News from the State
The new Homestead Exemption program took effect as a part of HB 119 on July 2nd. Seniors over the age of 65 and the disabled have until October 1st to sign up with their county auditor’s office. The new law exempts $25,000 of a home’s value from being taxed. This law will greatly help the seniors and disabled in your area, and they should be encouraged to participate. Here, two lawmakers discuss the homestead exemption.
Position By Lorraine Fende, State Representative (D-62nd District)
For far too long, the state of Ohio has asked seniors and the disabled to support local schools and essential services through property taxes. Governor Ted Strickland laid out an ambition plan to give those Ohioans deserved tax relief, and it gives me great pleasure to say that we have achieved that goal.
One of the truly groundbreaking elements in Governor Strickland’s two-year state budget was a dramatic reduction in the property tax burden on all of Ohio’s senior citizens, while preventing costs from shifting to local governments and schools. The application process is now open on this program that amounts to a tax cut for one in every four Ohio homeowners.
I strongly supported the Governor and his tax cut for every senior citizen in Ohio. By dramatically simplifying and increasing the value of the Homestead Exemption that’s been on the books for 36 years, we have made property tax relief available to 500,000 additional senior citizens.
On average, senior citizen homeowners will save $406 per year, thereby lowering their property tax bills by an average of 24 percent annually.
In addition, local governments will continue to be reimbursed for any revenue losses, as they are under the current Homestead Exemption. That’s good public policy, plain and simple.
The Governor’s plan earned broad bipartisan support when it initially passed both chambers unanimously – a phenomenon not seen in Ohio in decades. When the final vote was taken at the end of June, 129 of 130 voting General Assembly members said “yes.”
Though the Homestead Exemption proposal remained unchanged throughout the budget process, some legislative leaders had suggested “means-testing” the tax relief measure (by annual income) in order to determine what level of tax relief would be provided to seniors. Better sense won out, however, as that position was set aside in favor of the historic tax relief we now enjoy.
The Governor’s idea is a progressive tax cut – even without means testing. By allowing any senior citizen (regardless of income) to exempt the first $25,000 of the market value of their home from property taxes, a new and improved Homestead Exemption produces the most dramatic results for seniors living on fixed incomes.
This reality is best illustrated by the following example. Let’s assume that a retired homemaker in Cleveland owns a $50,000 home and has applied for the improved Homestead Exemption. Under the new program, she would see her tax bill cut in half. Under this same plan, a second homemaker who owns a million-dollar mansion in Bay Village would save only two-and-a-half percent on her property tax bill. If this is not a progressive tax cut, I don’t know what is!
The only factor that should be used to determine how much of seniors’ property tax burden is actually relieved by a tax cut is the value of the property being taxed, not the wages earned by a senior citizen throughout the course of a year. The plan enacted by the General Assembly earlier this summer makes this important distinction.
In addition to decreasing public schools’ reliance on the personal property tax, the new and improved Homestead Exemption also affords senior and disabled homeowners a significant savings - which will hopefully prevent them from having to make the tough decision between purchasing food and medicine.
The new Homestead Exemption is open to any Ohio homeowner who lives in a home that he or she lists as a primary residence, and is also:
• AT LEAST 65 YEARS OLD OR TURNING 65 THIS YEAR
• CERTIFIED PERMANENTLY AND TOTALLY DISABLED
AS OF JANUARY 1, 2007
• THE SURVIVING SPOUSE OF A QUALIFIED HOMEOWNER WHO
WAS AT LEAST 59 YEARS OLD WHEN THEIR SPOUSE DIED.
To receive this tax relief for 2008, newly-eligible Ohioans must fill out an application by October 1st. Homeowners who already receive the Homestead Exemption need not re-apply.
We have now given meaningful tax relief to Ohio’s seniors and disabled. We can be proud that we gave people on a fixed income this once-in-a-lifetime chance to get ahead.
There are three ways to apply for the newly-expanded Homestead Exemption:
1. Contact your local county auditor’s office (you can find the number in the blue government pages of your local phone book)
OR
2. Call the Ohio Department of Taxation for information at 1.800.282.1780
OR
3. Download the application by logging onto tax.ohio.gov and clicking on “Homestead Exemption.”
Position By Tom Patton, State Representative (R-18th District)
According to the Unites States Census Bureau, there are currently 1.4 million senior citizens living in Ohio. This number is expected to increase dramatically in the coming years, both in Ohio and across the nation. Many of these seniors live on fixed incomes, and with the increasing costs of medical care, some are forced to choose between paying their bills and purchasing the medications they need to stay healthy.
Members of the Ohio House of Representatives recently further assisted seniors by providing them with meaningful property tax relief through a homestead exemption. The homestead exemption was included in House Bill 119, the budget for the state of Ohio. This proposal would exempt the first $25,000 of a home’s value from local property taxes and would be available to all Ohioans age 65 years and older as well as those individuals who are disabled.
According to the Department of Taxation, the homestead exemption would apply to 775,000 homeowners, with each saving an average of more than $400 a year. Local governments, school districts and other entities that are supported by local property taxes would be reimbursed by the state, ensuring they are able to continue to provide valuable services to their communities.
I was pleased to join with my colleagues in offering this tax cut to our seniors. During the last General Assembly, I sponsored legislation that would have frozen property taxes on homes owned by Ohioans age 65 or older and prevented any future increases. Our seniors are important members of our neighborhoods, and measures that seek to reduce their tax burden allow them to live in their own homes longer, where they can be closer to their families and friends while remaining active in the community.
In order to pay for the homestead exemption, the governor has proposed securitizing Ohio’s remaining tobacco settlement funds. These funds are the result of an agreement between 45 states and the major tobacco companies, under which Ohio received approximately $10 billion to be paid over a 20-year period. By securitizing the remaining funds, Ohio will sell its rights to the revenue from these payments for a lump sum of approximately $5 billion. Out of that money, $2.2 billion would be used to continue school facilities projects throughout the state and the remaining $2.8 billion would be used to pay off other types of debt. The yearly savings that will result from not paying on the debt will be used to fund the homestead exemption.
During discussions on the budget, members of the House included a provision that requires the director of the Office of Budget and Management to certify to the governor and legislative leaders that appropriate money is available to the state to pay for the homestead exemption. By taking this action, we assisted elderly and disabled Ohioans living on fixed incomes while remaining fiscally responsible.
Ohio’s senior citizen population will continue to grow in the coming years, and we must start thinking now about how we can address the increased needs of these residents. Proposals such as the homestead exemption are a good first step in relieving the tax burden on our older residents. Members of the Ohio House will continue to work to make our state a great place for these residents to call home.
I welcome your thoughts and opinions on any of the matters we discuss here at the Statehouse. Please feel free to contact me at (614) 466-4895, by e-mail at district18@ohr.state.oh.us or by writing State Representative Tom Patton, 77 South High Street, District 18, Columbus, OH 43215. NEO
