In Arkansas, we keep looking for ways to put money back in taxpayers’ pockets. Just this week, I announced my support for legislation next year that will increase the state’s Homestead Property Tax Credit from $350 to $375. Arkansas homeowners deserve a break, and with our state’s growing economy and conservative budget, we can afford to make this change.
The Homestead Property Tax Credit came into being in 2001 after Arkansas voters approved Amendment 79 to the state constitution. The original tax credit was $300, and in the years since, it has risen to $350. The extra $25 credit will be a relief for homeowners without any extra cost to counties.
In granting the tax break, the proponents wanted to protect counties from economic harm through the loss of tax revenue. So the General Assembly passed enabling legislation to levy a statewide 1/2-cent sales tax. That money goes to the Property Tax Relief Trust Fund. The money from that fund, in turn, goes to counties to reimburse them for the loss created by the credit.
In a meeting in February, the executive director of the Association of Arkansas Counties asked me to support the idea of the $25 increase, and he followed up with a letter explaining why this was a good time for the change.
I asked the Department of Finance and Administration to analyze the impact of the increase. The department’s analysis demonstrates that this plan is the right thing to do.
The new credit will reduce taxes to counties by almost $18 million. At the end of the Fiscal Year 2017, the balance of the tax relief fund was $78 million, which is more than sufficient to cover the increased tax credit.
So I offer my enthusiastic support for increasing the Homestead Property Tax Credit. Any idea that allows us to put money back in the hands of Arkansas taxpayers can be a good idea.
I am confident the General Assembly will approve this change so it will become a reality next year.