City seniors to get property tax break

SOUTH PORTLAND — It started last fall, with a hand-written note from a group of senior citizens. It was brief, according to South Portland City Councilor Patti Smith – “Times are tough, what can you do for me?”

On June 20, after many months of work by city staffers, Smith and her peers passed an ordinance to extend a helping hand to members of the South Portland community aged 70 and older.

Beginning Dec. 1, those residents will be able to apply for property tax relief – perhaps as much as $400 a year – provided they have lived in the city for 10 of the last 12 years and owned or rented a homestead on the tax rolls for the two most recent years prior to application. Anyone interested in a tax break also must have first applied for and been accepted to the state’s “circuit-breaker” program.

“I feel that this is a strong step for us, as a city, of taking care of everyone in our city,” said Smith, just prior to the vote.

“I think it’s great to honor seniors that have been residents of South Portland,” agreed Councilor Alan Livingston.

Later during the same meeting, Councilor Tom Blake decried a zoning change needed to allow a South Portland Housing Authority project for low-cost senior apartments. Rank-and-file taxpayers are shouldering an ever-increasing burden, he said, because South Portland does “more than its fair share” to help the poor and elderly. Blake did not speak to the tax-break issue, and joined the council in unanimously adopting it.

The relative lack of debate may be due to the fact that councilors have already spent so much time on the issue, making it the primary topic of workshop sessions in September 2010, and again in May.

The issue really came to the forefront last spring, however. That’s when the 124^th Legislature passed a new law under which towns could allow seniors to defer property tax payments. Designed to keep senior citizens from losing their homes to foreclosure, the law allows qualifying seniors to put off taxes until a transfer of the deed or death, whichever comes first. Municipalities are not compelled to provide deferrals, however. Instead, they must first pass an ordinance to authorize the program.

However, it was clear from the onset that outright deferral of property taxes won’t come soon to South Portland.

“In my opinion [the law] was developed with too many administrative pitfalls and could expose the city to losing thousands of dollars, with no recourse,” wrote City Manager James Gailey, in a Sept. 13, 2010 memo to councilors.

Gailey’s primary concern was a mandate that municipalities offering waivers must record a list of all tax-deferred properties each year with the Registry of Deeds. Miss a name, or a date, Gailey noted, and the city loses its ability to collect back taxes once its elderly owner dies or sells.

However, in his note to city councilors, Gailey wrote, “I believe the intent of the program is good and is needed.” Thus, the alternative, offered up in May, and passed in July, with minor modifications.

As adopted, South Portland’s Property Tax Assistance Program requires seniors to apply for relief “no later than December 1st of each year.” In addition to age and residency restrictions, applicants must also have first applied for a homestead exemption, and prove receipt of a rebate from the state’s so-called “circuit-breaker” program for property tax relief.

Under that law, households with a senior aged 62 or older can receive a rebate of 25 percent off a property tax bill, or “rent constituting property taxes accrued” (to a maximum of $100 returned), provided annual household income is $9,200 or less. Benefits increase as income decreases, peaking at 100 percent of a tax bill (to a maximum of $400) on incomes less than $8,100. Benefit eligibility for individuals kicks in at an annual income of $7,400.  

“If a person qualifies for the state circuit-breaker program, they’ll certainly qualify for this [local] one, if they meet the residency requirements,” Gailey advised the council at the June 20 meeting.

The maximum local rebate is $400. However, the ordinance does require that South Portland’s finance director, Greg L’Heureux, pick a lesser amount – either one-quarter of the state circuit-breaker refund, or a pro-rated share of the kitty South Portland has set aside for refunds – if possible.

“We have the maximum, but if we then get inundated with applications, we’ll try to do a pro-rated share, so that all applications are funded at some level,” said Gailey.

As part of South Portland’s FY 2012 budget, the council appropriated $30,000 from taxation of all property owners to fund the senior relief program. Per the ordinance, any money not dolled out will roll over into the fund.

In order to make certain all seniors in the city are aware of tax relief possibilities, Gailey said the program will be “heavily announced come October.”