Proposal would affect only new applicants for property tax relief; would save $175,000
New Castle County Council members are expected to vote Tuesday on legislation that would reduce future property tax exemptions for senior citizens and the disabled.
Before the vote, the public will have a chance to speak on the proposal to lower both the income ceiling for the exemption and the amount of property value that is exempted.
Councilman George Smiley, D-7th District, introduced the legislation last month to help close the county’s multimillion-dollar budget deficit. Reducing the exemption would bring in $175,000 to $200,000 in the first year.
That amount would increase to as much as $600,000 by 2011, according to county estimates.
“All in all, I think what we’re proposing has been well received,” Smiley said. “The majority of people I talk to understand that we’re taking every action we can in terms of cost-cutting and trying to find new revenue streams.”
Currently, homeowners who are 65 and older and make no more than $50,000 a year can receive an exemption allowing them to subtract $50,000 from the assessed value of their home before figuring taxes. Marital status and Social Security benefits are not taken into account.
Smiley’s proposal would bring the yearly income limits to $22,500 for singles and $27,500 for married couples. The amount of exempted property value would drop to $32,000.
The ordinance also would limit the exemption to homes with a maximum assessed value of $125,000. That’s equivalent to a house with a market value of roughly $400,000.
The same changes would apply to disabled homeowners, who currently must make $40,000 or less to qualify for the exemption.
If the ordinance is approved, people now receiving the benefits would be grandfathered into the program. The changes would affect only new applicants.
County Executive Chris Coons said he supports the ordinance because it doesn’t eliminate the exemption entirely, which was the recommendation of a task force convened last year to examine county finances.
“This proposal protects current program beneficiaries, continues assistance for those struggling to pay higher costs of living on fixed incomes, closes loopholes that benefit the wealthy and preserves our ability to fund programs that seniors, disabled and other residents want and need,” he said.
Resident Jack Davidson, who lives in Rosetree Hunt, said he is against the plan. The 60-year-old retired educator is hoping to take advantage of the discount in another five years.
“I’m not a political person, but I am part of a humongous baby boom generation that is looking forward to that tax break,” he said. “Electricity’s gone up, gas has gone up, property taxes have gone up. This little bit of chump change is the county’s way of saying, ‘We’re going to pass this savings on to you.’ ”
Smiley’s plan also would restructure discounts on sewer fees to qualifying seniors and the disabled, who currently pay a flat fee of $36 a year. The fee would change to half their yearly sewer bill or $50, whichever is greater.
Smiley, 51, said the county must tighten its belt by sunsetting perks that were offered when the government was flush with cash from real-estate transfer taxes. Those taxes, which are collected on home sales, have fallen dramatically as the market has cooled.
“As much as people want to raise the issue about property taxes, that is the revenue that this county government was based on,” he said. “I’m moving forward with this and, hopefully, it will pass.”