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Peter’s Take: Deferrals-Only Real Estate Tax Breaks for Low Income Seniors

by Peter Rousselot July 12, 2018 at 2:45 pm 0

Peter’s Take is a weekly opinion column. The views and opinions expressed in this column are those of the author and do not necessarily reflect the views of ARLnow.com.

As ARLnow.com reported, the County Board is scheduled to vote on July 14 on changes to a program that provides real estate tax relief to low-income seniors. This RETR program has been in effect since 1991.

According to a county staff report:

The RETR program provides an exemption and/or deferral of real estate taxes for qualified Arlington homeowners who are age 65 or older, or who are permanently and totally disabled. The current… program provides an exemption and/or deferral of real estate taxes for qualified Arlington homeowners whose annual household income is at or below $99,472, and whose household assets (excluding the value of their Arlington home) are at or below $340,000… In calendar year 2017, [the county] approved 915 households for RETR, resulting in $4,139,872 in foregone revenue.

$3,744,588 (90 percent) of that $4,139,872 of foregone tax revenue was for exemptions.

The ARLnow.com story explains that the County Board has been asked to make these changes to the program (among others):

  • increase the asset limit to $400,000… and allow the County to adjust that amount annually as property values and the area’s median income level changes
  • For the very top earners… — households making anywhere from $80,000 to $99,472 per year — restrict them to only applying for a deferral from the taxes, not a full exemption

County Board Chair Katie Cristol is quoted as saying:

“The goal is to tighten it and make it more effective as a program, not lower obstacles for participation. This is not a large-scale policy change.

The county should convert this program as rapidly as possible into a 100 percent deferral program

It is inequitable and unfair to Arlington taxpayers to provide the heirs of low-income Arlington seniors with the permanent windfall those heirs now are receiving from the exemption component of the current program.

In a convincing recent letter to the Sun-Gazette, Arlington activist Kathryn Scruggs captured some of these inequities:

Many other cities and towns throughout the country offer programs that freeze real-estate taxes for qualifying elder households so that they still pay taxes, but with no annual increase. That way they continue to provide revenue for the jurisdiction… The community is desperate for more schools and will need more teachers, resources and staff. Yet the county government was forced to cut staff positions and programs for [the] upcoming fiscal year because it did not have enough money.

In his most-up-voted comment to the ARLnow.com story, Arlington activist Dave Schutz similarly was spot-on when he stated:

I am absolutely unconvinced that we should be exempting ANYONE from property taxes under this program. Deferral is just fine, and it lets granny stay in her vine covered cottage, that’s an absolutely generous and appropriate thing to do. Then the taxes come [to] the county at the end… But exempting simply bumps up the inheritance for her kids in Chillicothe after she dies — why do we have any interest in doing that?

The exemption component of the current program cannot be justified out of concern for mortgage lenders

An extensive report from an RETR working group noted (Recommendation 6) that some mortgage lenders object to a deferral program, claiming it threatens their creditors’ rights. Arlington taxpayers should not be held hostage to such objections.

Conclusion

Arlington’s RETR program needs a swift, large-scale, prospective policy change: no more exemptions.

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