Your Taxes and the Homestead Exemption Change – The Real Story
You may have heard some Scarborough town officials promoting the $5,000 increase in the “Homestead Exemption” in Fiscal 2021 as a property tax reducing miracle. Not so fast!
They are trying to make you believe that a $74 tax reduction for some homeowners should be considered as an excuse to increase school and town spending – rather than to provide the property tax relief the State intended it to be.
Quick Background on the Homestead Exemption
If you currently have the Homestead Exemption, it reduces the assessed value of your home by $20,000 for town property tax purposes. The State picks up that amount (roughly $300 per home) and sends it to the town each year. The exemption amount is scheduled to go to $25,000 in Fiscal 2021. That change will mean that affected homeowners will receive an approximate additional $74 reduction in property taxes next year, with the State reimbursing the town for it.
The Sleight of Hand
Some town officials are using this $74 State-funded tax reduction for eligible homeowners as an excuse for keeping the increased town and school budgets on a business-as-usual basis. If you get the exemption benefit, they want you to think of it as offsetting part of the continuing increases in the town and school budgets. It’s a bit like: “the State giveth and the town taketh away.”
Facts about the Homestead Exemption in Scarborough
Here are the reasons we disagree with this “now you see it, now you don’t” presentation of the tax impact of the Fiscal 2021 budget:
A note of caution
The State’s Homestead Exemption increase was approved before the COVID-19 pandemic – when the State’s finances were much healthier than they are now. As you probably know, the State is now facing revenue shortfalls of hundreds of millions of dollars due to reduced income, sales and other taxes.
In the current circumstances, having the State giving away millions of dollars on an increased Homestead Exemption makes no financial sense. If our State legislators were fiscally responsible, they would cancel, or at least delay, this change. But so far that has not happened… and the State is on course to give away millions of dollars it does not have through the increased exemption.
In summary
The bottom line… Fiscal 2021 needs to be the year of a ZERO % tax rate increase for all Scarborough taxpayers. And let’s make it real simple: keep the Fiscal 2020 tax rate of $14.70/$1,000 of assessed value unchanged at $14.70 for Fiscal 2021. That way everyone gets no increase and those who get the Homestead Exemption will get the tax relief benefit envisioned by the State.
You may have heard some Scarborough town officials promoting the $5,000 increase in the “Homestead Exemption” in Fiscal 2021 as a property tax reducing miracle. Not so fast!
They are trying to make you believe that a $74 tax reduction for some homeowners should be considered as an excuse to increase school and town spending – rather than to provide the property tax relief the State intended it to be.
Quick Background on the Homestead Exemption
If you currently have the Homestead Exemption, it reduces the assessed value of your home by $20,000 for town property tax purposes. The State picks up that amount (roughly $300 per home) and sends it to the town each year. The exemption amount is scheduled to go to $25,000 in Fiscal 2021. That change will mean that affected homeowners will receive an approximate additional $74 reduction in property taxes next year, with the State reimbursing the town for it.
The Sleight of Hand
Some town officials are using this $74 State-funded tax reduction for eligible homeowners as an excuse for keeping the increased town and school budgets on a business-as-usual basis. If you get the exemption benefit, they want you to think of it as offsetting part of the continuing increases in the town and school budgets. It’s a bit like: “the State giveth and the town taketh away.”
Facts about the Homestead Exemption in Scarborough
Here are the reasons we disagree with this “now you see it, now you don’t” presentation of the tax impact of the Fiscal 2021 budget:
- Many homeowners don’t get the Homestead Exemption. In fact, 40% of residential properties do not receive the exemption. Among the reasons: You don’t qualify for the exemption if you haven’t lived in your home for more than a year. And non-resident homeowners are not eligible for the exemption. This includes many long-time summer residents who pay full taxes and receive very little in town and school services.
- In the past, the town has never considered the Homestead Exemption when calculating and presenting the tax impact of budget increases. It has always presented – appropriately – the mil rate change. That’s the tax rate everybody pays for town and school services. Why are we changing the presentation method now to include the Homestead Exemption?
- Every homeowner should get a ZERO % total tax increase. The only way to achieve that is by having a ZERO % increase in the tax rate.
- If you are receiving the Homestead Exemption, your taxes should go down by $74 from what they otherwise would have been. So if we achieve a ZERO % tax rate increase, your tax bill should be $74 less than this year’s. That’s why it’s called tax relief! And that’s how the State intended it.
A note of caution
The State’s Homestead Exemption increase was approved before the COVID-19 pandemic – when the State’s finances were much healthier than they are now. As you probably know, the State is now facing revenue shortfalls of hundreds of millions of dollars due to reduced income, sales and other taxes.
In the current circumstances, having the State giving away millions of dollars on an increased Homestead Exemption makes no financial sense. If our State legislators were fiscally responsible, they would cancel, or at least delay, this change. But so far that has not happened… and the State is on course to give away millions of dollars it does not have through the increased exemption.
In summary
The bottom line… Fiscal 2021 needs to be the year of a ZERO % tax rate increase for all Scarborough taxpayers. And let’s make it real simple: keep the Fiscal 2020 tax rate of $14.70/$1,000 of assessed value unchanged at $14.70 for Fiscal 2021. That way everyone gets no increase and those who get the Homestead Exemption will get the tax relief benefit envisioned by the State.