OWOSSO — The city still has the most generous poverty exemption policy in Shiawassee County, officials say, allowing people to claim a property tax exemption if they qualify.
On Monday, Owosso City Council members approved continuing determining the poverty income threshold in 2020 through a blended calculus instead of using the Federal Income Standard Poverty Thresholds applied by other area municipalities.
The vote was 6-0. Council member Daniel Law was absent.
“As much as the cost of living has gone up in the past few years, this is one small thing we can do to help a few extra people in the city,” Mayor Chris Eveleth said.
City residents who meet the new poverty threshold and an asset test can apply with the city assessor for a complete exemption from paying property taxes.
Under the federal poverty income threshold, a family of one must earn less than $12,490 to meet the threshold. Under the blended calculus adopted by Owosso, the threshold income is $18,160 for a family of one.
The blended rate combines the federal threshold with 40 percent of the income level set by Michigan State Housing Development Authority, City Manager Nathan Henne said.
“We contacted all the municipalities in Shiawassee County and it appears that we are the only one who uses the blended income thresholds,” City Assessor Treena Chick said in a memo to Henne and council members.
“To maintain consistency in Shiawassee County, we would need to use the federal poverty guidelines; however, doing so would mean some taxpayers would no longer qualify for the exemption.”
“(The blended rate) creates a new threshold that’s more beneficial,” Henne said Monday.
Council members also considered 30- and 35-percent blended rates, but ultimately opted for the 40 percent rate.
The city adopted the blended rate in 2015, after council member Lori Bailey and others raised concerns about the small number of people eligible under the federal rate.
In 2018, 17 Owosso households were eligible for a property tax exemption; 11 households in 2017, 12 households in 2016 and 2017, and 15 households in 2014.
State law requires local governments to set income levels for their poverty exemption guidelines. The income levels cannot be set lower than the federal poverty guidelines, which are updated annually by the U.S. Department of Health and Human Services. The law also requires an asset test.