Tax break for elderly awaits Holden's OK

JEFFERSON CITY, Mo. -- For some elderly Missourians, the annual arrival of property tax bills can lead to worries about how long they will be able to afford to keep their homes.

Legislation awaiting the governor's signature, however, would afford property tax relief to senior citizens who find themselves unable to keep up with the ever-growing financial burden.

Loretta Schneider of Cape Girardeau, who heads the Southeast Missouri district of the Silver Haired Legislature, an advocacy group for the elderly, said new residential development often pushes up the value of nearby older homes. As a result, homeowners can find themselves hit with double-digit percentage growth in their tax bills, even when little or no improvement has been done to their property.

"People who have owned a home a long time want to stay in their home," said Schneider, 67. "New development shouldn't be such a detriment to homeowners" who may have their taxes raised, he said.

While many younger homeowners have the financial means to absorb higher taxes caused by property reassessment, that isn't always an option for the elderly, said Lorene Thomason, an 84-year-old Silver Haired Legislature member from Dexter.

"Older people basically have more illnesses and medical bills, and for most of them, their income is stationary," Thomason said. "For those people, they do need some help."

The Missouri Legislature passed the bill, dubbed the Missouri Homestead Preservation Act, two weeks ago, ending a decade-long effort to do so.

Unless a fatal flaw is uncovered during the customary process of reviewing the bill's language, spokeswoman Mary Still said Gov. Bob Holden will likely sign the measure into law.

"His intent is to support it," Still said.

Homeowners could apply with the Department of Revenue for a homestead exemption to cap the growth in their property tax bill due to reassessment at 5 percent, provided they meet the following criteria:

They pay real estate taxes on a home they occupy.

They are at least 65 years old and, if married, their spouse is at least 60 years old, or they are of any age and disabled.

Their federal adjusted gross income doesn't exceed $70,000 a year. (The means test would be increased annually for inflation.)

No home improvements have been done in the previous year that would account for growth in the home's appraised value exceeding 5 percent.

The homestead exemption would be credited to the property owner's tax liability the following year. Homeowners could begin applying for the exemption in April 2005, and if granted they would receive a credit on their 2006 property tax bill.

However, the exemption would only be made available if lawmakers annually appropriate the funding necessary to compensate local taxing jurisdictions for the lost revenue. In the first year, the exemption is expected to cost the state $1.4 million.

The bill's sponsor, state Sen. Chuck Gross, R-St. Charles, said he couldn't foresee the legislature failing to provide funding for the exemption considering the public uproar that would cause.

Gross said the bill will restore fairness and predictability to the system.

"Most people I talk to are not upset they have to pay more," Gross said. "They're upset that they are receiving huge increases far and above what is expected from year to year on property tax bills and putting them in a situation where they can't meet their budgetary needs."

The bill is SB 730.

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