December 21, 2011 09:38 PM UTC

Homestead Exemption "Amnesia"--It's Back

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• by: Colorado Pols

Yesterday’s big news in Colorado was the significantly improved revenue projections delivered to the Joint Budget Committee by Gov. John Hickenlooper’s chief economist Henry Sobanet. As the Pueblo Chieftain’s Patrick Malone reports today:

An unexpectedly strong revenue forecast on Tuesday compelled Gov. John Hickenlooper to withdraw his proposal to cut $89 million from K-12 education total.

Now anticipated windfalls of $231 million for the current fiscal year and $115 million next year freed up the funds, the Office of State Planning and Budgeting told the Joint Budget Committee. Previous projections showed the state faced a budget shortfall of more than $500 million…

Hickenlooper’s revised budget proposal does not seek to change the $98.6 million that the governor recommended withholding from the Senior Homestead Exemption. House Republicans have been staunch that restoring the tax break for senior citizens who are longtime homeowners should be a key priority.

“While I am disappointed that Governor Hickenlooper continues to propose a property tax increase on Colorado’s seniors most in need, Colorado’s slow economic recovery gives us reason for optimism,” said House Majority Leader Amy Stephens, R-Monument.

With revenues back on the upswing, Gov. Hickenlooper’s first priority is restoring funding to public education–which has seen some $700 million in cuts in the last few years. The improving revenue picture is welcome news, but it needs to be kept in perspective to the massive cuts we’ve seen in recent years. And we’re not even talking about the looming challenges presented by the Lobato vs. Colorado case, where a judge has ruled that Colorado’s education funding system is both inadequate and not rationally related to the requirements imposed on the system.

It’s fully expected for Republicans to make as large a stink as they possibly can over the homestead property tax exemption for senior citizens, even though it was the same economist Henry Sobanet, working for Republican former Gov. Bill Owens, who originally proposed cutting that program back in 2003. We’ve been much amused by representatives like Sen. Nancy Spence railing against Democrats for cutting the homestead exemption, just like she did during 2003’s much less severe recession.

With all of this in mind, we’d like to show you a fascinating transcript forwarded to us last weekend. The transcript is from a public conversation between the media and elected officials that occurred during a “pre-legislative session” Q&A. Specifically of interest is a back and forth between Tim Hoover of the Denver paper to House Speaker Frank McNulty on the wrangling over the homestead exemption. Hoover has some pointed questions about who really benefits from a fully-realized homestead exemption, and McNulty’s answers are ambiguous and evasive at best.

McNulty: Our perspective is a little bit different than that that’s been shared by our Democrat colleagues and by Governor Hickenlooper. We don’t believe now is the right time… That it’s never the right time to increase property taxes on those seniors who have been hardest hit by this recession…

We understand there will be a dialogue that takes place. We will be constructive participants in that dialogue. But understand that our view- the place from which we start is much different than where some of my Democrat colleagues are starting. We are starting from the position that is a bad idea to raise property taxes on those seniors in Colorado who have been hardest hit by this recession.

Hoover: when you talk about hardest hit in this recession one of the complaints about the senior homestead exemption is that there’s no means test for it so people with ski chalets get it and conversely, people who don’t own homes but are elderly and quite poor, either they are renting or they have sold their homes within 10 years or whatever to downsize or be responsible, they don’t get it and they need it the most. [Pols emphasis] Would you guys, I mean Republicans, be open to statutorily enacting some kind of means test to try to dole  out and whittle down the size of that 100 million?

McNulty: we have been all along, we have been proponents of Asset testing for benefits like this, but of course it has to happen across the board. We can’t pick one program like this and say we are going to asset test it and not make that same effort for other similar programs.

Hoover: like what?

McNulty: other entitlement programs where if you meet certain criteria you are eligible for that government program. And so Asset testing is a reasonable and responsible discussion to have, and certainly I’m willing to be a constructive participant in that discussion…

Reportedly, Hoover then asked McNulty what entitlement programs are not subject to an asset test–since Medicaid, for example, is. But unfortunately, McNulty’s only real talking point about seniors had already been used twice. And be assured, the politically active Republican donors who care about the homestead exemption do not want any means or asset testing.

Look, folks, we understand on a certain level why Republicans put up a perennial fight over the homestead exemption, even though they originated the current practice of sacrificing it to balance the budget. It’s a straightforward appeal to senior citizen voters who stand to benefit. But on the larger battlefield of fiscal responsibility, and exigent needs the state is slowly regaining the ability to meet, this is a political loser for them. Chieftain:

Rep. Tom Massey, R-Poncha Springs, was instrumental in budget negotiations earlier this year to reduce cuts to education by $67 million. He agrees with fellow Republicans that the Senior Homestead Exemption is important, but said it should take a back seat to funding schools. [Pols emphasis]

Speaker McNulty’s not going to like that.