Saying Newtown needs to employ "out of the box thinking" and "a BHAG [big, hairy, audacious goal] for senior tax relief," two of the three Democratic members of the Board of Finance indicated during their first meeting of the year, Monday, January 9, that they hope to deliberate a possible change of direction on how the town extends property tax assistance to qualified local seniors.

The short, two-item meeting agenda included possibly delivering a recommendation to the Legislative Council's Ordinance Committee on whether council members should consider adjusting the earning parameters for qualifying tax relief program applicants; the amounts of relief granted under those four parameters; keeping, modifying, or eliminating an asset questionnaire applicants must submit as part of the qualifying documentation; and/or an affidavit the applicants must sign and submit.

Moments into discussion on the subject, finance board member Kelley Johnson expressed concern because she wanted to have a much broader discussion, versus just rendering a recommendation on the existing program.

Chairman John Godin reminded the board that since the benefit is administered under a council ordinance, his board was bound to only making recommendation on any combination of the four aforementioned aspects of the relief program. At that point, Vice Chairman James Gaston said that there might be other things the town could do to enhance the program, and that he was hoping to have a broader discussion of the program details.

Mr Gaston said that the charge to the finance board from the council addresses narrow, short-term considerations, and suggested there might be some "problems" if changes are made without the finance board becoming involved in vetting more significant changes, including having a discussion about introducing tax deferments along with or instead of the current benefit - which simply reduces qualified applicants' total tax bill by one of four fixed amounts based on their household income.

Last September, Ordinance Committee Chairman Ryan Knapp came before the finance board requesting input. Prior to that meeting, the Ordinance Committee was charged with reviewing the program after the town logged 22 fewer applicants for the local four-tiered elderly and disabled tax credit program in 2016, leaving just under a quarter-million-dollar surplus.

The program is currently funded with a $1.65 million allocation in the municipal budget. Based on 2012 home values, the average benefit recipient received about a 40 percent discount on their property tax bill between the local program and others managed at the state level.

The average home value among 2016 participants is around $272,000, with the average beneficiary receiving a property tax break of just over $2,400. At the close of the 2016 application period, there were 355 applicants who qualified in the top benefit of $2,525 after reporting $0 to $45,000 in household/individual income.

Households earning $45,001 to $55,000 may qualify for a maximum benefit of $1,750; those earning $55,001 to $65,000 may qualify for a maximum benefit of $1,300; and a recently added tier of eligibility for those earning between $65,001 and $70,000 in reported income provides an $800 reduction.

The qualifying cap for applicants - 200 percent of the median assessed value of their residential home - is $468,000 for the 2015-17 benefit cycle. The qualifying asset cap, after one's local primary residence, is $1.25 million.

A Broader Discussion

Responding to Mr Gaston's and Ms Johnson's hope to open a broader discussion, Mr Godin said he was not inclined to get into such a complex matter in the weeks ahead of what may prove to be very challenging budget deliberations. Mr Knapp, who was present for the meeting, also suggested that finance board members review minutes from his committee to access significant information, data, and resident input that was amassed over several months of ordinance committee meetings.

That prompted Ms Johnson to wonder whether awarding tax relief benefits even "moved the needle" for residents who are experiencing financial challenges. Mr Godin responded saying, "Maybe $500 won't make a difference, but it shows we're listening and making the effort."

He added that "you'll never make everybody happy," and reminded his board that providing a benefit for one household takes more from someone who pays 100 percent of their property tax obligation. To that, Ms Johnson said, "It seems we have an improper framework," and countering that property tax "deferral can help a lot more people."

That brought First Selectman Pat Llodra into the conversation. She pointed out that in her experience, "with a deferral you lose more money up front, and may not recoup [that money]," even if the town puts a lien on the related property. Mrs Llodra said the state permits several ways for communities to extend property tax relief to qualified residents including a "local option" program, which allows towns to freeze property taxes on homes owned by people age 70 or older who have lived in the state at least one year, or to a qualifying surviving spouse.

Mr Knapp said that his ordinance committee members agreed they were not planning on making a lot of substantive changes this year, and that there was not much will to increase allocation.

The first selectman said, "Maybe the needs determination or level of abatement needs to be looked at - suggesting a deferral is changing the ordinance, and there won't be any changes. It's too late for this year."

Mr Gaston countered that any such discussion on changes to the benefit program should start at the Board of Finance.

"My read on towns with senior tax relief is, the vast majority are tagged circuit breaker numbers, and only a handful of towns have near what we have," he said. "New Canaan, one of richest towns in the country, has $400,000 asset cap - we have $1.2 million."

Acknowledging that Newtown's program is still fulfilling a significant amount of need, Mr Gaston said maybe Newtown should consider having a generous deferment for those here fewer years. Or start offering that benefit after three years.

Mr Godin said he was concerned that there would not be an appetite among seniors for a deferment option.

"If you're not going to have participation, why have the program?" he asked.

In the end, Mr Godin held off on calling for a vote or for any final recommendations, suggesting his colleagues review the ordinance minutes, and wait to receive and review a package of data on benefit program participation that has been amassed by the tax collector's office for the past two years of the program, to get a better idea of who is participating, and the related properties and benefits being provided.

Post-Meeting Input

Contacted following the meeting, Ms Johnson remarked about needing more "out of the box" thinking.

"In corporate speak, we need a BHAG (big, hairy, audacious goal) for senior tax relief," she wrote in an e-mail response. "The deferral program is an interesting option that might provide us with the opportunity to offer significantly more tax relief to seniors over time," Ms Johnson continued. "If the town budget continued to support senior tax relief at the same level each year, shifting the current program from tax credits to tax deferral means that we could gradually help more and more seniors with greater financial assistance."

She said at first glance, the math seems pretty simple because tax relief offered to a household in one year is eventually returned to help another household at a later date.

"We could certainly tweak the existing needs-based formula to increase the tax credit support to our neediest seniors and/or distribute tax credits to slightly wealthier seniors, but we'll never meet the need," Ms Johnson concluded. "What does it take to achieve significant, sustainable tax relief for all Newtown seniors? That's the bolder vision that I'd like to explore. A tax deferral is just one option utilized by other Connecticut towns that recently came to the attention of the Newtown BOF, although I'm sure there are other options worthy of public discussion."

Mr Gaston also responded via e-mail to The Newtown Bee, saying he supports the Board of Finance comprehensively reviewing all the potential tools available for senior tax relief.

"In addition to the State Circuit Breaker relief for seniors there are three additional instruments available to towns, 1) set property tax reductions based on income and assets; 2) freezes on future property tax increases; and 3) deferments (with or without interest on property taxes). All of them have costs and benefits to which the effectiveness, efficiency, practicality and fairness must be weighed," Mr Gaston said. "The instruments are not mutually exclusive, many towns offer more than one senior tax relief instrument. The senior tax relief benefits must be needs-based and we must be mindful that no matter what instrument(s) is applied, either short-term or long-term, working individuals and families are paying for the senior tax relief."

Mr Gaston shares the opinion that there is a positive benefit to keeping longtime residents who have reached seniority in Newtown.

"The objective is to address the needs of the most vulnerable long-term resident seniors while at the same time not increasing tax burdens upon the working individuals and families such that they can no longer afford to live in Newtown, or have such classes of individuals and families bypass Newtown as a place of residency," he continued, offering some pros and cons to freezes and deferments.

"A freeze on future increase property taxes for a set period of time without repayment might help the most vulnerable seniors, particularly those at the State Circuit breaker level," he said. "Moreover, given that most seniors have fixed revenues and costs this instrument might make future financial planning easier for seniors over the future years. The costs of the program must be compared to the present town plan. Drawbacks might be the increased complexity in administering the plan and the long-term versus short-term costs to the town."

Mr Gaston said a deferment option might be beneficial to a Circuit Breaker income senior who expects a short-term financial crunch and recognizes that the set property tax reductions would not suffice to keep them in Newtown.

"For example, assume a husband turns 65 years old, is eligible for Social Security and retirement benefits. His earning have markedly decreased because he is retired. His wife of 62 is retired but she is not eligible for retirement benefits yet. Her benefits commence at age 65. A short-term deferment program of the property taxes may well keep them in town," he offered. "The drawbacks, again there would appear to be a more complex administrative process, some additional costs to the town as to legal fees (if an interest rate is charged that might offset fees or costs), and a senior(s) may not wish to have a lien placed on the property.

"It may be that the simplest instrument(s) is best for all, it may be a combination of options is viable and desirable," the finance official concluded. "A thorough and comprehensive analysis will assist us in making educated choice(s) for our seniors specifically, and our town residents overall."

The finance board is expected to conclude their current discussion and decide on any recommendations at its January 26 meeting.