Bill would limit benefits of property tax credit for elderly

February 14, 2007|By Larry Carson | Larry Carson,sun reporter

A bill that would limit the benefits of Howard County's untested senior property tax credit law is to be submitted by County Council Chairman Calvin Ball.

The east Columbia Democrat said his bill will encompass the recommendations made by a citizens task force that the council created last month to re-examine the Republican-sponsored tax cut, which was unanimously approved a week before last year's election.

"Based on what I heard and read, I'll put in a bill to apply the recommendations," Ball said after the council was briefed on the committee's suggestions Monday by Ted L. Meyerson, chairman of the task force.

Meyerson said the changes would sharply reduce the cumulative effect of the law, limiting the tax cuts and the county's revenue losses.

If a larger cut is needed, "you have an opportunity to enhance it as time goes on," Meyerson said. The alternative would be the more politically difficult task of reducing a benefit after voters begin receiving the tax cut in July.

Under the current law, Meyerson said, a person receiving a $500 tax cut the first year of the program would be getting a credit of $2,000 in a decade, which could slice millions of dollars from county revenue. With the changes the committee recommended, that $500 tax cut would increase to $800 over the same period.

Western county Republican Councilman Greg Fox argued that the law should be left alone for a year and allowed to work so that its effect could be measure before changes were made.

"Does it make sense to make those changes now or wait a year? There's nothing to force us to do this now," he said after the briefing. Other members said they are studying the issue. Any legislation must be submitted by Feb. 22 for introduction March 5.

The law provides homeowners who are 70 or older and have annual incomes of less than $75,000 a 25 percent reduction on county property taxes. In addition, their county tax bills are frozen for as long as they own their homes.

The committee wants that law repealed and made three major recommendations:

Lower the income eligibility ceiling to four times the federal poverty level, which would be $54,760 this year.

Eliminate the freeze aspect of the bill, allowing each home's property tax bill to rise 5 percent a year.

Add an asset test to match the state property tax relief program for limited-income homeowners of any age. That would mean applicants could not have assets exceeding $200,000, not counting the person's home and up to an acre, or retirement accounts.

Those are differences the members will debate next month, as Ball's legislation moves toward an April 4 vote. The council must adopt any changes in April to give the county enough time to incorporate them in tax bills mailed July 1.

One change most members appear to agree on is eliminating the current law's provision that freezes tax bills once the first 25 percent tax cut is made.

"I'm uncomfortable with the fact that the attorney general's office has declared part of the existing law unconstitutional," said Councilwoman Courtney Watson, an Ellicott City Democrat who peppered Meyerson with questions about the committee's recommendations. Beyond that, however, "I'm officially undecided," Watson said.

Fox also questioned whether the panel's recommended income limit is too low because the state program's income ceiling is $60,000, higher than the amount the committee suggested.

Watson questioned Meyerson about how an asset test might affect someone with a house and more than one acre of land. Only the applicant's house and an acre would be excluded.

"Wouldn't that encourage a senior to sell land to avoid taxes?" she asked.

Meyerson agreed that the asset test presents complex implications but asked whether, if residents with valuable assets can sell to help support themselves, it is fair for county taxpayers to subsidize them?

Cathy Stefano, who is not on the committee but has been an ardent advocate for the tax-cut program, said she, too, would remove the freeze but that "lowering the income [limit] I do not understand at all."

"Who does it help. It helps the county lower the revenue loss, and we don't even know what that will be," said Stefano, of Columbia.

However things turn out, Meyerson said, the group "has been an extraordinary task force" that met 10 times in one month, with at least 90 percent attendance at each biweekly session.

"The task force has been wonderful," he said.

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