Kentucky Senate Bill 51: Protecting Seniors from Property Tax Hikes

Kentucky's Senate Bill 51, a proposed constitutional amendment targeting property tax stabilization for residents aged 65 and older, has recently cleared a state Senate committee. Spearheaded by State Senator Mike Nemes, this legislation aims to lock in the current property tax assessment on seniors' primary residences, shielding them from increased valuations that could inflate tax bills.

If approved by three-fifths of both chambers in the Kentucky General Assembly, the amendment will be put before voters in November. Senator Nemes emphasized the financial pressures on seniors with fixed incomes, advocating for this measure as essential relief. The proposal seeks to maintain property tax calculations on the original assessment, effectively shielding seniors from sudden tax hikes.

Under this proposal, should a property's assessed value increase from $200,000 to $300,000, taxes would remain based on the original $200,000 valuation. State Senator Cassie Chambers Armstrong, a proponent of the bill, recommended a means test to exclude high-value properties, thereby focusing relief on low-income seniors.

The fiscal note from the state predicts a $5.5 million annual reduction in state revenue if the bill passes. Local governments, heavily reliant on property tax income, lack a detailed analysis of the amendment's broader impact. Property taxes are pivotal, accounting for 72% of funding for local school districts and nearly a quarter of total school funding in Kentucky, directing about half of all collected property tax revenues towards education.

The Kentucky Center for Economic Policy has voiced concerns about the bill's fiscal implications on schools and local government services, underlining the importance of property tax revenues in maintaining budget stability. The center advocates for careful consideration in altering property tax structures to avoid destabilizing local government finances.

Related legislative initiatives in the Kentucky House mirror these efforts. Representative Daniel Grossberg has introduced a bill to cap property exemptions for homes valued at $500,000. Additionally, some Republican proposals suggest raising the homestead exemption for seniors from the current level of roughly $49,000 to up to $100,000.

Currently, Kentucky offers a homestead exemption for seniors and individuals with disabilities set at $49,100, with adjustments for inflation every two years. Any substantial changes in property tax legislation will significantly affect Kentucky's budget and local services, underscoring the need for strategic planning and analysis.