Changes Considered In Tax Relief Program For Seniors

By Jan Howard

The Board of Finance continued its discussion last week of elderly tax relief, including the current program, as well as a proposed tax deferral program, and veterans tax relief.

The board voted unanimously to recommend an increase in the Veterans Tax Relief program to $10,000, in accordance with state guidelines. Currently, veterans receive $3,000 off their assessment.

The board voted 4-2 to recommend raising qualifying income levels from $0 to $40,000 and $40,000 to $60,000, with tax credits, respectively, of $1,382 and $825. Members Michael Portnoy and Joseph Kearney voted in opposition with John Kortze, Jim Gaston, Harry Waterbury, and Peter Giarratano voting in favor.

Prior to the vote, an amendment to the motion, supported by Mr Portnoy and Mr Kearney, to remove the increase in income levels, failed by a vote of 4-2.

Mr Kearney said he opposed raising the income levels because it would bring in more people to the program. Therefore, he was in favor of increasing tax credits but not expanding the income levels.

 The current program has income levels of $0–$35,000 and $35,000–$55,000 and a cap on total tax relief of approximately $500,000. The current income levels have been in effect since 1999 and offer tax credits of $1,100 and $700 respectively. The program is offered on a first-come, first-serve basis, according to First Selectman Herb Rosenthal. Once the cap is reached, no additional people qualify for the program.

According to a report by Finance Director Ben Spragg, there are currently 508 participants who receive $475,000 in benefits.

During their discussion, the Board of Finance members reviewed a comparison of assessments and taxes paid for five individuals for a period of three grand list years, which showed the impact on the tax credit of tax increases and revaluation.

“The ultimate goal is to keep people who are here in their homes,” Mr Kortze said. Referring to the five-person comparison, he added, “For the best case scenario, they are back to where they were.”

The members also reviewed an analysis prepared by Mr Giarratano of possible education costs that would be avoided if seniors were to stay in their homes and not sell to families with children. His conclusion was that increasing participation in the elderly tax relief program could have a meaningful effect even at low participation rates.

Mr Portnoy said he felt it would be better for the seniors to take the deferment. Mr Gaston, however, felt the town should provide seniors with the option of either tax relief or tax deferral. “We should watch where it goes,” he said of the proposed tax deferral program. “I would not want to phase out elderly tax relief as it is.”

Regarding the tax deferral program, however, questions remain to be addressed before a final recommendation for an ordinance is made to the Legislative Council, such as income requirements, amount of tax that could be deferred, number of years a person would need to be a resident, availability of the program to residents of condominiums, and whether there should be a cap on the value of property.

Mr Spragg noted that while the elderly tax relief program would grow, under a tax deferral program the town would not lose anything. He added, however, that there could be “loads of problems with this thing.”

He said he talked to several financial directors in other towns in regard to the proposed program. One problem that has arisen is that credit reports would reflect the lien notices. Mr Rosenthal has also noted on several occasions that many of the town’s elderly citizens would not be interested in the program because they would consider it as debt.

Among issues being questioned is whether total household income should be used to establish eligibility instead of individual income on both tax relief and tax deferral programs, as recommended by Mr Spragg.

Mr Gaston said a senior citizen might be penalized if a child came home on a temporary basis because of some hardship. The senior citizen, he noted, would be “bumped out of the tax relief program” if the child’s income placed him/her over income requirements.

He said eligibility for the program should continue to be based on individual income.

Mr Portnoy and Mr Kearney noted that tax deferment could help seniors more than the tax relief program and also the town, because taxes deferred would be paid back plus interest at the time the house is sold.

Mr Gaston said the town should have a tax deferment program in addition to the tax relief program, but noted he is still not convinced on total household income being a requirement.

A vote on the tax deferral program is expected to take place at the board’s next meeting on February 9.