Though some area municipal officials are concerned with how they will be paid for, new property tax breaks for low-income seniors, veterans and the disabled could soon be likely in many parts of the state, thanks to a bill recently passed by the Massachusetts Senate.
The bill, approved last Friday, offers cities and towns the option to increase certain local property tax deferral and abatement programs. If the bill is eventually signed into law, it would be up to individual municipalities to decide whether to offer the expansions.
“A society is judged on how we treat our most vulnerable,” Senate President Stan Rosenberg, D-Amherst, said in a statement. “The Senate continues to look for ways to help those in need while balancing the needs of local communities to provide services to our residents.”
Though the expansions are not mandates, several municipal leaders said this week they will give the new tax breaks a serious look.
“These measures are certainly something we’d consider and take toward the Select Board,” David Burgess, assessor for Amherst, said. “We’ve already made available tax abatement programs to the maximum extent that the state allows, so Amherst is already a little ahead of the curve on this.”
Amherst has voted to continue tax break programs for the last 15 years, Burgess said.
But for other municipalities, financing the new programs could create roadblocks. Since cities are not mandated to put the programs in place, the state is not mandated to reimburse cities for the extensions.
“It’s not that there’s going to be less money coming in to the town, it’s that the rest of the town really has to pay that tax money,” South Hadley Town Administrator Mike Sullivan said. “When you give a tax break to one group but not others, you have to look at how you’re balancing that. If we implement new tax breaks, will we create more divisions even though we’re trying to put people on equal footing?”
Sullivan said South Hadley abated $133,315 in property taxes in fiscal 2016 under exemptions for veterans, senior citizens and the blind. Massachusetts reimbursed the town for $70,365.
Northampton also has tax break programs in place, Mayor David Narkewicz said. In addition to exemptions for qualified seniors based on income and asset limits, 51 people have enrolled in the city’s property tax “work-off” program for seniors and veterans since it started three or four years ago, he said, working off a total of $41,000 in tax breaks.
The tax breaks for the deaf are similar to current tax break programs for the blind, Narkewicz said, and Northampton has 23 people enrolled in that program.
“Many of these programs are ones that we already have people actively involved in,” Narkewicz said. “We definitely want to modify our programs to include what the state may now allow us to do. I’ve tried to look a lot at whether people in more vulnerable populations can afford to live here, and I want to remain mindful of that.”
Narkewicz noted, however, that although the state may extend possible tax abatements, it does not seem to be planning a corresponding reimbursement package for the money deferred in property tax.
For fiscal 2017, Northampton abated a total of $193,725.68, and received $69,210.56 in reimbursent money from the state, Narkewicz said. The remaining $124,515.12 was absorbed by the rest of the city’s taxpayers.
If more tax dollars were abated under the programs in the bill just passed by the Senate, the amount of money reimbursed by the state would not increase, Narkewicz said. More of the deficit would have to be paid by the city’s taxpayers.
“The fact that there’s not a corresponding state reimbursement doesn’t affect my desire to move forward with the program if it’s passed,” Narkewicz said. “But I do think it’s important for people to understand how this would have to be paid for.”
The bill passed the Massachusetts Senate unanimously, with a 39-0 vote, and now goes to the House of Representatives for consideration.
Bill S. 2124, which passed the Massachusetts Senate with a 39-0 vote last Friday and now moves to the House for consideration, combines several different property tax break options that cities and towns may choose to adopt.
Here’s a look at some of the highlights:
Under current law, an 8 percent interest rate on deferred taxes jumps to 16 percent once the taxpayer dies or sells the home.
The new bill offers an extension of the 8 percent rate for one year after the taxpayer dies or sells the property, or a decrease of the 16 percent rate.
The volunteer service property tax reduction program allows veterans to “work off” their property tax bill through community service.
The current maximum tax reduction is $1,000. The maximum under the new bill would be $1,500.
A similar program is already an option for senior citizens. Their maximum tax reduction is already $1,500.
The bill offers two new features for the deaf — an exemption from property tax on $5,000 of the taxable property, or $437.50 of the actual tax amount due, whichever is greater; or an exemption of $500 of the actual tax amount due.
Similar programs are already in place for the blind.
The deadline for applications to have these lands assessed, valued and taxed is currently Oct. 1. The new deadline would be Dec. 1, in order to decrease the paperwork burden on farmers during harvest season.
Under current law, a city or town can file a foreclosure on a property that does not pay deferred taxes by six months after the money is due. The new bill would extend that period to one year.
These programs and extensions would all become optional for cities and towns if the bill passes the House and is signed into law.