A little-publicized change in the state budget passed last month means homeowners who turn 65 next year won’t get a break on their property taxes unless they prove they earn than less $30,000 a year.
The Homestead Program, which had been in effect since 2008, exempted the first $25,000 in taxable value on the homes of residents 65 and older and the disabled regardless of income.
The new rules are part of the House Bill 59 “omnibus amendment” to the state budget approved by the House-Senate conference committee and signed by Gov. John Kasich on June 30.
Medina County Auditor Michael E. Kovack said about 14,000 property owners now are enrolled in the program. He estimated the average savings to be between $390 and $490 a year, depending on which school district the home is in.
The change won’t affect those already in the program. And they will continue to get the tax break even if they move to another home.
But property owners who turn 65 after Jan. 1, 2014, will have to prove they meet the less-than-$30,000- per-year “means test” in order to qualify.
Kovackk said those who turn 65 before the end of this year can qualify under the old rules, but they must apply by June 2, 2014.
The new rules will be seen in the tax bills that go out in 2015.
Supporters of the changes argued that adding a means test to the Homestead Exemption only returns it to what it was originally designed to do — help low-income seniors — when it was created in 1971. It wasn’t expanded to all seniors until 2008, during the administration of Democratic Gov. Ted Strickland.
Kovack, a Democrat, criticized the new rules, noting that the change in the Homestead Exemption Program is one of two provisions in H.B. 59 that will increase property taxes for homeowners.
The new budget also eliminates the 12.5 percent property tax rollback for all new and replacement levies.
Members of the GOP’s House and Senate Majority Caucus have said the changes are part of a needed “shift towards a consumption-based tax structure and away form our current income tax structure, which penalizes success.”
Kasich argued the changes will make it harder to pass school levies because property owners will have to pay more to make up for the loss of the rollback, Kovack said. Under the old rules, the state paid the difference.
The overall effect of the changes is to make schools and local government more dependent on property taxes, Kovack said.
“They are pushing the tax burden down to the local level,” he said. “They are cutting local government funding. Every township village and city got hammered.”
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