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Council to discuss senior tax exemption

February 24, 2013

WOONSOCKET – A proposed updating of the existing senior citizen property tax exemption aimed at lessening the burden of expected tax increases on the city’s older property owners will get further review by the City Council at its upcoming work session on Monday.
City Council President John F. Ward, who proposed an improvement of the current little-used exemption, said he is open to suggestions from his peers on exactly what changes could be made to make the exemption available to a greater number of elderly residents.
The measure to increase the allowed exemption could help seniors on fixed incomes as they face higher tax bills under the city’s efforts to balance its troubled budget with additional revenue.
“We are trying to protect seniors who live in the community and keep them in their houses,” Ward said.
The council president had placed a modification of the existing senior exemption of $158.76 for seniors earning no more than $14,000 annually before his peers at last Monday’s meeting of the council and had the proposal tabled for further discussion at the work session.
The change he offered would raise the income eligibility to $30,000 annually and create an exemption of the tax rate for the first $12,000 of a senior’s property assessment. That modification could save an eligible senior a projected $387 annually compared to the $158.76 savings now possible.
The change could come as the city further reduces its homestead property tax exemption as part of steps being recommended to address a projected growing deficit in the city’s budget.
The homestead exemption, which allows single-family homeowners a 39 percent reduction in the home valuation on which their tax bill is based, could be further reduced by the state Budget Commission running city fiscal affairs as one of its options for increasing revenue.
The city adopted the higher homestead exemption as the valuations of city property climbed rapidly several years ago and single-family homeowners now gain an even a higher benefit from the exemptions as the value of their properties have declined, according to Ward.
But while the city may move to reduce or eliminate the homestead provision, such a step could be an overwhelming burden on fixed income seniors just trying to stay in their homes, according to Ward.
Other communities in the state provide seniors with a better exemption option based on a set reduction of their assessed value and that is what Ward believes Woonsocket should offer.
“Seniors will need some kind of relief to stay in their homes and in every other community they do it through a senior tax exemption,” he said.
If seniors do sell their homes to lower their living expenses, those homes are typically bought by families with children, he noted. Additional children in the city would also mean higher costs for education in the city budget.
“They have spent time living in their community so you find a way to help them stay in their homes. It is a very common practice,” Ward said of seniors.
Exactly what kind of senior exemption is actually offered by the council as a recommendation to the Budget Commission could depend on the views of Ward’s peers on the council, he noted.
Any change would also have to be forwarded to the General Assembly for its consideration and would not likely be applied to local tax bills until 2014-15, he said.
City Councilman Albert G. Brien said Thursday that he hasn’t had a chance to fully review Ward’s proposal but does want to discuss the option during the work session on Monday.
The concept of helping local seniors with their tax burden is a worthy one, he noted, but Brien also suggested that the overall impact must be weighed on the city as a whole.
“Any time we give something away and it creates a minus, it also creates a plus in some other category,” he said. “The concept is certainly laudable but I would have to see what the total cost would be.”
With just about 20 local seniors taking advantage of the exemption now, a change to include a significantly greater amount of exempted property could shift the burden of carrying the city budget to other sources of revenue, according to Brien.
“I need to know how much it would cost and where will that income comes from,” he added.
As it is, Brien said, a change in the homestead exemption is likely to create a shift in the local tax burden across classifications and that impact must be determined before any other changes are made.

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