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Lawmakers tinker with senior tax break
Rather than establish statewide ceiling, plan would use income figure in each county as freeze guideline
By Richard Locker, Commercial Appeal
April 25, 2007
NASHVILLE -- Legislation allowing Tennessee cities and counties to freeze property taxes of homeowners 65 and up began taking shape Tuesday after weeks of talks -- but with lower household-income limits to qualify than originally proposed.
Rather than a statewide ceiling on seniors' income to qualify for the tax freeze, sponsors of the measure and county government representatives agreed to use the median household income of people ages 65 to 74 in each county as the maximum income level for seniors to qualify.
In Shelby County, that would mean homeowners 65 and up whose annual household income is no more than $36,063 would qualify for the tax freeze on their primary residence, if the bill passes the state legislature and Shelby County opts into the program. Each county's figure would be adjusted yearly based on the annual cost-of-living adjustment in Social Security payments.
The bill's sponsors -- Sen. Mark Norris, R-Collierville, and Rep. John DeBerry, D-Memphis -- originally sought an income ceiling of $50,000 to qualify, with local governments allowed to set lower ceilings. But the state attorney general opined last month that the legislature cannot delegate to local officials its authority to set qualifying standards.
The new version of the bill had its first airing in the Senate State and Local Government Committee Tuesday, which voted 9-0 to send it to the Finance Committee for more review. It is set for hearing today in a House subcommittee.
Norris and DeBerry said Tuesday they believe the bill will win approval this year but it still has several hurdles to jump and details to be worked out.
It would set up the legal framework for the state constitutional amendment ratified by 83 percent of the voters in last November's statewide election. The amendment enables, but does not require, cities and counties to enact the senior tax freeze within their borders. The legislation sets the parameters for the program, such as the income limits for eligibility.
Under the constitutional amendment, seniors will still pay their annual property-tax bills -- but at the dollar amount they owed when they turned 65 or acquired the house, whichever is later.
"It's a big step in the right direction and I appreciate the support it got today," Norris said after presenting the agreement worked out with county lobbyists.
Critics say it will shift the tax burden to younger homeowners and businesses, or force local governments to cut spending.
"I believe everybody wants to do it" (offer the tax freeze to their local senior homeowners), DeBerry said. "I don't see any difficulty with it at this juncture, but that may change."
Another key agreement is that a senior household's total wealth or assets will not be considered for determining eligibility. The constitutional amendment allows the legislature to use both income and wealth in determining eligibility. Some seniors have large assets but lower incomes.
-- Richard Locker: (615) 255-4923
Senior tax freeze
Tennesseans ratified a state constitutional amendment last November allowing city and county governments to freeze property taxes for homeowners 65 and up. The state legislature must set the parameters before local governments can opt in or out of the program.
If median household income for each county's residents who are 65 to 74 is the maximum income to qualify for the freeze, in Shelby County:
Median household income for that age category is $36,063.
There are 248,958 total single family households in the county and 46,521 of them, or about 19 percent, are owned and occupied by people 65 and over.
64 percent of the homeowners 65 and up would qualify because their incomes fall under the median for their age group.
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