Senior tax breaks: Selectmen may hike cut-off for deferments

Torn between an urge to help seniors struggling with tax bills and the cost that senior tax breaks put on other property owners, the selectmen are moving toward a consensus that the fairest way to help seniors would be to expand a program that allows people over 65 — with limited incomes — to remain in their homes but defer paying taxes on them.

The selectmen appear wary of two other tax reduction proposals for seniors that were put forward by John Fisher of the OWLS during last winter’s budget discussions.

One proposal the selectmen were cool toward was an increase to the $1,048 tax credit senior property owners receive. The other was a “tax freeze” protecting seniors against town property tax increases once they reach age 75.

The tax deferment program the selectmen would like to expand is currently available to senior citizens with incomes of $55,000 or less. The selectmen spoke of raising the permitted income level to $65,000 at their Dec. 12 meeting.

First Selectman Rudy Marconi said Assessor Al Garzi would draft a formal proposal — probably for consideration by the selectmen the second week of January.

“Al’s going to go back and restructure it and come back, put it in formal words,” Marconi said.

Tax credits, freeze

The senior tax credit that Ridgefielders over 65 can now sign up for, reducing their annual tax bills, currently allows a $1,048 reduction to each senior property owner. Fisher of the OWLS had proposed increasing the tax credit to $1,200.

The $1,048 tax credit is enjoyed by 1,675 taxpayers over 65, amounting to about $1,739,000 a year in taxes that aren’t collected — and are made up by younger taxpayers — according to Assessor Garzi.

Increasing the tax credit from $1,048 to $1,200, as requested, would cost the town’s other taxpayers an additional $254,600 a year, Garzi projected.

“Raising the tax credit is a big impact, in a year we’re cutting back personnel,” Marconi said.

The proposal to freeze seniors’ taxes, so they don’t have to worry about annual tax increases once they reach age 75, also had the selectmen concerned about costs.

“I think we don’t want to go there,” Marconi said.

Calculations Garzi provided to the board’s previous discussion of the issue back in October showed the town at that point had 949 households with taxpayers over 75, and exempting them from tax increases that run at about 2% annually would add about $225,000 a year to what other taxpayers have to pay.

Marconi laid out his thinking in a Dec. 17 interview.

“There’s no question that John Fisher representing the seniors of our community would have liked to have had a tax freeze for those over 75, in their homes,” Marconi said. “But the cost to the general taxpayer would have been into the six figures — it was a couple hundred thousand, which the board felt was too much to absorb at this time, especially given the personnel cutbacks that the Board of Selectmen will be proposing for the 2020 budget cycle.”

The cutbacks include positions eliminated through retirements and layoffs in the course of the current fiscal year, expected to show up in next year’s budget as a reduction of about five and half positions.

“We did the incentivised retirements and, in addition to that, we did two layoffs,” Marconi said.

“The estimated total savings — because you need to take into consideration a fully loaded position, it’s not just salary,” Marconi said, “it includes all the other benefits, the biggest being health. … When you add those positions, it will yield a little over a $500,000 reduction in what we will be asking for the public to approve for the 2020 budget.”

Deferment program

During their Dec. 12 discussion, the selectmen were more amenable to increasing the income limit for the deferment program — since those taxes, though deferred, are eventually collected.

“I still feel increasing the income is the way to go,” said Selectman Steve Zemo. “It keeps the rest of the citizens whole.”

Marconi said talking to officials from other towns reinforced his belief that Ridgefield already does well by its seniors.

“We do a lot more than a lot of towns do,” Marconi said. “New Canaan said, ‘You do a deferment and a tax credit?’ ”

Each of those two programs runs about $2 million a year, according to Garzi.

Selectman Bob Hebert lamented — but accepted — the difficulties of increasing the tax credit program as requested by Fisher of the OWLS.

In addition to projecting a $254,000 cost for raising the tax credit from $1,048 to $1,200, Garzi had projected what a smaller increase — from $1,048 to $1,100 — would cost the town’s other taxpayers. That $52 increase to seniors’ tax credit would mean another $87,100 a year on everyone else’s tax burden.

“I’d like to do it,” Hebert said. “But if we can’t afford it, we can’t afford it.”


Raising the cut-off point for participation in the town’s “tax deferment” program for the elderly, as the selectmen would like to do, could also have some short-term costs even though the money is eventually collected when the seniors either sell their homes and move, or pass away and the properties are sold by their heirs.

Given that currently only households with annual incomes of $55,000 or less qualify; there aren’t that many seniors receiving the tax deferments.

“The income level is very low — $55,000,” Garzi said. “Every year, we have some 47 people deferring their entire tax bill … It goes into uncollectable.”

“The people who take advantage of it, need it,” added Marconi.

The total of deferred taxes the town is carrying totals about $2 million, according to Garzi.

Overall, uncollectible taxes represent a very small percentage since the town has a good record of collecting nearly all of the taxes owed each year.

“We’re at what now, 99%?” Garzi said.

With an average Ridgefield tax bill running about $10,000 a year, if someone was on the program for 10 years he or she could accumulate a deferred tax debt of about $100,000.

When a property is eventually sold the town is at the front of line to get paid, leading some banks that hold mortgages to be uncooperative with homeowners seeking to defer taxes, according to Garzi.

“The non-local banks wouldn’t allow it,” he said. “The local banks would allow it.”

It’s conceivable — but unlikely — that a debt in deferred taxes could build up enough to be greater than the sales price of a property.

“Will we ever exceed the value of a property? We haven’t gotten there yet,” Garzi said.

With the $55,000 income limit acting as a kind of means test, the program isn’t growing much.

“We might get one or two people a year,” Marconi said.

There’s long been a belief among town officials that seniors don’t like deferring taxes they owe  — they want to feel they’re carrying their weight, and don’t want property they’re leaving their kids to be burdened with a tax debt.

But Selectman Zemo wondered if this might change as the senior population shifts from the people who lived through World War II to the post-war baby-boom generation.

“Baby boomers, they’d probably be very comfortable with it,” Zemo said.

Raising the income limit from the current $55,000 might bring more senior taxpayers into the program.

“We’ve had some people come in for $65,000 and $75,000,” Garzi said.

The selectmen thought raising the limit so the tax deferments are more widely available would be a way to help more needy seniors.

“It’s a great tool for people to stay in their homes — with a means test,” Marconi said.