Despite the possibility of revenue shortfalls created by pending legislation in the General Assembly, the Carroll County commissioners are moving forward with options to relieve the property tax burden on senior citizens, especially those on fixed incomes.
The commissioners will schedule a public hearing on the property tax credit that could allow elderly residents to stay in the homes they purchased years before a brisk housing market and rapidly rising assessments created financial hardships for them.
"This needs to go to public hearing," said Commissioner Julia Walsh Gouge. "I hope we can go through with it and are not hampered by other proposals."
Sen. Larry E. Haines, leader of Carroll County's legislative delegation, has proposed lowering the cap on the Homestead Tax Credit by 2 percentage points. The commissioners lowered the cap to 7 percent last year and have criticized Haines' proposal, saying it came as a surprise and could create a $43 million gap in revenue within five years.
Several counties are considering similar proposals and other bills could lower the cap statewide. Haines' proposal, Senate Bill 519, would provide relief to all property owners, he said.
"It is tough balancing the wants and needs of the county with keeping taxes low," said Del. Susan W. Krebs, who represents South Carroll. "This [Senate] bill should be tested against the impacts of what people will have to give up."
Local bills that have the support of the delegation traditionally win legislative approval. If Haines' proposal passes, the commissioners may not have the financial wherewithal to extend additional tax relief to seniors. But they have opted to move ahead with their public hearing.
"The public hearing does not commit you to the proposal," said Ted Zaleski, county director of management and budget. "It just sets you up to make the decision."
Elderly residents have watched pricey new homes rise on the empty fields that surround their older, more modest homes. Those grander homes increase tax assessments for their entire neighborhood.
"There is no way to predict whether all the credits proposed in state law will go through," Zaleski said. "If you pass this, it will happen."
The commissioners won authority from the state last year to create a county tax credit for senior homeowners that would supplement those the state already allows. The state, which would administer the program at a minimal cost to the participating counties, left the guidelines, such as age, income and home value, to jurisdictions.
The criteria will need flexibility and shelf life and should rely on percentages for home values and net worth rather than actual numbers, officials said. The commissioners' proposal would make eligible residents 65 and older with a household income limit of about $50,000 and whose maximum home value is $300,000.
"We are trying to help the people I call Aunt Mae, so they can age in place, in their own homes," said Commissioner Dean L. Minnich.
The county proposal also excludes up to $500,000 in net worth criteria, including assets in retirement programs.
"Some people might be living on modest incomes from stocks and bonds that are not part of their individual retirement programs," Zaleski said. "The proposal can benefit in a targeted way people that you are trying to help."
The potential fiscal impact on the county, which derives about half its revenue from property taxes, is unclear, Zaleski said.
"There is not enough information to predict with certainty what this will accomplish," he said. "After one tax cycle, we can see what has come of this and if we have hit the target."
The credits could be set and implemented as early as fiscal 2007, which begins July 1.
A senior resident of a $300,000 home with an income of $15,000 would receive a $3,540 property tax bill. The state would provide a $1,355 credit, and under the proposal, the county would add a $1,374 credit - reducing the annual property tax obligation to $811. As income rises, the credits would decrease and nearly disappear for those with incomes of $45,000.
"The greater the income, the smaller the credit the homeowner would receive," Zaleski said. "Those with the lowest incomes would benefit the most."