Representative Johnny Rye filed HB1034 to increase the homestead property tax credit which applies against a home owner’s property taxes.
State law now provides for an annual credit of $350.[i] Rye’s bill would increase the credit to $375. The extra $25 would be a good thing for homeowners. It is about the equivalent of being able to buy about an extra eight gallons of milk in a year.
Here is something you probably don’t know. The amount of the increase could have been much higher if the legislature had not messed with the Property Tax Relief Trust Fund over the years. For example, in 2005 the legislature authorized the transfer of over $40 million out of the trust fund to general spending[ii]. In 2016, one of the trust fund’s sources of income was taken away and is now used for highway spending.[iii]
If Rye’s bill passes your credit will increase by $25. If the legislature had never messed with the Property Tax Relief Trust Fund ….. well, they will tell you “No sense crying over spilled milk.” But you better keep an eye on future moves to raid the fund.
* * * * *
By the way, the money is not free money. Counties are reimbursed for the loss of revenue from the Property Tax Relief Trust Fund and the fund is supported from a portion of other taxes you pay.[iv]
[i] A.C.A. 26-26-1118
[iii] http://www.arkleg.state.ar.us/assembly/2015/2016S3/Acts/Act1.pdf Prior to the 2016 transfer of funding sources. A small percentage of diesel fuel taxes were transferred for use for several purposes other than highways. The law said the transfers were to offset some tax exemption allowed. See Sections 9 & 17
[iv] A.C.A. 19-5-1103