Ways & Means debates proposed homestead exemption, JFO says change would cost about $45 million more

The House Ways & Means Committee on Oct. 12 debated replacing the current Education Fund property tax credit with a homestead exemption, focusing on who would qualify, how much the exemption would cost and how to limit its reach.

Julia Richter of the Joint Fiscal Office told the committee that draft 1.1 of the proposal — which applies the income-based exemption to the full house-site value with no cap — would “cost $45,000,000 more than the current property tax credit.” She described a version that caps the exempted portion of house-site value (for example, the first $400,000) that would reduce the additional cost to about $35,000,000 above current law.

Committee members repeatedly framed the choice as a policy decision about trade-offs between simplicity and cost. Representative Felder said he preferred an exemption to the existing credit because an exemption is simpler to administer and to understand. Representative Tinker and others emphasized…