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Unease in local governments stalls tax bill Voter-supported relief for seniors sits idle while lawmakers debate details By TOM HUMPHREY, KnoxNews "If you ask them, they say they're not trying to kill the bill, but clearly they are," said Senate Republican Leader Mark Norris, referring to local government lobbyists. "There are lots of unresolved questions," said Margaret Mahery, a former Athens mayor who is executive director of the Tennessee Municipal League. "We need to take a longer look at it and don't jump into something that, down the road, could negatively impact us. "It's easy to do but hard to take back." Measure with a history The push toward freezing the property taxes of people 65 and older dates to 1979, when the Legislature enacted a law allowing local governments to implement freezes. But that law was subsequently struck down by the state Supreme Court as a violation of the Tennessee Constitution. Last November, voters approved an amendment to the state constitution that eliminated the legal roadblock by specifically declaring that the Legislature has a right to authorize city and county governments to give such a tax break to senior citizens. Norris, R-Collierville, sponsored the legislation that led to the referendum. The senator says approval of the amendment last fall means the 1979 law invalidated by the Supreme Court decision has legally sprung back to life. The old law, however, states that a tax freeze only applies to senior citizens with income of $12,000 or less. Because of inflation since then, the freeze would apply to very few senior citizens. In fact, the state already has a program in effect that rebates property taxes paid by citizens ages 65 or older who have income of less than $20,000. Setting the cap About 81,000 people statewide are expected to apply for the tax rebates this year, according to Tom Fleming, who heads the division of property assessments in the state Comptroller of the Treasury. Norris and Rep. John DeBerry, D-Memphis, are sponsoring a bill, SB2/HB1033, that would set the income ceiling to $50,000. Another bill, SB1/HB1, would set the cap at $60,000. That measure is sponsored by Sen. Doug Jackson, D-Dickson, and Rep. Mark Maddox, D-Dresden. Data developed by Fleming and his staff, which have been distributed to legislators, indicates that the vast majority of people older than 65 would qualify for a freeze if the $60,000 figure were adopted. Statewide, according to Fleming's figures, there are 380,612 households owned and occupied by people 65 years of age or older, or 20.7 percent of all owner-occupied households in the state. In Knox County, 21.45 percent of households are owned by people 65 or older, or 26,205 of the 122,195 total. According to calculations by the comptroller's office, 82.6 percent of those senior citizen households would qualify for a freeze if the income level were set at $60,000; 76.7 percent if the level were set at $50,000. For every penny of property tax increase in the future, the report states, Knox County would lose $62,138 in revenue because of a freeze at the $60,000 level. At $50,000, the loss would be $57,700 per penny. The number and incomes of senior citizen households vary widely around the state. For example, more than 30 percent of households are occupied by senior citizens in Cumberland County, versus just 13 percent in Williamson County. In any case, a tax break for senior citizens would mean that future tax increases could fall more heavily on others. "They would be young families trying to raise their children and put them through college," said Mahery. How much is enough? "I think most people voting for this thought we were talking about low-income elderly," said Doug Goddard, executive director of the Tennessee County Commissioners Association. "But now, some would like to include almost everybody." Mahery said a $20,000 income level would be a more appropriate cap for a senior tax freeze. Norris says that would effectively mean helping no one, noting that those at $20,000 or less income can already get rebates from the state for the property taxes they pay. This year's proposed legislation would only authorize counties and cities to implement a freeze. Every city council or county commission would have to decide whether to use that authority. "It's up to local governments to decide, and that's a problem for them," said Norris. "We're used to them begging for more local control and responsibility, and this is giving it to them on a silver platter. And now they don't want it." The result, he said, is "a well-orchestrated attempt to choke the life out of tax relief for senior citizens - and Tennesseans are not going to like it." Goddard and Mahery acknowledge that once the Legislature authorizes tax relief, local governments will face pressure to grant it. "That's just natural," said Mahery. "If Knox County passed it and Loudon County did not, the citizens of Loudon County wouldn't understand why they didn't get the same break." The objections, Goddard said, rest not with the concept of tax relief but with the income level and multiple other details. Norris proposes to set one income ceiling statewide - the $50,000 can be subject to negotiation, he says - and then let each city or county adopt some lower figure base if necessary. Fleming says in his report that there is a legal question on whether the state constitution requires a single limit that applies statewide, an approach preferred by Mahery and Goddard, or whether each local government can set its own rate, subject to a cap established by the Legislature, as in Norris' proposal. "We need to be consistent across the state or citizens will be confused about what's going on," said Mahery. Goddard said that a "royal nightmare" in paperwork and administration would be created if different cities and the county that encompasses all of them set different income thresholds. Hamilton County, for example, could have 10 different rates, he said. Norris says the "one-size-fits-all" argument is a "disingenuous" effort to dodge local decision-making and political pressures. Goddard says one compromise idea has been floated: Have the Legislature declare that the cap in each county will be at the median income level for senior citizen households in that county. The senator has asked state Attorney General Bob Cooper for a formal legal opinion on whether his "local control" approach is constitutionally sound. Norris said he agreed not to push for a vote on the bill until Cooper has issued his opinion, expected soon. But the lawmaker plans to move forward quickly then. Local government leaders say they prefer that the bill be put off while a study committee is appointed to resolve issues related to the proposed freeze legislation. |
