Drew Proposes Senior Citizen Property Tax Programs

The Finance and Government Operations Commission voted on Wednesday evening to send to the full council an ordinance with three programs to provide tax relief for senior citizens. Mayor Dan Drew presented the programs to the Commission, with the technical support of Damon Braasch of the Tax Office. Each of the programs provides either a tax credit, a tax freeze, or a tax deferral.

With FGO approval, the tax relief ordinance will be voted on by the full Common Council at their meeting next Monday (7PM, Council Chambers).

Drew is fulfilling one of the key promises he made in his campaign for mayor (see, for example, HERE). On Thursday he wrote in an email to The Eye, "I have met people living on fixed incomes who have been unable to pay their taxes, and this program will provide them with the financial stability they need to stay in their homes."

The tax credit is a city extension of an existing state program. Residents of the city who are over 65 can receive a municipal credit of $50 (in addition to the credit from the state), if their income is less than $32,300 (single) or $39,500 (married). For residents with incomes above those limits, but below $37,300 (single), or $44,500 (married), they would not receive the state credit, but would receive $100 to $150 from the City.

The tax deferral is a program in which home-owners whose income meets the limits above would choose not to pay part or all of their taxes. Unpaid taxes would accrue 18% interest charges, and the city would place a lien on the property for the unpaid taxes. This is similar to how the city handles delinquent taxes for all residents. However, according to Braasch, the city would normally move towards foreclosure within a few years, while this program would allow seniors to defer their taxes without this threat looming. The taxes and interest would be due upon death.

The tax freeze program has similar income restrictions to the credit, but in addition the homeowner must have less than $125,000 in assets, not including the home. Qualified seniors would have their taxes in 2013 frozen at the 2012 level. For example, a house assessed at $200,000 would lead to taxes of $5220 with this year's mill rate of 26.1; if the mill rate rose to 27.1, the tax savings under the proposed ordinance would be $200, or 3.7% of the tax bill. Braasch noted that the applicants who are approved for the program this year would actually receive the benefit beginning on July 1st of 2013, when the rate would be frozen at the 2012 level. If the property taxes of all citizens were cut, then this benefit would be moot, seniors would not be locked into a higher rate.

Financial analyst Tina Gomes said that there were 188 residents who applied for the state tax credit, if they all qualified for the tax freeze, and there were a 1 mill increase, she estimated it would cost the city $55,000 in the 2013/14 budget.

The proposed ordinance has a built-in sunset provision, it will expire in two years unless the Council takes further action, "Unless otherwise extended, this tax relief shall expire after the Grand List of October 1, 2013."

The draft ordinance is available HERE.