Poor homeowners victims of state’s poor taxing system

THE STRUGGLE SOME low-income homeowners are having paying their tax bills is a result of the state’s failure to live up to its obligation to fund our schools.

The State’s Shelley Hill recently reported that low-income homeowners worry they might not be able to keep their homes because of rising taxes. Habitat for Humanity and other agencies are concerned they might not be able to continue providing affordable housing.

Low-income homeowners, whose salaries rise little from year to year, have seen monthly mortgage payments increase to cover property taxes; recent increases in their homes’ values could lead to even higher taxes next year.

Sandra Cochran is one of the homeowners highlighted in Ms. Hill’s report. Ms. Cochran moved into a Habitat home in Arthurtown in 1995. Recently, Habitat recalculated Ms. Cochran’s monthly mortgage payment in order to cover the increase in this year’s property taxes. Her monthly payment is increasing 19 percent.

She also received notice from the county that the value of her home had gone from $37,300 in 2001 to $47,500. Her fall tax bill will be based on the new value, which rose 27 percent.

Of course, all property owners are experiencing the same problem. It’s just that when one is barely able to afford a modest home to begin with, such increases become critical. And it is in the interests of society to help people be able to afford to be homeowners.

Counties must reassess the value of homes every five years. The idea is to fairly distribute the tax burden. Counties cannot use a new assessment to reap a windfall. But those whose property value increased are likely to pay more in taxes next year.

Property values are not the only thing driving increases. The key driver is school funding, which makes up 50 percent or more of property taxes. The pressure on homeowners mounts as the state fails to properly fund schools. Counties and districts have no choice other than to tax property owners more heavily.

Homeowners also are feeling the pinch as counties struggle to replace dollars lost due to a reduction in the assessment of vehicles and the property tax relief act of 1995. The state once fully reimbursed counties for rolling back school operations costs on the first $100,000 of assessed value on homes. But the state has frozen the amount it sends back to some counties, while still requiring the same rollback.

We are not suggesting low-income homeowners should not pay taxes; they should. Part of being a homeowner means people must assume responsibility and pay taxes: But it makes no sense to help low-income residents become homeowners only to expose them to a system that taxes them extraordinarily, forcing them to lose their piece of the American dream.

An exemption aimed at low-income homeowners would fix this problem. But that would only further complicate a bad system. Our state and local tax code is littered with exemptions, some well-intended, others meant to pacify certain groups.

We must protect residents overall against sudden spikes in taxes following reassessment. To do that, we need comprehensive tax reform. The resulting system should enable the state to properly fund schools and ease the burden on local property taxpayers, including low-income homeowners.