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Finance Board Input Sought On Senior Tax Relief Program

Published: September 30, 2016

Legislative Council Ordinance Committee Chair Ryan Knapp appeared before the Board of Finance on September 22, reaching out for ideas and input on the local senior tax relief program. The Ordinance Committee was charged with reviewing the program, which has a tiered structure and provides qualifying applicants with reductions to their property tax bills.

The town saw 22 fewer applicants for the local four-tiered elderly and disabled tax credit program in 2016, leaving just under a quarter-million dollar surplus that reverted to a special fund balance. That surplus would reduce taxpayer contributions to the program in 2017 if it continues to be funded at the current $1.65 million.

Mr Knapp began his presentation reviewing some history of the program. In 2013, he said, the council approved increasing the fund from $1.5 million to the amount available now.

“That number was increased to $1.65 million because we were bumping up against the point where we were going to have to start prorating the benefit we were giving to seniors,” he said. That was happening because the number of applicants qualifying under what was then a three-tiered benefit distribution were exceeding the maximum award available for each.

When that occurs, the maximum benefit is divided among total number of applicants, versus adding or shifting money into the dwindling fund tier to ensure all qualifying applicants receive the maximum benefit.

At that time, the Ordinance Committee suggested increasing the fund by $1.5 million, and adding a fourth benefit tier for applicants whose household earnings were between $65,000 and $70,000. An asset and home value test were also added into the application criteria at the recommendation of the finance board.

“I’m here tonight to ask for another recommendation — and the help and assistance of this board as we try to determine what we should do next,” Mr Ryan said. He said several suggestions were on the table, from a total revamping of the program to initiating, to the extent it was allowed under statute, elements that may have been available to some applicants when they lived in other states.
Newtown’s current senior tax relief program has been identified among the most generous in Connecticut.

It was previously reported that 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 these program participants is around $272,000, with the average beneficiary receiving a property tax break of just over $2,400.

By the time the ordinance committee was able to meet and begin considering modifications to the program, it was too late to initiate any for the 2016 benefit, so instead, Mr Knapp said, committee members decided to do some more fact-finding. Since available data only reflected the first year of experience with the four-tiered program, the panel recommended keeping the tiers and benefits the same, and performed a “thorough vetting” of the latest program results, state statutes, and other information.

“We’re at a point where we’ve looked at a lot of data, and basically this program that was supposed to expand the resources available to the senior community from $1.5 million to $1.65 million because we knew the senior population was growing and expressing a need for it — we’re actually authorizing less benefits,” Mr Knapp said. “Last year we thought we were going to get closer to that number because we thought there was a lot of interest [among new applicants].”

Instead, 2016 saw a decrease in benefits awarded, leaving the $249,000 surplus.

Mr Knapp said, as a result, there was little interest in making substantive changes to the current program. However, the latest ordinance language does provide tiers and the amounts available for applicants within those tiers he said could be “toggled” by resolution so officials could act more quickly if it appears there is a sudden increase in applicants within any of the benefit tiers.

“We want to honor the commitment that we made in 2013, and get [benefit distribution] closer to the $1.65 million, without getting into a prorating situation,” he said.

He said adjustments could be made to and within income ranges, and the amount allocated.
“There’s some concern whether the people at the lowest range of the [income] spectrum are being helped enough,” Mr Knapp said, adding that by December, his committee would like to factor in finance board advice on how to move forward.

Finance Board Chairman James Gaston, Sr, asked about some of the options the council’s ordinance committee discussed.

Mr Knapp said a property tax freeze, changing the application cycle from the current two years to three, as well as dumping the asset and/or the home value test were among the points the committee discussed. “The ordinance committee cannot commit the town to future expenses — that has to go through an appropriations procedure,” Mr Knapp said.

Since the current year carried more than a quarter-million-dollar surplus, Mr Knapp said the committee was looking at either awarding slightly more to each recipient across the scale, or expanding the income groups to help more residents.

He said the town used multiple means to promote the increase in benefits, including putting advertisements into tax bills and holding public forums to explain the increased benefit initiative.
“Our hope was to reach the people with the most need, but we’ve actually seen an outflow that exceeds our inflow,” Mr Knapp said.

The committee, in consultation with the tax collector, learned that some applicants may have either passed away or relocated out of town; others may have begun drawing more cash from investments, pushing them over the qualifying earnings threshold; or they were discouraged by the home value or asset tests.

Mr Gaston asked about the asset, income, and home value tests, which Mr Knapp reviewed.
“Those tests are not very common,” Mr Knapp said. “There are only two other communities that have the asset test, and one with the home value test. But we look at it as a matter of checks and balances,” he added, saying that between local and state programs, no state resident can get their property taxes lowered more than 75 percent.

Mr Gaston asked if the program was intended to just maintain a level of senior benefits, or to attract more seniors to move to the community because of the historically high benefit for qualified residents.

Mr Knapp said that some seniors who came to the committee complained that they have a hard time justifying staying in Newtown because of high and increasing local property taxes.
First Selectman Pat Llodra said she introduced the idea of increasing the pot in 2013, to ensure everyone who has a need could receive some assistance.

“So it was much to our surprise that we had not expended the full amount. And it teed off the idea of reviewing the program,” the first selectman said. “The balance always is — someone is paying that $1.65 million. I want to be cognizant that every time we’re reducing the revenue stream, someone has to pick that up.”

“We know seniors are the largest growing population, but the applications are trending in the opposite direction,” Mr Knapp said.

Finance Board Vice Chair John Godin said that perhaps the asset test is too stringent.
“I doubt incomes are going up, unless people are taking more in distributions,” he said. “I’m also surprised at the quarter-million-dollar surplus.”

Mr Gaston said the finance board would delve into the program details and promised input by mid-November.

“That’s a lot to think about, but we will think about that,” Mr Gaston concluded.

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