Veteran’s Exemption Change Would Offer Relief for Local Governments

Posted on December 12, 2018 by Dene Westbrook

Following months of advocacy and committee discussion, the House Tax Policy committee reported two bills this morning that would shift the cost burden for the disabled veteran property tax exemption from local governments to the state.

During this morning’s hearing, two new versions of House Bills 4985 and 4986 were offered by the bill sponsor, Rep Dave Maturen (R-Vicksburg) and approved overwhelmingly by the committee.  The substitute H-2 versions for each bill change the benefit from a local property tax exemption to a 100% refundable component of the state’s Homestead Property Tax Credit program.  In an effort to address arguments from veteran groups about cashflow and timing concerns related to paying the tax locally and being refunded by the state, the new language allows the veteran to defer their local property tax payment and have the state pay the eligible Homestead Property Tax Credit directly to the local unit of government to cover the cost of the property tax levy.

In addition to this shift of costs over to the state program, the proposal also expands the existing veteran benefit by allowing a disabled veteran to now qualify for up to 23% of their gross rent paid, a benefit that is not provided under the current local property tax exemption program.

The state has an existing infrastructure within the Homestead credit program, so assuming this function should be relatively straightforward for the Department to implement.  It is estimated that the proposal will restore between $20 and $25 million dollars to local units of government from lost property tax revenue.

These bills are now on the House floor awaiting further action.  In order to have a chance at sending the bills to the Governor before the end of this year, the House would need to take action tomorrow (Thursday) to send the bills to the Senate.  League members are urged to contact their State Representative and ask for their support of this critical reform.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].

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