Topic:
ELDERLY; LEGISLATION; LEGISLATIVE INTENT; MUNICIPAL FINANCE; MUNICIPAL ORDINANCES; PROPERTY TAX; TAX EXEMPTIONS;
Location:
TAX EXEMPTIONS - ELDERLY;

OLR Research Report


August 22, 2008

 

2008-R-0467

LEGISLATIVE HISTORY OF PA 06-176

By: Nicole Dube, Legislative Analyst II

You asked for a legislative history of PA 06-176, which created a local option senior property tax freeze. You also asked which towns adopted a local tax freeze in response to this legislation.

SUMMARY

PA 06-176 allows towns, without state reimbursement, to freeze the property taxes for homeowners if they or their spouses are age 70 or older and meet the circuit breaker program's income limits. The freeze continues for a surviving spouse who was at least age 62 when the homeowner died. The act also allows towns to phase-in the effects for property revaluations for up to five years using one of two implementation options. (Prior law allowed towns to adopt a three-year phase-in.)

Towns have had the option to offer local property tax relief, without state reimbursement, since 1973. The law (CGS 12-129n) allows towns to offer, with certain restrictions, seniors age 65 and older additional local option tax relief without income criteria. The tax relief can take any form, including freezing tax payments at specified levels.

According to the Commission on Aging's (COA) February 2008 Report, “Property Tax Relief for Older Adults: A Profile of Connecticut's Local Programs,” 20 towns currently offer local option tax freeze programs, nine of which were implemented since enactment of PA 06-176. These towns include Canterbury, Cheshire, Lyme, Monroe, New Haven, Southington, Torrington, Trumbull and West Hartford.

HISTORY OF PA 06-176

HB 5093

PA 06-176 originated in HB 5093, “An Act Concerning Property Tax Relief For Certain Elderly Homeowners.” The bill was raised by the Select Committee on Aging.

The original bill allowed a municipality, with approval from its legislative body, to freeze the property taxes on homes owned by certain elderly people. To be eligible, the homeowner or spouse had to be age 70 or older and reside in the state for at least one year. The freeze continued for a surviving spouse who was at least age 62 when the homeowner died. It required homeowners to have qualifying income (both taxable and nontaxable) in the immediately preceding tax year that did not exceed the limits for the state-reimbursed “circuit breaker” program (currently $29,800 for individuals and $36,500 for married couples, adjusted annually for inflation). It also required annually adjusting the qualifying income amounts to reflect inflation in Social Security income. Under the bill, people whose taxes were frozen could still qualify for other property tax relief programs.

The bill also allowed the town to impose asset limits for eligibility and put a lien on the property for the total tax relief granted plus interest at a rate the town determined. It established application procedures and deadlines and imposed penalties for false statements. It did not provide state reimbursement for lost revenue to a town that chose to offer the optional tax freeze. The bill applied to assessment years beginning on or after October 1, 2006.

Public Hearing

The Aging Committee held a public hearing on HB 5093 on February 23, 2006. Two witnesses testified in favor of the bill: Rep. Lawrence Miller, one of the bill's co-sponsors, and Maggie Edward, the acting state long-term care ombudsman. Rep. Miller stated that the bill would assist seniors in meeting the increased financial demands caused by the rise in utility and energy costs, allowing them to continue to live independently. He cited an article by the New England Economic Partnership, a non-profit organization that provides economic analyses and forecasts of the New England region, that estimated the increase in oil, gas, and other home-related expenses would cost families approximately $1,700.

Committee Action

The Aging Committee referred the bill to the Finance, Revenue, and Bonding Committee on March 2, 2006. The vote was 11-0 with 2 members absent.

The Finance Committee reported a substitute bill on April 5. The substitute deleted the provision requiring an annual adjustment to the qualifying income to reflect Social Security inflation and made technical changes. The vote was 50-0.

House Action

The House took up the bill on May 1, 2006. When the bill was called, Rep. Feltman, Aging Committee chairperson, summarized it noting it was an optional, locally funded program and not a mandate. He then offered House Amendment “A” to (1) make minor changes in the tax freeze provisions and (2) add provisions regarding the phase-in of property revaluations. Specifically, the amendment:

1. increased from three to five the number of years that municipalities were able to phase-in the effects of their property taxes;

2. required the town's legislative body (the board of selectmen in town meeting towns) to select one of two implementation options for the phase-in;

3. allowed the town to phase in part, rather than all, of the assessment increase;

4. allowed the legislative body or board of selectmen to discontinue the phase-in;

5. modified how property built during the phase-in is assessed;

6. required the town's chief elected official to notify the Office of Policy and Management (OPM) secretary within 30 days after the legislative body decides to implement or discontinue the phase-in; and

7. imposed a $100 fine for an official's failure to notify OPM.

The debate focused almost entirely on the phase-in of property revaluations. Rep. Feltman described the amendment as the “West Hartford originated revaluation bill” designed to benefit West Hartford taxpayers as well as other towns across the state facing large assessment increases.

Rep. Farr testified in support of the amendment, calling it a “very well thought out approach.” He noted that extending the phase-in from three to five years bought it into alignment with current revaluation laws requiring towns to revalue all property at least once every five years. He believed the amendment provided a necessary option to towns to help alleviate the problems they encounter when experiencing dramatic increases in property values. However, he noted that the phase-in “shifts or postpones shifting the burden from one group of taxpayers to another.”

Rep. McClusky described how the amendment originated from a collaboration between the Town of West Hartford, the Connecticut Business and Industry Association, and the Metro Hartford Chamber of Commerce. While the initial proposal was geared toward West Hartford, he believed the amendment would also benefit other cities such as New Haven and Stamford.

Reps. Miner and Belden also testified in support of the amendment. However, Rep. Miner expressed concern with the amendment's use of the term “legislative body.” The amendment required a town to obtain approval from its “legislative body” before implementing a local option tax freeze. But, for the phase-in of property revaluations, it required the town to obtain approval from its “legislative body or its board of selectman if the legislative body is a town meeting.” Rep. Miner objected to the latter requirement, stating it was “handing off that authority to a body that I don't think many of the municipalities in this state intend to have the Legislature confirm.” House “A” was adopted on a voice vote.

The remaining debate was very short. Rep. Moukawsher testified against the bill, citing the need for the legislature to provide property tax relief for everyone instead of specific groups such as the elderly and manufacturers.

Reps. Adinolfi and Miner testified in favor of the bill citing the need to provide towns with additional options to provide property tax relief to seniors. Rep. Adinolfi said it would not cost towns because they have the

choice to recapture the lost taxes by placing a lien on the property. Rep. Miner said it would help seniors cope with rising costs in energy and utilities. The amended bill passed by a vote of 148-0.

Senate Action

The Senate took up the amended bill on May 3. It was placed on consent calendar and adopted by a vote of 36-0 without discussion.

TOWNS WITH A LOCAL OPTION TAX FREEZE

The Commission on Aging issued a report in February 2008, “Property Tax Relief for Older Adults: A Profile of Connecticut's Local Programs” that surveyed all the state's towns to determine which have implemented local option property tax programs for the elderly, including credits, deferrals, abatements, and freezes. Of the 169 towns surveyed, 108 (64%) have a local option program and 61 (36%) do not. (A copy of the report is enclosed.)

According to the report, 20 towns currently offer local option tax freeze programs, nine of which were implemented since enactment of PA 06-176. Table 1 provides a list of these towns, including program details obtained through the survey.

Table 1: Towns with Local Option Tax Freeze Programs

Town

Implementation

Lien on Home

Annual Income Limits

Asset Limits

Program Details

 

Before PA 06-176

After PA 06-176

       

Bethel

X

 

N

$45,000

 

Applicants must live at that property for at least one year before applying. The program began with the 2006 grand list. At the time of the survey there were 288 program participants.

Canterbury

 

X

N

   

No other information was available.

[1] Cheshire

 

X

N

$29,800 if single; $36,500 if married

N

Applicants must be at least 70 years of age. At the time of the survey there was one program participant.

Durham

X

   

$40,000 if single; $84,000 if married

 

The town council or similar legislative body determines the freeze rate and the number of participants.

[1] East Haven

     

$29,800 if single; $36,500 if married

 

No other information was available.

Fairfield

X

   

$40,000

$500,000

The program was modified after enactment of PA 06-176.

Guilford

X

 

N

$29,600 if single; $95,000 if married

 

Applicants must be at least 65 years old and live at that property for at least one year before applying. The program began with the 2006 grand list. At the time of the survey there were 630 program participants.

Lyme

 

X

N

$40,000 if single; $47,500 if married

 

Applicants must be at least 65 years old and live at that property for at least five years before applying. The program began with the 2006 grand list.

Meriden

X

 

Y (with interest)

$35,000

 

The program was modified after enactment of PA 06-176. The program began with the 2006 grand list. At the time of the survey there was one program participant.

Milford

X

 

N

   

Applicants must live at that property for at least one year before applying. The program was started for the grand list year 2006.

Monroe

 

X

N

$52,950

 

Applicants must be at least 65 years of age and lived at that property for one year prior to applying. The program began with the 2007 grand list .

Naugatuck

X

 

N

 

$125,000

Applicants must live at that property for at least one year before applying. The program began with the 2006 grand list. At the time of the survey there were 254 participants.

New Haven

 

X

 

$50,000

 

Applicants must be at least 70 years old or a widow at least 62 years old at the time of the eligible spouse's death. Participants may receive up to $2,000 in savings. Any amount over $2,000 must be deferred or paid by the participant.

Southington

 

X

Y (with interest)

 

N

Applicants live at that property for one year prior to applying. The program began with the 2006 grand list.

Tolland

X

   

$47,700

 

Taxes are frozen at the rate for the year in which the participant is accepted for benefits. Participants must pay for acreage changes of property, while property taxes are frozen. At the time of the survey there were 60 program participants.

[1] Torrington

 

X

N

$29,800 if single; $36,500 if married

$125,000

Applicants must be at least 70 years of age and lived at that property for one year prior to applying. The program began with the 2006 grand list.

Trumbull

 

X

N

$50,000

N

Applicants must be at least 70 years old and have lived at that property for one year prior to applying. Taxes are frozen until July 2012 when participants must reapply and have their taxes frozen at a new rate.

Westbrook

X

 

Y

$58,000

 

The program began with the 2005 grand list year. At the time of the survey there were 89 program participants.

[1] West Hartford

 

X

 

$29,800 if single; $36,500 if married

N

The program began with for the 2006 grand list.

[1] Winchester

X

   

$29,800 if single; $36,500 if married

 

The program was modified after enactment of PA 06-176.

Source: Information taken directly from the COA Report, “Property Tax Relief for Older Adults: A Profile of Connecticut's Local Programs,” February 2008.

[1] Income limits for these programs are the same as the Circuit Breaker Program. We modified the income limits listed in the COA report to reflect the current Circuit Breaker income limits.

ADDITIONAL RESOURCES

OLR Report 2006-R-0342, Local Option Property Tax Relief, http://www.cga.ct.gov/2006/rpt/2006-R-0342.htm.

Commission on Aging report, “Property Tax Relief for Older Adults: A Profile of Connecticut's Local Programs.” February, 2008. http://www.cga.ct.gov/coa/PDFs/Reports/prop%20tax%20report%20FINAL%202-6-08%20_2_.pdf.

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