"Where's the beef?"

That's what many recipients of the newly revised homestead tax exemption thought when they examined their real estate tax bills in January.

Almost thirty thousand property owners in Montgomery County enrolled in the homestead exemption program last summer after the state dropped the income eligibility requirement.  The popular program provides tax relief to senior and disabled homeowners, and the savings was projected to be four hundred dollars or more per year.

But when first half tax bills arrived many of the new homestead program participants discovered their taxes reduced by only two or three hundred dollars or less compared to last year, prompting them to feel cheated and misled.

Those property owners enrolled in the homestead program did receive the credit to their tax bills as promised.  In fact, the average savings in Montgomery County this year for the homestead exemption is $517.

The actual reduction in the amount of taxes charged compared to the previous year was quite less due to levies approved by voters that resulted in higher property taxes.  This includes the county-wide Human Services Levy that was approved in November.  Voter approved levies in 2007 increased real estate taxes for those on the homestead program by an average of $237 a year, an amount equal to 46% of their homestead reduction.

Depending on where their property is located, the amount of the homestead reduction used to offset increased taxes is, in many cases, much higher.  In Oakwood, for example, where voters approved a library levy in May of last year and a school levy in November in addition to the Human Services Levy, property owners receiving the homestead exemption saw an average tax increase of $877.  When the average homestead reduction for Oakwood ($602) is applied to this amount, the net effect is an actual increase in taxes of $275 compared to a year ago.

The homestead exemption remains a significant benefit to those who qualify for the program despite the impact of levies.  Indeed, some property owners, including over 460 owners of manufactured homes, had their tax obligations reduced to zero when the homestead reduction was applied. 

Local schools, townships, cities and social service agencies will continue to place levies on the ballot to fund the cost of the services they provide.  As voters approve these levies, the property tax burden will continue to rise.  The homestead exemption eases this burden for senior and disabled taxpayers as it was intended, and the Auditor's office will continue to encourage qualified homeowners to take advantage of the program.