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Council Sets $1.25 Million Asset Cap For Tax Relief

With more than a quarter-million dollars remaining unspent in a tax relief fund for qualifying town seniors and those with disabilities, the Legislative Council engaged in a spirited discussion September 3 over setting a statutory asset cap as one of three qualifying criteria for the program.

After the council’s Ordinance Committee settled on a $1 million asset cap recommendation, a number of council representatives weighed in during deliberation, some hoping to see the cap increased and others expressing disdain for the measure.

But as Council Vice Chair Neil Chaudhary stated as the motion for the $1 million cap was tendered, the ordinance has already been ratified and the council was required to set a cap. He then explained a formula he reviewed with the ordinance committee to try and determine where to set that cap.

Mr Chaudhary said he was tasked with looking for an amount that could afford retirees enough to “live comfortably,” but not so low that it would disqualify truly needy applicants from the tiered benefit. During committee deliberation, council members also learned that the current year’s tax relief program was left with a $276,545 surplus after all applicants qualified for the maximum benefit.

They were also told by First Selectman Pat Llodra that a newly funded tier in the current budget providing an $800 property tax reduction for applicants earning between $65,001 and $70,000 only paid out $18,400 of the $150,000 budgeted to 23 applicants.

Mr Chaudhary said his formula factors in Social Security payments, a five percent rate of return on investments, and a 2.5 percent rate of inflation over a 22-year period.

“I didn’t want to exclude those in need,” he said in arriving at the $1 million proposal. “It allows for a nest egg.”

Council Chair Mary Ann Jacob reminded her colleagues that applicants are asked to sign an affidavit regarding their claims on the tax relief application, with no plans for auditing, and that based on the amount of tax relief assigned in the lower tiers, the program was succeeding in assisting the most needy applicants.

She also reminded the council that the next cycle of the program will permit certain medical benefits to be included in the financial calculations, and that the ordinance has to be reviewed and reconsidered annually.

Council member George Ferguson said he did some research and determined that six percent of potential candidates for relief by age and earnings are still disqualified from the program because the value of their homes exceeds another criteria of the ordinance.

Mr Ferguson said a basic point of financial advice for retirees is to conserve assets, and said he did not favor an asset cap as a qualifying component of the tax relief program. He then asked for a “friendly amendment” to increase the proposed cap to $1.5 million.

That request was rejected.

Ordinance Chairman Ryan Knapp told the full council that he was the sole member of his committee to vote against the $1 million recommendation, saying that a number of seniors who may have qualified for the benefit up to this year might be shocked to learn their assets bump them off the program beginning next year.

Ms Jacob said the ordinance outlines three separate criteria, any one of which would disqualify applicants, and that those standards are in place for next year to ensure that funds set aside for assistance go to the most needy.

She said after the next application cycle, the council will have much better data to determine whether any aspect of the ordinance should be adjusted.

“We’ll know after this year if a lot of people are excluded,” she said. “It’s a low risk if it doesn’t impact a lot of people.”

Ms Jacob also noted that much of the feedback from seniors over the benefit this year actually resulted from dissatisfaction with last year’s property revaluation, and concerns were also being expressed by a number of seniors who come from states or regions where there is automatic tax relief.

Councilman Anthony Filiato pointed out that before the council agreed to add a $150,000 infusion to fund benefits to the new top tier earners, Newtown already had one of the most generous tax relief programs in Connecticut. And Councilman Phil Carroll said that every dollar that goes toward relief is a dollar more that comes from the pockets of taxpayers who may not be eligible to participate in the benefit.

Both Mr Ferguson and Mr Knapp talked about how the town should do everything possible to encourage seniors to stay in town or move here, because they tend to use few or less services than average taxpayers, particularly costly education services.

Poised to vote on the main motion, Councilman Joe Girgasky requested a second friendly amendment to increase the cap to $1.25 million, which was accepted. The vote on that amendment passed 7-4, and a subsequent vote on the new motion passed with the same results.

More stories like this: senior tax relief, Asset Cap
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