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Seniors can’t make more than $39K to get tax freeze
By John Rodgers, NashvilleCityPaper.com
April 25, 2007
Davidson County seniors making less than $38,881 annually could qualify to have their property tax rates frozen under proposed legislation that started to move Tuesday in the state Legislature.
The property tax freeze talks are in response to a constitutional amendment that Tennesseans approved last year to allow certain seniors 65 years of age or older to have their tax rates frozen.
The referendum on the amendment passed overwhelmingly with 83 percent voting in its favor.
After the amendment’s passage, the Legislature still had to set the income ceiling to determine which seniors would qualify to have their property tax rates frozen.
Tuesday, after weeks of discussions between lawmakers and local government officials about the income ceiling, the Senate State and Local Government Committee approved a bill to set the income limit at whatever a county’s median income is for home-owning seniors between ages 65 and 74.
“Those who qualify will continue paying their property tax at the rate they’ve been paying,” said Senate Republican Leader Mark Norris (R-Collierville), the sponsor of the passed amendment and the bill. “If the tax rate goes up or if there’s a reappraisal and the assessed value goes up, their tax is capped.”
In Davidson County, home-owning seniors between ages 65 and 74 have a median household income of $38,881. About 63 percent of seniors in Davidson County would fall under that income ceiling.
That means if the legislation is approved, a senior citizen homeowner in Davidson County with a household income less than $38,881 could qualify to have their property tax rates frozen.
If a senior homeowner earned more than $38,881 per year in household income, his or her property tax rates could be increased like everyone else’s.
In Williamson County, one of the wealthiest counties in the state, the income ceiling for seniors hoping to qualify is $52,185.
Besides Williamson, the other doughnut counties around Nashville have similar median household incomes to Davidson County, ranging between about $36,000 and $40,000.
If the bill passes, local governments would have the option of whether or not they opt into the senior property tax freeze program.
But local governments have been wary of how much freezing the property tax rates could affect their tax revenues and shift the tax burden to younger homeowners.
In Davidson County, for example, if the property tax rates were increased by 1 cent, then Metro government would lose about $100,000 in property tax revenue from those seniors who would not have to pay the 1-cent increase.
Under that example, Metro would have to raise property taxes more than they desired to make up for the $100,000 shortfall caused by the freeze.
Doug Goddard, executive director of the Tennessee County Commissioners Association, said the property tax rate freeze would cause the property tax burden to be shifted to other taxpayers, such as “young families.”
“There’s no question about that,” Goddard said. “It’s shifted to all other property taxpayers.”
Goddard said seniors who qualify for the property tax freeze still pay their property taxes. They would just not pay the higher rate.
While local government officials are wary of the effect less tax revenues will have on their budgets, they say that there would likely be overwhelming political pressure on city councils and county commissions to opt into the program.
Charlie Cardwell, Metro’s trustee, said the Metro Council would likely want to get into the senior property tax freeze program.
Under the amendment, the only way seniors property tax rates could be unfrozen is if they voluntarily make improvements to their property, which causes the value to increase.
Goddard said the income ceiling only applies to just that – income – and not a senior’s wealth. The Internal Revenue Service’s definition of income would be used.
In the bill, the state comptroller’s office will promulgate rules on the income ceiling and other factors involved in implementing the freeze.
Since the State and Local Government Committee approved the bill, the Senate Finance Committee will next take up the measure, which is still in a subcommittee in the House.
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