Homestead & Reimbursement Rate

Posted by Scott Adkins, Milford, April 6, 2016: Brain cramp here in Milford. I know that the Homestead is going up to $ 15k, but what about the reimbursement of the additional $ 5k. I’ve heard yes @ 50% like the current for $ 10k and I’ve heard 62%

Responses: 50% of the total this year FY 2016-17 and 62.5% next year FY 2017-18 (Dwayne Young, Weston)

It’s 50% reimbursement this year, next year the exemption goes to 20k with 62.5% reimbursement. (Gary Picard, St. Agatha)

I’m still getting conflicting information. So, let me try this.

fy16 – Exemption is $ 10k and we are reimbursed 50%
fy17 – Exemption is $ 15k and we are reimbursed 50% on the $ 15k or just the $ 10k like fy16 and we “eat” the extra $ 5k????
fy18 – Exemption is $ 20k and we are reimbursed 62% on total

Sorry, for those of you that have this solid, I applaud you, but I can tell you from conversations that this is not as solid amongst some. (Scott Adkins)

Scott,for 16-17 HS will be $15,000 Town raises 50% State reimburses 50% for 17-18 HS will be $20,000 Town raises 62.5% State reimburses 37.5% . An important question for me is do we as an organization address the concern that this program is heading toward a 100% local tax burden when the authors intent was a 100% state supported taxpayer relief program?

The impact in the second year for my little piece of paradise will represent 40 cents of the mil rate, assuming same number of homesteaders and same mil rate. (both are likely to have increased for 17-18).

I can appreciate that for the larger cities and towns this issue may be de minimis, but not for mine and I presume I am not alone. (Mark Robinson, Fayette)

I think you have the 17-18 reimbursement backwards…….it’s 62.5% state reimbursement…I HOPE! (Gary Picard)

The attached document was just printed from Maine Revenue Services website March 29, 2016. The average of the 50% and 75% will equal 62.5% reimbursement from the State. (Lynette Eastman, Woolwich) Homestead Exemption

Thank YOU Lynette!! I guess you’re a better “digger” than myself or more likely was right in front of my nose, but couldn’t see. (Scott Adkins)

Based on Lynette’s e-mail, I have greatly misunderstood what was reviewed with Geoff Herman at the Interchange on March 25th. My apologies to all. Off my high horse to wipe the egg off. (Mark Robinson)

No worries, Mark. If they didn’t try to make it so convoluted and would just reimburse at 100% it would save a whole lot of hair pulling…….. I actually obtained this from our Assessors’ Agent because it’s been such a big question. She feels that they have the two tiers of reimbursement due to the probable assessed values of older mobile homes that likely would fall under $10,000. It made sense when she was explaining it to me…..I think it has lost something in the translation. (Lynette Eastman)

Below is Geoff Herman’s explanation of the Homestead to clear up any confusion. (Bill Post, Bowdoinham)

For the last several years, the Homestead property tax exemption has been valued at $10,000. The state pays each municipality for 50% of the lost tax revenue associated with the exemption, which is the minimum reimbursement rate required by the state’s Constitution.

In the budget bill enacted last year (in July 2015), the Legislature increased the value of the Homestead exemption for the tax year beginning on April 1, 2016 to $15,000, a $5,000 increase in exempt value for each homesteader. For the April 1, 2016 tax year, the state reimbursement rate of 50% does not change. The state will continue to reimburse at the 50% rate, and since each municipality will be receiving no reimbursement for 50% of the increased exemption, each municipality’s property tax mill rate will tick-up a little bit as a result.

In the same 2015 state budget bill, the Legislature increased the value of Homestead property tax exemption from $15,000 to $20,000 for the tax year beginning on April 1, 2017. For the April 1, 2017 tax year, beginning roughly a year from now and in addition to the value of the exemption being increased to $20,000, the state reimbursement rate will also be increased from 50% to 62.5%.

For now, therefore, the reimbursement rate increase is on next year’s horizon. For municipal purposes in this budgeting cycle, the focus should be on the fact that the Homestead exemption has been increased to $15,000 for this year, and the state will reimburse each municipality for just 50% of the tax revenue associated with that exemption.

(As a final side-note, as I’m sure all are aware, the value of the exemption actually provided to each homesteader needs to be adjusted by the municipality’s certified assessing ratio.)

Hope this helps.

Geoff Hermann, MMA