Tax debate may go on

Some see more study after seniors' break is limited

April 06, 2007|By Larry Carson | Larry Carson,sun reporter

The County Council's vote to limit property tax breaks for older homeowners may mark the start of a new round of study and possible changes in the tax laws rather than the end of the debate.

That's one thing people on both sides of the divisive issue seem to agree on.

"I believe they have more work to do," Councilwoman Mary Kay Sigaty, a west Columbia Democrat, said after "reluctantly" backing the new tax bill the council adopted on a 3-2 vote Wednesday night.

Courtney Watson, an Ellicott City Democrat who voted against the bill, said added changes are likely "in as little as a year," which is one reason she opposed now changing a law passed less than six months ago.

"It's not in the best interest of the county to pass Council Bill 68 [last year's tax bill] and take it away and then replace it again in as little as a year," she said. A citizens task force appointed in January to study the issue has scheduled a meeting for 2 p.m. April 12 in the George Howard Building. The group, which recommended that the council scale back the tax breaks, is to produce a final report in November.

Sigaty and others have said they are interested in expanding the breaks on property taxes to benefit other taxpayers such as renters.

They have argued that targeting the benefit only at older homeowners is not fair.

The bill that passed unanimously Oct. 31 -- a week before the election -- gave homeowners 70 and older with incomes less than $75,000 a 25 percent tax cut and froze their bills for as long as they own their homes.

The measure approved this week cuts that income-eligibility ceiling to five times the federal poverty level, or $68,000 this year. Western county Republican Greg Fox tried unsuccessfully to amend the income ceiling to about $72,000.

It also removes the freeze provision, which an informal attorney general's opinion found unconstitutional, and it added an asset test of $500,000, excluding the applicant's home and life insurance. Sigaty tried to reduce that figure to $400,000, but got no support. Applicants also must apply for relief under the state's property tax program for lower-income homeowners.

County Executive Ken Ulman signed the measure into law yesterday. It will take effect in 60 days.

Despite the close vote, the bill's sponsor, Council Chairman Calvin Ball, an east Columbia Democrat, said the outcome was a good result. "We are a team. Everybody had to give up a little something," he said.

Fox, the council's lone Republican, said the asset test was the major reason he voted against the final bill, though he praised Ball for amendments that would allow more people to qualify. Ball's bill originally followed the citizen task force recommendations of a $54,760 income limit and a $200,000 asset test, excluding the home and formal retirement accounts.

"I appreciate Calvin Ball's willingness to compromise," Fox said before casting his vote. "Not all of my concerns have been addressed, but it's a step in the right direction."

Still, few were happy with the outcome.

Sigaty said she wanted the original law repealed and not replaced. Fox and Watson said that while they too were skeptical of the October bill, they thought it should be left alone for a year to see what effect it might have.

County finance officials estimated that the original bill would have cost the county about $3.5 million a year, while the bill approved this week would cut that loss to about $1.7 million a year.

Like Sigaty, Susan Buswell, a former state delegate who serves on the citizen committee and watched the vote, was unhappy with the $500,000 asset test.

"It's hard for me to imagine that anyone with a half-million dollars of liquid money needs help from the taxpayers," Buswell said. Ball said he suggested the change to allow people with savings that predate 401(k) and IRA accounts to qualify.

Councilwoman Jen Terrasa said she also had serious doubts about the tax cut and the reform bill, but she voted for Ball's bill, saying, "I think this represents an improvement."

After the meeting, she disagreed with Watson's view that once a law is approved, it should not be changed too quickly. "We tweak laws all the time to make them better," she said.

Critics of the tax cut have argued that the need for more tax relief for older homeowners has not been established, especially since Howard County allows people 65 and older with incomes less than $75,000 to defer any county property tax increases interest-free until their homes are sold.

If the original tax cut were allowed to take effect, it would be politically difficult to remove it or scale it back, they contended.

revised property tax break

A measure adopted by Howard County Council changes several provisions of a 25 percent property tax break, effective with July's tax bills, enacted last year for residents age 70 or older:

Income eligibility ceiling:

Was $75,000 for a family of two, now is five times the federal poverty level, or $68,000.

Freeze on tax bills:


Asset limit:

Added requirement that applicants must have less than $500,000 in assets, not counting a home or life insurance.

State relief:

Added requirement that applicants must apply for state "circuit-breaker" property tax relief.

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