Tums Wonít Solve This Problem
There is a large segment of Frederick Countyís population that is being ignored by its elected officials. These taxpayers have paid their dues time and again, with a whimper mostly.
Our General Assembly passed a bill unanimously during the 2006 session which provided for property tax relief for senior citizens Ė those 70 and over. There were certain parameters left to the discretion of each jurisdiction, both county and municipal, such things as income limits, length of residency, etc.
And to the surprise of just about nobody, not a single jurisdiction in Frederick County saw fit to implement this law in either Fiscal Year 2007 or Fiscal Year 2008.
The Tentacle asked each of the candidates for county commissioner in last yearís election cycle just how they would address this issue of a tax freeze for senior citizens. At the end of this column you will find the responses of four of the five commissioners elected last November.
We are not talking about the elimination of property taxes for senior citizen, owner-occupied residential property. The bill allows local governments to freeze those taxes for seniors. In other words, whatever was paid last year would be paid again this year; only an increase Ė caused by an increase in the property tax rate or in the assessment Ė would be eliminated.
For example, if you paid $3,000 to Frederick County last year, and the commissioners and state assessed value would raise you taxes by $320, you would still pay only the $3,000 you paid last year. Thus, county revenues in the next fiscal year would be reduced by $320.
County finance officials estimated last year that the total revenue the county would not realize if every senior citizen who qualified actually applied for the relief, would be approximately $2.8 million.
But, other county personnel have stated that usually only about 40 percent of those eligible for such programs actually apply for it.
So, Frederick County could expect to actually forgive only $1.12 million, a drop in the proverbial bucket when you consider that the total county budget for the current fiscal year exceeds $470 million. And, donít forget that the audited fund balance for Fiscal 2006, which was only available for the present fiscal year, exceeded $37 million. This means that the county took in $37 million more than it spent in 2006.
When it came time to consider this senior property tax freeze, our newly installed commissioners pushed the idea aside, saying there wasnít enough time to properly address it. Certainly that was the case last year with the old Board of County Commissioners because Gov. Robert L. Ehrlich, Jr., didnít sign the measure into law until May 14, 2006.
But it was a poor excuse this year when they had months to seek input from their staff and to implement some relief for seniors.
There is a law in place called the Homestead Property Tax Law. However, it is so outdated in light of the rapid increase in property assessments, that it brings little relief to anyone who is eligible Ė including seniors. It needs to be updated.
Senior citizens have paid their dues many times over. They have built the infrastructure and funded generations of services and programs. Now that their working life is mostly over, itís time to provide some relief. We hear so often about the need to build this school, or that road, or that park, the same chant we heard when our present seniors were beginning and continuing their careers.
But the up-and-coming generations want more and more for themselves and theirs that they canít fund it all by themselves. So they ask Ė no, demand Ė that everybody must pay. Our seniors built the schools their children and grandchildren attended. They increased the capacity of our water and sewer systems. And the roads they traveled as working adults were no less crowded than they are today by new generations.
There are those who argue that seniors have all the wealth and donít need relief. Perhaps that is true in some cases. But there are countless thousands who do need Ė and deserve Ė the relief.
The mayor of one of our 12 municipalities said that the reason his town didnít consider it this year was because the county didnít implement a process to deal with the situation. The county collects the property tax for each municipality and then sends them a check.
The logistics might be simple to implement. This tax freeze law requires those eligible to apply for the relief. So the county could collect the full tax, the senior could them apply with the municipality and be given a refund by that municipality. Likely, however, it will be a much more complicated process, you know, because we are dealing with government bureaucrats.
Anyway, itís time to make some noise and, thus, get the ear of our elected officials. They donít seem to do anything without first hearing an uproar.
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RESPONSES from David Gray, Jan Gardner, Charles Jenkins, and Kai John Hagen to a question posed by The Tentacle during last yearís campaign on the question of implementation of the senior tax freeze law.
David Gray (R)
We will need to integrate this tax benefit with the Maryland Homeowners Property Tax Credit.
The Homeowner's Property Tax Credit is forgiveness of tax, dependent on the owner's income vs. assessment, whereas the commissioners' bill is a deferral. It is better to have tax forgiven rather than deferred.
Tax forgiveness should be calculated first. Then the remainder could be looked at to see what could be deferred.
The ordinance must be simple to calculate.
The law leaves the details to the new board of commissioners.
For instance: If the asset limit (net worth) includes the house/property than the new higher value of the house could disqualify the owner even if the income limits are met (i.e. low Ė fixed income). This would defeat the purpose of the bill. Presently the Homeowner's Tax Credit has a net worth limit of $200,000 and limits the credit to the first $300,000 of assessed property valuation.
Everything that is deferred will be subtracted from the proceeds when the house is sold. This reduces the money available for assisted living or inheritance.
Initially the county would lose revenue. However after the first few years revenue should even out. As people pass on the deferred taxes will be paid back into the county treasury.
The next board should appoint a working group of citizens to thoroughly study options. Public hearings should then be held with mail, e-mail and phone input encouraged. Many older citizens could find it difficult to come to Winchester Hall.
Charles A. Jenkins (R)
Three immediate things I will work on to relieve the plight of seniors not being able to continue living in Frederick County.
1) Freeze the property tax bills on residents over 70 with incomes below $60,000. I will not support putting a lien on the property to "re-coup" the "lost" taxes upon the death of the owners.
2) Work to combine the fire tax portion of our tax bills with the property tax portion of our bills, subjecting the fire tax to the same 5% increase applicable to all owner-occupied housing in the county. For example, currently if your assessment increased by $100,000 the fire tax is not capped at 5% as are property taxes; your increase is based on the full assessment increase.
3) Look to allowing imports of prescription drugs from Canada. These savings can amount to real relief for many of our citizens.
FYI: the state analysis of freezing property taxes at the current rate is approximately $2.8M, or 1.5 cents on the property tax rate. If we didn't build our next high school (Oakdale) as a Peer One school with all the bells and whistles, then this freeze on the property taxes for seniors would be pretty painless to the county's coffers.
John L. Thompson Jr. (R) Ė No Response Received
Jan Gardner (D)
I have a public record on the topic of a senior tax credit or tax freeze. I supported Commissioner Reeder's efforts to obtain legislative authority to implement such a tax credit for the past two years. The first year Mr. Reeder introduced this concept, only Mr. Reeder and I voted in support of obtaining legislative authority for a senior tax credit. Last year, Commissioner Lovell added his vote, so the bill went to the delegation but was ultimately not introduced because of the statewide bill.
Commissioners Reeder, Lovell and I ultimately agreed on the following criteria to qualify for the tax credit/freeze:
1. Age 70;
2. Owner Occupied Homes Only;
3. Must have lived in the home for five years, downsizing considered;
4. Annual income of $55,000 or less;
5. We would establish an asset cap which excluded the house or property in question but I can't remember the amount of the asset cap.
There were other details to consider such as what happens if an occupant moves into a nursing home but still owns the home and has a spouse under the age of 70. There are other similar circumstances that need some thought.
I am on the record with a positive vote on this bill and with a positive vote on the prior year's bill which requested broad authority with details to follow in a local bill.
Thus, I am willing to support targeted tax relief for seniors on a fixed income.
Kai John Hagen (D)
I enthusiastically support the goal of Senior Citizen Tax Freeze Bill, and I look forward to participating in the process of determining the parameters for a Frederick County ordinance to implement the new state law, which authorizes our county commissioners "to grant a tax credit against the county or municipal corporation property tax imposed on real property owned by and used as the principal residence of an individual at least 70 years old and of limited income; etc."
I am not prepared to list here exactly what I think each and every parameter ought to be, however, with regard to details such as the types of assets to be counted, the length of residency required, the specific impact of having moved within the county, and so on.
Those issues will be resolved, but there is an important public discussion and decision-making process to be engaged, and I would like to have the full benefit of reading all the information and hearing all the testimony before committing to a specific answer on each of those points. While I wholeheartedly agree with the establishment of a senior property tax credit, I don't pretend to know exactly how all the details should best be handled.
Regarding other areas of great concern to our senior citizens, I look forward to working on issues related to taxes, transportation, the cost of housing and health care, and the ability of seniors to stay in their homes.
A healthy community offers a high quality of life for all its citizens.