Not too long ago, Missouri legislators were clamoring to provide relief to elderly homeowners from rapidly rising property taxes.
Then the housing bubble burst, home values fell in some areas, and so did state revenues. Lawmakers allowed the expiration of a state program that had helped offset local property tax hikes for some seniors and disabled residents.
With the economy again improving, some Missouri lawmakers now want to revive that property tax break. But this time, their proposals are being met with indifference – even opposition– from some of their colleagues.
“It’s bad policy – the idea that the state government is going to subsidize a local government because their property taxes are too high,” said Sen. Brad Lager, R-Savannah.
Lager’s opposition to this year’s property tax proposals is particularly notable because he voted to enact the same tax breaks in 2004, when he served in the House. His evolving view of property tax issues reveals how time, term limits and the recent recession have changed the political dynamics at the Missouri Capitol.
Of the 186 Missouri lawmakers who voted to overwhelmingly pass the 2004 property-tax-relief legislation, just 15 remain in the Legislature. Term limits have forced many of the rest to leave.
That means few lawmakers remember the news conferences featuring seniors struggling to pay rising property tax bills, or the impassioned debates about whether the property tax relief should be given to seniors with low, middle or higher incomes. Some of the newer lawmakers may not even know that the program existed, because it expired before they arrived.
But even for those familiar with the program, the passage of time and the Great Recession’s hard hit to state revenues have changed beliefs on what the state can and should do with its limited resources. The property tax relief program is one of just several initiatives that no longer exist.
“It’s not in the budget now, and I haven’t seen any movement toward that,” said Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia.
As originally passed in 2004, the Missouri Homestead Preservation Act essentially capped increases in residential property taxes for older and disabled Missourians at 5 percent after reassessments, which occur every other year, and at 2.5 percent in non-assessment years. People with annual incomes of up to $70,000 were eligible. But practically, it applied primarily to the middle-class, because a separate tax credit already existed for individuals with incomes below $25,000, and homeowners couldn’t claim both.
To avoid hurting schools and local governments that depend on property taxes, the legislation required the state to pay the costs of the property tax rebate for seniors and disabled homeowners whose taxes rose by more than the limit.
The bill included an automatic expiration date for the state program after six years.
From the 2007-2011 fiscal years, Missouri budgeted a total of $7.5 million for the program, with the annual payments never exceeding the nearly $3 million allotted in the initial year. In the 2009 fiscal year, the state budgeted just $91,089 for the property tax rebates.
This past week, the Senate Ways and Means Committee heard testimony on legislation seeking to revive the property tax rebates starting in 2015. The sponsoring senators said restoring a cap on property tax increases would prevent retired and disabled residents from being essentially taxed out of their own homes as property values rise in their neighborhoods.
“Being able to live in one’s home – and live in the area where people have developed a community around them – is very, very important for people who are moving into their graying years,” said St. Louis resident Judith Parker, of the Missouri Alliance for Retired Americans.
No lawmakers disagreed with that general notion. But no vote was taken, and the legislation didn’t appear to gain much traction among committee members.
The committee chairman, Sen. Will Kraus, said afterward that if seniors have concerns about rising property taxes, there are ways to address that without tapping into state revenues. He said local governments could adopt their own property tax caps for seniors, or a measure could be referred to the ballot asking voters whether to approve a property tax break for older homeowners.
“The property tax is a local tax. So why is the state eating the cost? That’s my question and concern,” said Kraus, R-Lee’s Summit.
A decade ago, Missouri lawmakers decided that large increases in local property taxes were, in fact, a state concern. But the lawmakers have changed. Many have literally been exchanged for new lawmakers. Others have simply changed their minds.