Senior tax relief plan ignites new battle over voter-approved tax law

Senior tax relief plan ignites new battle over voter-approved tax law Thursday, February 26, 2004

Michael P. Norton State House News Service

Democrats and Republicans have waged [battle] this year over spending, reforms, and budget cuts. Now a new fight is brewing on Beacon Hill over tax relief.
Moments after Democratic lawmakers endorsed a series of local option proposals to help senior citizens cope with rising property tax burdens, Republican Gov. Mitt Romney said he's open to helping elderly homeowners but believes a key provision of the new plan undermines the tax-limiting Proposition 2 1/2.
"I will veto anything which tinkers with Prop. 2 1/2," Romney said after meeting in his office with the chief sponsors of the 1980 ballot law, Barbara Anderson and Chip Ford. "What's on the table now does more than tinker. It undermines in a serious way the intent and purpose of Prop. 2 1/2 and therefore I will fight it in every way I possibly can."
The House last week, on a voice vote, approved legislation exempting some senior citizens from tax increases passed on override votes. On Thursday, the Legislature's Taxation Committee endorsed a series of senior tax relief proposals, including the one approved by the House, and the broader package of tax law changes will soon be debated by the full Senate, according to committee members.
The bill's supporters say too many senior citizens are being forced to sell their homes and move from their hometowns because while their incomes are fixed, their property taxes are soaring due to the roaring real estate market. But Romney says Democrats are more concerned with passing local tax hikes, and alleged the primary purpose of the bill is to convince senior citizens to stop voting against overrides.
"Its purpose is to take the burden away from senior citizens and keep them away from the voting booth to stop Prop. 2 1/2 overrides, and instead causing hardworking families on limited incomes to be stuck with higher tax bills," Romney said. "That's the wrong way to protect senior citizens." A harmful side effect of the proposal, the governor said, would be to pass the burden of local tax hikes onto the unemployed.
The governor did not endorse specific tax relief ideas, but said many are on the table and he is "very committed" to the idea of using government spending and tax policies to help senior citizens, especially those with low or fixed incomes. "We'll be open to the widest array of ideas to do that," said Romney.
The governor suggested that cities and towns can do more to control costs and negotiate more favorable prices to avoid overrides. "Let's limit the size of government, limit the expense in our municipalities, be tougher in our negotiations with the people who are providing resources to cities and towns, get our costs under control, as opposed to raising taxes continually in property taxes or in other taxes," Romney said.
Legislators say their ideas have been hashed out over four months in response to demands from senior citizens throughout Massachusetts and municipal officials who are both sympathetic to the plight of seniors and looking for ways to get tax overrides approved to offset cuts in state aid from Beacon Hill. In addition, lawmakers said, the proposals would take effect only if adopted by the local governing body.
Anderson said lawmakers are using seniors to increase the likelihood of approval of local tax overrides, which require a two thirds vote to pass [sic - requires only a majority]. "There's something wrong here," said Anderson. "And it's obvious. It's transparent. And we're going to fight it because it's an assault on Prop. 2 1/2 and in the long run isn't going to do anyone any good, including the seniors."
Based on her experience with local override efforts, Anderson said senior citizens are often not the direct beneficiaries of override votes and due to "human nature," often vote against local tax increases. She said that if the legislation is approved, seniors may not longer be part of the "front line defense" of Prop. 2½.
Laura Russell of Sharon, a volunteer with the Massachusetts Councils on Aging, said she has voted for local overrides largely because her son attends middle school in the town. But Russell said she has sympathized with the impact of overrides on senior citizens and believes the bill will address their needs.
"The Legislature would be wise to pass such a constructive bill," Russell said. "We need to help seniors who find they have no flexibility to be able to stay in their homes without going bankrupt. I know senior after senior who have been forced to move and pull up their roots."
Russell said the statewide councils on aging group voted unanimously Friday to endorse the tax relief proposals approved by the committee Thursday. Committee co-chairwoman Sen. Cynthia Creem said municipal officials also sympathize with senior citizens and would welcome a chance to offer relief.
"We're really excited about this," Creem said. "We know it will come out of the Legislature in one form or another and it will give seniors a break." She said the Senate Ways and Means Committee is likely to rework the bill, before it hits the Senate floor for debate and consideration of amendments.
Sen. Robert O'Leary (D-Barnstable) said he hopes the bill "will help us pass some necessary overrides" and make more seniors eligible for tax credits by raising income and home value eligibility standards.
"We need relief," said O'Leary. "There are people that are really in trouble."
Here's a rundown of the bill's main provisions:

Allowing municipalities to exempt homeowners who qualify for the so-called circuit breaker tax credit from increases in property taxes resulting from Proposition 2½ overrides. To qualify for the circuit breaker credit, a person must be 65 or older, or would need to own a home with an assessed value of $700,000 or less. The income threshold is $43,000 for single filers and $64,000 for married filing jointly.
Making owners of homes valued up to $750,000 eligible for the so-called circuit breaker tax credit. The bill also indexes the eligibility standards to housing rather than consumer price indexes. The current eligibility threshold is $432,000.
Allowing cities and towns to charge less than the mandated 8 percent interest rate to entice more seniors into using an existing property tax deferral program. Under the bill, 8 percent would be the ceiling.
Allowing cities and towns to offer a property tax exemption to eligible seniors equal to 10 percent of the average assessed value of residential property;
Allowing municipalities to extend property tax hardship abatements to individuals based on age, infirmity or poverty eligibility standards. Currently, individuals must meet all three standards.
Extending an existing property tax exemption of up to $500 for individuals 70 and over to disabled individuals of any age;
Allowing seniors who volunteer for city or town governments to work off $1,000 of their property tax bill, up from the present $750 allowance;
Creating an awareness program to provide more information to older taxpayers.

Senior tax relief plan ignites new battle over voter-approved tax law	Thursday, February 26, 2004
Michael P. Norton	State House News Service
Democrats and Republicans have waged [battle] this year over spending, reforms, and budget cuts. Now a new fight is brewing on Beacon Hill over tax relief. Moments after Democratic lawmakers endorsed a series of local option proposals to help senior citizens cope with rising property tax burdens, Republican Gov. Mitt Romney said he's open to helping elderly homeowners but believes a key provision of the new plan undermines the tax-limiting Proposition 2 1/2. "I will veto anything which tinkers with Prop. 2 1/2," Romney said after meeting in his office with the chief sponsors of the 1980 ballot law, Barbara Anderson and Chip Ford. "What's on the table now does more than tinker. It undermines in a serious way the intent and purpose of Prop. 2 1/2 and therefore I will fight it in every way I possibly can." The House last week, on a voice vote, approved legislation exempting some senior citizens from tax increases passed on override votes. On Thursday, the Legislature's Taxation Committee endorsed a series of senior tax relief proposals, including the one approved by the House, and the broader package of tax law changes will soon be debated by the full Senate, according to committee members. The bill's supporters say too many senior citizens are being forced to sell their homes and move from their hometowns because while their incomes are fixed, their property taxes are soaring due to the roaring real estate market. But Romney says Democrats are more concerned with passing local tax hikes, and alleged the primary purpose of the bill is to convince senior citizens to stop voting against overrides. "Its purpose is to take the burden away from senior citizens and keep them away from the voting booth to stop Prop. 2 1/2 overrides, and instead causing hardworking families on limited incomes to be stuck with higher tax bills," Romney said. "That's the wrong way to protect senior citizens." A harmful side effect of the proposal, the governor said, would be to pass the burden of local tax hikes onto the unemployed. The governor did not endorse specific tax relief ideas, but said many are on the table and he is "very committed" to the idea of using government spending and tax policies to help senior citizens, especially those with low or fixed incomes. "We'll be open to the widest array of ideas to do that," said Romney. The governor suggested that cities and towns can do more to control costs and negotiate more favorable prices to avoid overrides. "Let's limit the size of government, limit the expense in our municipalities, be tougher in our negotiations with the people who are providing resources to cities and towns, get our costs under control, as opposed to raising taxes continually in property taxes or in other taxes," Romney said. Legislators say their ideas have been hashed out over four months in response to demands from senior citizens throughout Massachusetts and municipal officials who are both sympathetic to the plight of seniors and looking for ways to get tax overrides approved to offset cuts in state aid from Beacon Hill. In addition, lawmakers said, the proposals would take effect only if adopted by the local governing body. Anderson said lawmakers are using seniors to increase the likelihood of approval of local tax overrides, which require a two thirds vote to pass [sic - requires only a majority]. "There's something wrong here," said Anderson. "And it's obvious. It's transparent. And we're going to fight it because it's an assault on Prop. 2 1/2 and in the long run isn't going to do anyone any good, including the seniors." Based on her experience with local override efforts, Anderson said senior citizens are often not the direct beneficiaries of override votes and due to "human nature," often vote against local tax increases. She said that if the legislation is approved, seniors may not longer be part of the "front line defense" of Prop. 2½. Laura Russell of Sharon, a volunteer with the Massachusetts Councils on Aging, said she has voted for local overrides largely because her son attends middle school in the town. But Russell said she has sympathized with the impact of overrides on senior citizens and believes the bill will address their needs. "The Legislature would be wise to pass such a constructive bill," Russell said. "We need to help seniors who find they have no flexibility to be able to stay in their homes without going bankrupt. I know senior after senior who have been forced to move and pull up their roots." Russell said the statewide councils on aging group voted unanimously Friday to endorse the tax relief proposals approved by the committee Thursday. Committee co-chairwoman Sen. Cynthia Creem said municipal officials also sympathize with senior citizens and would welcome a chance to offer relief. "We're really excited about this," Creem said. "We know it will come out of the Legislature in one form or another and it will give seniors a break." She said the Senate Ways and Means Committee is likely to rework the bill, before it hits the Senate floor for debate and consideration of amendments. Sen. Robert O'Leary (D-Barnstable) said he hopes the bill "will help us pass some necessary overrides" and make more seniors eligible for tax credits by raising income and home value eligibility standards. "We need relief," said O'Leary. "There are people that are really in trouble." Here's a rundown of the bill's main provisions: Allowing municipalities to exempt homeowners who qualify for the so-called circuit breaker tax credit from increases in property taxes resulting from Proposition 2½ overrides. To qualify for the circuit breaker credit, a person must be 65 or older, or would need to own a home with an assessed value of $700,000 or less. The income threshold is $43,000 for single filers and $64,000 for married filing jointly. Making owners of homes valued up to $750,000 eligible for the so-called circuit breaker tax credit. The bill also indexes the eligibility standards to housing rather than consumer price indexes. The current eligibility threshold is $432,000. Allowing cities and towns to charge less than the mandated 8 percent interest rate to entice more seniors into using an existing property tax deferral program. Under the bill, 8 percent would be the ceiling. Allowing cities and towns to offer a property tax exemption to eligible seniors equal to 10 percent of the average assessed value of residential property; Allowing municipalities to extend property tax hardship abatements to individuals based on age, infirmity or poverty eligibility standards. Currently, individuals must meet all three standards. Extending an existing property tax exemption of up to $500 for individuals 70 and over to disabled individuals of any age; Allowing seniors who volunteer for city or town governments to work off $1,000 of their property tax bill, up from the present $750 allowance; Creating an awareness program to provide more information to older taxpayers.

Send comments to: webmaster@framinghamtpa.org

Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation