A second piggyback program the county could enact is a 2.5% owner occupancy credit, which Nolan said would be a much broader, smaller tax decrease that would reduce taxes by more than $9 million countywide.
The homestead exemption credit would cost $4.5 million, including $250,000 to the county and $4.25 million to all other local governments, mostly schools.
The credit is typically about $400 per home depending on taxing jurisdiction, which could become about $800 for qualifying homeowners.
“Usually in the past the credit is given by the state and then the state reimburses the local governments,” Nolan said. “What this does is says counties can decide whether they’re going to double it, however, we take that money from the local governments. They don’t get reimbursed.
Local governments funded through property taxes include counties, cities, villages and townships as well as schools and libraries. Montgomery County has chosen not to give property tax relief to homeowners, saying it would hurt organizations in the more metro county.
Locally funded relief?
“Effectively, we’re telling all the local governments in the county you’re giving a credit to these senior citizens so that their property taxes will be down,” Nolan said.
Thousands of homeowners in the county would qualify for the piggyback provision.
“It’s really significant to the individual that’s in that category but it’s not very significant to the local governments that’re going to lose this,” Commissioner Tom Grossmann said.
Some school districts would be hit harder than others if the commissioners were to enact a piggyback. For example, people who most qualify for the homestead exemption live in Carlisle and Franklin school districts, which already have funding issues, Nolan said.
“You’re taking from the poorer parts of the county but that’s also the people more in need so there’s two sides to that,” he said.
Out of concern for districts like Franklin, where disproportionate numbers of households qualify and the community has struggled to get revenue, Commissioner Shannon Jones said she wanted to know whether the county could reimburse local governments.
“I am very much in favor of looking for ways to reduce property taxes to the extent that we can, particularly for our senior citizens and lower income senior citizens. We want them to be able to stay in their property for as long as they are able to do so,” Jones said.
While most local governments can probably handle a small budget reduction, Commissioner David Young said that is not the case for schools that should not be treated the same as other governments.
Commissioners gave staff direction to research both piggyback options, plus to provide a breakdown of what the credit would mean to each jurisdiction. Nolan and the prosecutor’s office also will research whether the commission would be able to reimburse local governments from county coffers.
A decision would need to be made by mid-October, he said.
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