoid some tough decisions with the State Budget (which need to be made) is simply wrong.

Look for a loud and cantankerous fight over this issue. The Governor and many House Democrats are bent upon taking this money back from homeowners to use for the State budget. Those of us who believe the homeowner is paying enough property taxes will have an uphill battle ahead of us. Wish us well, and keep a firm grip on your wallet!

The Waynedale News Staff
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