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Senior tax relief program spreads
Impact on coffers uncertain
By CLAY CAREY • Staff Writer • Tennessean.com
April 27, 2008
Retirees Reedman and Charlene Vaught just get by on Social Security payments and a little money Reedman tucked away during his career as a Baptist preacher.
"Anything we can save anymore comes in handy," the 69-year-old Portland resident said. Their income is set, but the price of everything else seems to rise continuously.
Reedman Vaught and his wife, a retired nurse, were among the first to sign up for a county property tax freeze for low-income senior citizens, available in Sumner this year for the first time.
Already this year, nine Tennessee counties and cities have enacted property tax freezes for low-income seniors through a state program adopted last summer. It's likely that other communities aren't far behind — even as local governments face lean times in the upcoming budget year.
The number of cities and counties that have frozen property taxes for seniors has doubled since January, according to the state comptroller's office. Among this year's additions: Sumner, Williamson andMontgomery counties and the city of Goodlettsville.
Portland officials have discussed a similar set property tax rate for older residents. "It'd be nice if they can follow suit with (Sumner) County," Reedman Vaught said.
A committee studying a senior property tax freeze in Rutherford County should come back with a recommendation by this summer, County Mayor Ernest Burgess said.
Burgess said there's some concern about the revenue the county might lose, and Rutherford is still trying to figure out the mechanics of differing tax rates among categories of residents. But he doubts those worries will derail the popular proposal.
"I think it has an overwhelming likelihood of moving forward," Burgess said.
So far, more than 200seniors have signed up for the program in Sumner County, Trustee Marty Nelson said.
"If their appraisals increase or the tax rate increases, they get to continue at that base rate," Nelson said.
"So many of them are on fixed incomes — this pretty much fixes their taxes for them."
There is an April 2009 deadline for seniors in Sumner to get their tax rate frozen at the 2008 property tax rate. County commissioners will determine the 2008 property tax rate this summer; the current rate is $2.28.
Revenue loss could hurt
Exempting hundreds, or maybe thousands, from future property tax increases will be costly. That's a common concern for cities and counties that haven't enacted the tax freeze, said Tom Fleming, the state comptroller's official in charge of assessments.
"I think they want to do what is best for all the citizens," he said. "I think a lot of them are waiting to see how this might affect some of these other counties" that approved the freezes early on.
It could be a few years before counties and cities know the full financial effect of the property tax freezes.
There's none in the first year of the program. Even in following years, Fleming said, it won't necessarily create budget problems — financial hits won't be felt until property tax rates are increased by local leaders or adjusted through regular appraisals.
Only two Nashville-area governments, Wilson and Davidson counties, enacted the tax freeze for senior citizens in its first year. They were among nine counties and cities statewide to implement freezes in 2007.
So far, about 1,000 Wilson County residents have qualified for the tax freeze, enacted there in 2007. County commissioners have not moved to raise its $2.48 tax rate since then, but some officials have said an increase might be needed this year.
"It's been a successful program. It's a good feeling to help those that need the help," County Trustee Jim Major said. But county officials still don't know whether the eventual cost will outweigh the benefits.
"We can't gauge that until there's a tax increase," Major said. "There's going to be a certain amount of revenue loss. … You are going to have about 1,000 people not paying that additional tax."
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