JEFFERSON CITY — A bill to freeze taxes for seniors in Missouri would cost counties millions if it went into effect, according to an analysis released this week by the state Legislature’s research division.
In May, the Legislature approved a plan to stop property tax increases for eligible seniors. Counties would have the option to adopt the measure if Gov. Mike Parson signs it into law, but they would face losing millions of dollars in tax revenue depending on the number of senior homeowners.
Under the Legislature’s proposal, a senior could get the tax break if they are eligible for Social Security retirement benefits, own a home and are required to make tax payments on that home. A county can put it in place with an ordinance or by voter approval.
The analysis by the Committee on Legislative Research’s Oversight Division includes information from more than 70 counties on how the plan would impact them.
St. Charles County officials estimate the revenue losses would amount to more than $78 million over five years, according to the analysis. The county estimates losses would go up annually, and it could cost the county as much as $155,000 for new software and personnel to implement the program.
County officials also believe the bill violates the Hancock Amendment in the Missouri Constitution. The amendment prohibits the state from requiring local governments to “begin a new mandated activity” unless the General Assembly covers the cost, according to the analysis.
The Hancock Amendment allows local governments to replace missing funds by increasing the tax rate. But under SB 190, counties would have to report the tax credit as revenue collected — meaning they couldn’t roll up their tax levies to make up for the lost revenue, according to the analysis.
Officials in Jefferson County estimate the bill would have cost them $4.2 million were it in place over the past five years.
St. Louis County Councilman Mark Harder, a Republican from Ballwin, introduced a bill in May that would put the plan in place in St. Louis County. He says it’s an obvious way to keep seniors in their homes.
But the county estimated if the plan had been in place for the last four years, it would have missed out on nearly $34 million in revenue, according to a memo from county leaders. The county estimates it could cost $125,000 a year on new personnel, too.
Opponents of the bill also question whether full-time teachers would be eligible for the tax credit because they aren’t entitled to Social Security coverage in Missouri. Railroad workers are also exempt from Social Security benefits.
The state researchers couldn’t estimate how many counties might put the plan in place. The cost for each county differs depending on how many seniors live there. In St. Louis, for instance, 10% of homeowners are over 65, according to the analysis. But in Morgan County, in central Missouri, 44% of homeowners are.
As of 2021, the median home price in Missouri was $163,600 with average real estate taxes paid totaling about $1,600.
Seniors in Missouri paid roughly $874 million in property taxes that year.
Jobs outlook: With unemployment in metro St. Louis at a record low, David Nicklaus and Jim Gallagher explain what has to happen for the region to see further job gains in 2023.
David Nicklaus
,
Chris Drury
The measure could prevent pay raises for teachers and present a logistical nightmare for counties wanting to implement it, the associations said.
St. Louis County seniors favor a bill that would freeze their property taxes, but county revenue experts say it would reduce funding for education and other public services by millions.
The bill, sent to the governor, would freeze property taxes and also exempts all Social Security benefits from the state’s income tax.
Political Fix
Our political newsletter featuring local and national updates and analysis.