State Rep. Lonnie Sims is proposing a reasonable tax break for some of the state’s poorest residents.
Sims’ House Bill 1009 would raise the income limit for double homestead exemptions from $20,000 to $25,000.
The basic homestead exemption reduces assessed value on homes by $1,000 if the owner lives in their own home on Jan. 1.
Homeowners who qualify for the homestead exemption can get an additional $1,000 off their assessed value if the total household income is no more than $20,000 in the previous calendar year. It affects a small number of people, but those who get it, need it.
The limit hasn’t been raised since 1997, meaning some of the community’s poorest homeowners have lost a modest tax benefit to the corrosive effects of inflation.
Rep. Meloyde Blancett has proposed a second bit of property tax relief for the poor and elderly as a companion effort.
Responding to a constituent’s problem, Blancett has proposed excluding any one-time federal payments from the income qualifications for property tax relief, such as the senior valuation freeze and the double homestead exemption. In other words, COVID relief checks — which are meant to stimulate the economy — won’t push poor and elderly homeowners into higher property tax bills.
Blancett, a Democract, brought the idea to Sims, a Republican, who has been amenable about accepting it as an amendment when the House considers his bill. That’s bipartisan tax relief for people who need it.
The only argument against the Sims proposal is that it is likely to be an unfunded mandate on local governments, especially counties and public schools. The cost of the double homestead exemption is supposed to be picked up by the state Ad Valorem Reimbursement Fund, but the state hasn’t fulfilled that commitment since 2002, meaning the cost is born by local property tax-supported governments, mostly schools and county government.
But, frankly, the cost here is so insignificant to those governments, that it can be easily excused. A House staff analysis of HB 1009 estimates that the cost of lowering the income eligibility would be $131,000 for the entire state.
Schools and local government depend on property taxes, but no one would be so hard-hearted as to suggest that such modest tax relief is consequential to their school’s bottom line. On average, the double homestead exemption results in a savings ranging from $87 to $137 a year, Sims says.
The Legislature should fully fund the Ad Valorem Reimbursement Fund. Repeatedly failing to do so is robbing Peter to pay Paul, and Peter in this case are schools and county government.
But the unlikely nature of such a fiscal reform shouldn’t cause anyone to pause in approving HB 1009 or Blancett’s proposed amendment. In tandem, the two ideas are a bipartisan effort to help poor and elderly Oklahomans in a small but meaningful way and keep stimulus money from becoming a burden on people it is supposed to help.