Kenton mayors hear concerns about legislature's proposals to adjust Homestead Exemption Act

Posted on February 20, 2024

By Patricia A. Scheyer
NKYTribune reporter
February 20th, 2024

Kenton County Mayors met Saturday to compare notes on events happening in their cities, with the ADD district, SD1, TBNK, and at least one state legislator joining in to keep the mayors aware of events outside the box of the cities.

A few mayors acceded their speaking time to Ft Wright’s mayor Dave Hatter, who wanted to explain what the state has in mind for ‘improving’ the Homestead Exemption Act, which has been around since 1972, and the consequences that holds for cities.

“Right now there are three, possibly four bills out there that will make structural changes in the Homestead Act,” Hatter stated. “At our last council meeting, at the last minute, we passed a resolution opposing any structural changes to the Homestead Exemption.”

He told the mayors that currently the Exemption Act takes about $33 million from the value of the homes in the city of Ft Wright. That amounts to approximately $77,000 that is not in the city coffers to pay for city services such as fire/EMS, police, public works, and road repair.

When the Exemption Act first was enacted, the amount that a person could deduct from the taxable value of his or her house, due to the homeowner being disabled, was $6,500. Through the years, the government has increased the amount every two years to account for inflation. The amount that a disabled person can deduct from their house this year is $43,650.

The bills that are under consideration in the house and the senate this legislative session are all attempting to change the terms of the Homestead Exemption act.

HB 61 would consider the first $250,000 of the value of the house, and reduce the value 50 percent of that $250,000. Hatter had a spread sheet constructed spelling out, first of all, the current state of Homestead Exemption Act on the city’s finances, and then the effect that the changes from HB 61 would have on the finances.

The $77,000 that the act currently takes from the city budget would raise to $160,000.

“We have enough in the bank that we could take that increase, and go on without raising taxes,” Mayor Hatter stated. “But as prices continue to go up, we would eventually have to look at raising taxes, because city services are not free. You can only raise city taxes 4 percent without a possible recall, and that doesn’t give the city much extra money.”

He was concerned that other cities who do not have as much money in the bank could withstand the year over year increase from the change in Homestead exemption terms.

HB 111 and SB 23 would remove the original $6,500 amount, which is the basis for the inflation hikes through the years, and give the authority of how much to deduct from the value of the home to the General Assembly, a decision which would make it very difficult to insert a legitimate number into the spreadsheet for the budget.

According to Hatter’s spreadsheet, if the general assembly decided to deduct an extra 10 percent, that would mean an additional taxable loss of over $53,000 and if the General Assembly set the rate at 20 percent, that would subtract an additional taxable rate of over $131,000.

“Already at tax time we don’t get the property values until after we set our tax rates,” said Hatter. “If we add the unknown factor of guessing what rate the General Assembly will decide on, that is just more factor that we can’t determine.”

Another bill under consideration would freeze the value of the disabled person’s home, when the owner reaches the age of 65, which would stop any future rise in the value of their property, again decreasing the taxable value for the city.

“I am not sure what the General Assembly wants to accomplish with these bills,” Hatter mused. “It could be they want to reduce costs for elderly, disabled people. But the bottom line is, city services aren’t free. If a faction of people don’t pay for those services, the rest of the city’s population has to pay for it.”

At the meeting, Hatter recommended that the other mayors take a look at the bills under consideration and then take a look at the spread sheet he sent to them. He told them to substitute their numbers for the numbers of the city of Ft Wright in the spreadsheet and see how their cities will be affected by the bills. If they will be adversely affected, he thought they might consider a resolution similar to the one passed by Ft Wright Council asking the legislature to not make any structural changes to the Homestead Exemption Act.


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