Sunday, March 18, 2007

The Elderly Tax Freeze

The Elderly Tax Freeze

The Elderly Tax Freeze had its public hearing last Thursday I would say there were a good 100 people there in support of it and a few against it. The committee needed more time to review different scenarios and is going to be dealt with again at this Thursday’s Finance Committee meeting.

The Elderly Tax Freeze is for homeowners over age 70 with income under $50,000 would have their annual tax bill frozen at the current amount (the amount that they paid in July ‘06 & January ‘07) until they no longer own the property. Homeowners over age 70 with higher incomes can defer taxes with or without accruing interest, depending on income, until the house is sold or transferred. (Senior homeowners have always had the option of requesting a tax deferral but very few people take advantage of this option.)

The expected loss of revenue to the City is estimated at $1.3 million in year 1, working up to $4.02 million in year 5. This is not taking into account the amounts that we will get back when someone in the higher bracket moves (they have to pay the city back) nor can we say for certain that all eligible seniors will take part in this. That is why the above can be looked at only as an educated guess.

The Committee has a number of way of dealing with this

Passing it as is
Denying it as is
Revising it.

I don’t feel that it will be rejected out right, nor do I feel that it will pass in the current form. That is why I believe that it will pass with a number of revisions.

Some of the revisions proposed are to soften the financial impact this will have on the City. We can charge interest to people who make over a particular Gross Adjusted Income (GAI) that would be paid off when the home is sold.

We can cap the total reduction. This can be done on a citywide basis. Meaning we have $2 million to spend on this program and the reduction will be based on how many people apply but the lost revenue will not exceed the set dollar amount. Or we can cap the homeowner to a yearly credit of not more then $10,000 or what ever number is appropriate.

We can cap the people eligible to participate by lowering the income threshold.

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