August 7,  2007

Ordinance would reduce
seniors' tax exemptions

Legislation to significantly restrict eligibility for county tax breaks for seniors and disabled persons and cut the benefits of the exemption program is being prepared for introduction when County Council returns from its summer recess.

George Smiley, chairman of Council's finance committee, said the proposed ordinance he is going to sponsor will apply to newcomers to the county and those now in the program who move to new residences.

"No one is going to see their taxes raised as a result of this ordinance," he said. "It doesn't take any benefit away from those who already have it."

It also does not affect seniors' benefits applicable to school districts' property tax which, although collected concurrently with the county tax, is a separate levy.

Chief financial officer Michael Strine, who helped draft the measure, said he has 'briefed' County Executive Christopher Coons on its provisions. Coons, Strine said, "wants to wait until he sees the [final proposed] legislation" before taking a position on it.

As it now stands, the proposed ordinance would exempt the first $32,000 of a residential property's assessed value from the property tax for a single owner who is older than 65 or disabled and has annual income of $15,000 or less. Married couples who own their property jointly and have combined income of $19,000 or less would be eligible for the same benefit if either of them is over 65 or disabled. Proceeds from Social Security are  not included in the income calculations.

Presently, the first $50,000 of assessed value is exempt for owners over 65 with incomes, single or joint, of $50,000 or less. The exemption and income limit for disabled persons are $40,000. There is now an additional exemption of $42,000 for someone who has lost the use of arms or legs and $82,000 for loss of both. The $42,000 exemption would remain under the new ordinance, but the combined exemption would be lowered to $74,000.

The proposed ordinance would exempt the first $5,000 of assessed value of any residential property assessed for more than $125,000 if income of the owner or spouse is less than $3,000. There is no limit on a property's value in the present law.

It is now possible for owners who meet age, physical and income qualifications before the June 1 application deadline but do not apply to obtain pro rata tax abatements on a quarterly basis. There is no such provision in the proposed ordinance.

Both seniors and the disables now pay a flat $36 annual fee for sanitary-sewer service irrespective of the amount of water they use. The proposed ordinance calls for them to pay  half of the total charge computed on usage or $50, whichever is more.

Smiley said he also is considering a provision which would require an otherwise eligible property owner to have lived in New Castle County for three years before becoming eligible for the exemption program.

Smiley said the proposed ordinance is still a proverbial 'work in progress', but he expects to have it ready for introduction when Council next meets, on Aug. 28. Under Council rules it could be enacted as soon as Sept. 11. However, it would seem more likely that discussion will extend beyond then. There is no rush because the deadline for inclusion in the program this tax year, which began on July 1, is past and the deadline for next year, when the measure would become effective is June 1, 2008.

He said he has begun circulating the proposed ordinance in draft form among his colleagues, but has not yet gotten any reactions. "I have no idea what lies in store for this legislation," he said.

He said he took the unusual step of making his present intentions public after a fellow councilman, Robert Weiner, 'leaked' the information in an e.mail to some of Weiner's constituents. "I wanted to hold off on any rumors getting around and prevent a panic," Smiley said.

Smiley said he opted against simply seeking repeal of the present program and substitution of a new one because he felt that would be unfair to those now enjoying benefits. Passage of the proposed ordinance would ultimately result in phasing out the present program as those participating in it die and move.

Strine said there currently are 18,638 senior exemptions and 1,444 disability exemptions out of a total 199,600 residential properties in the county. They 'cost' county government $13.5 million in revenue not received.

Smiley said he expects the changes to net about $225,000 during the first year "and double each year after that" as larger numbers of people reach age 65 and move into the county.

Doing away with the exemption program had been proposed earlier by some members of the county's financial future taskforce. The taskforce as a whole recommended significantly modifying it.

Smiley said making the tax break available to the elderly with generous income limits had the effect of discriminating against young couples raising children on lower incomes. "In some ways, they're the ones who need help," he said.

On the other hand, those now benefiting from the program are receiving public safety, libraries, parks and other county-provided services on the same basis as everyone else, he added.

Acknowledging that the appearance of targeting seniors and the disabled could be politically risky, he said he and other Council members have responsibility to deal with county government's problematic financial situation.

"I refuse to play politics with [my] office," he said. "I do what I think is the responsible thing for residents of this county and their government."

Soon after taking office in late 2004 Smiley, whose district was created in the expansion of Council from seven to 13 members,  joined other members in voting to raise the exemption and income ceiling from $40,000 to $50,000. He said he considers that vote to have been appropriate.

"That was waiting for us when we came in ... before we got a clear picture of what the financial position of the county really was," he said.

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