Fort Wright City Council announced their opposition to any changes to the current structure of the homestead exemption in Kentucky.
Kentucky established the homestead exemption to reduce property taxes for people over 65 and those considered “totally disabled.” According to the resolution passed by the Fort Wright city council on Feb. 7, changes to the exemption could negatively affect the city’s revenue.
The homestead exemption involves the state legislature calculating an amount of money, based on cost of living, that should be subtracted from the property value of qualifying homeowners. Then, the homeowner owes property taxes based on that deducted property value. This lowers the homeowner’s property taxes owed.
According to the Kenton County Property Valuation Administrator, Darlene M. Plummer, 698 of the approximately 2285 “residential parcels” in Fort Wright benefit from the homestead or disability exemption. That’s around 30% of homeowners in Fort Wright who can pay lower property taxes.
76-year-old Jim Antell is one of those Fort Wright homeowners. LINK nky asked him if there was a noticeable change in his property taxes since applying for the homestead exemption.
“Yes, my tax liability has dropped around one fourth,” Antell said. “I’m saving around $500 a year now. [ . . . ] I think it’s a great program that helps seniors save a few dollars in our tight economy.”
Kentucky state representatives recently set forth several bills to expand and restructure the homestead exemption. Three of these bills, House Bill 61, House Bill 62 and Senate Bill 23/House Bill 111, in particular, caught the attention of Fort Wright Mayor Dave Hatter.
Hatter said he is concerned that structural changes to the homestead exemption would harm the city. He believes the threat is especially troubling if the homestead exemption is expanded, meaning lower property taxes, resulting in less money going into the city budget. Fort Wright data shows that in 2023, the city lost 5% of its property tax revenue to the homestead exemption.
“This would have a very negative impact on our property taxes and the money it takes to run the city,” Hatter said at the council meeting.
Fort Wright’s 2023-2024 budget accounts for the city receiving $1,566,000 in property tax revenue from its residents. That makes up 23.8% of the city’s revenue.
“I appreciate that [legislators] are taking steps to make things more affordable,” Hatter said. “But it takes a lot of money to run this operation.”
That “operation” is the city of Fort Wright and its services, like sending ambulances and filling potholes, and according to Hatter, in the last several years, “costs are not going down.”
Every other year, the legislature looks at Kentucky’s cost of living index and recalculates the homestead exemption. As the cost of living rises, so does the homestead exemption amount.
Hatter said he is fine with the biannual recalculation. However, he argues against changing the calculation itself.
The representatives behind House Bill 61 released a local government mandate statement that admits the bill “would have a negative fiscal impact on local government entities that are funded by property tax revenues.” Data collected by Fort Wright says that the amount of property tax revenue lost to the homestead exemption would increase by 31%.
Statements for HB 62 and 111/SB 23 argue that the effects of those bills on local government would likely be minimal. However, Fort Wright estimates that if SB 23/HB 111 were passed, the city could lose an additional 9% to 17% in property tax revenue, depending on how property values change.
If the bills make it through the Kentucky House of Representatives, all three would require ratification by Kentucky voters.