(Source: AZCentral): Rebekah L. Sanders – Ruth Rogers, 66, feared she would lose her Phoenix home over about $800 in back property taxes.
Struggling to get by on less than $10,000 a year in Social Security income, Rogers tearfully told employees at the Maricopa County Treasurer’s Office last year that she neglected utility bills and skipped meals to try to cover the debt.
“It was devastating,” she said of potentially giving up the small house her parents bought in the 1950s. “I love my home. It may not be much, but I love it.”
Treasurer’s Office employees and a customer moved by Rogers’ plight took up a collection to help her pay off the debt.
They also enrolled her in the Elderly Assistance Fund, a program created by the state that subsidizes property taxes for roughly 14,000 low-income seniors in Maricopa County to the tune of about $200 each.
“The ladies down there bent over backwards to help me,” said Rogers, a former security guard who enjoys participating in historical reenactments. “I never want to go through that again.”
Funding assistance running out of time
Rogers’ tax struggle — and that of thousands of other poor, elderly Maricopa County residents — could return next year.
The Elderly Assistance Fund is slated to run out of money in 2019. People in the program would see their property tax bills double, said Maricopa County Treasurer Royce Flora.
Legislation he has pushed for years at the Arizona Capitol would fix the problem, he said.
Senate Bill 1268 would permanently cut property taxes roughly in half for qualified homeowners age 65 years and older who earn less than $36,000 per year. The bill would apply statewide, increasing the number of seniors helped to about 22,000.
“If you’re an old person and you live on a limited income with expensive medication … you’re really living on the edge,” Chief Deputy Treasurer Russell Pearce said, noting bipartisan support for the bill. “It’s not a partisan issue. … This is the government taxing them out of their homes, and it’s our job to stop that.”
The bill has passed the Senate and is awaiting a final vote in the House.
Opponents say the legislation is unfair to other taxpayers and is the wrong way to fund help for poor seniors.
“There’s all sorts of groups that people might find sympathetic” who wouldn’t receive the tax break, Arizona Tax Research Association President Kevin McCarthy said. “I could think about a low-income, disabled veteran that hasn’t reached 65 or doesn’t quite meet the income tests.”
He predicted the bill could face legal challenges if it becomes law.
Why is money for poor seniors running out?
Ironically, lawmakers cut funding for the Elderly Assistance Fund in 2015 in an effort to help homeowners of every age avoid foreclosure.
At the time, people with late property taxes were charged a 16 percent interest rate when they paid off the debt. A portion of the funds went to the program that covers property taxes for poor seniors.
Justin Olson, then a Mesa Republican legislator, said the interest rate was “abusive” and prevented some homeowners from saving their properties. In essence, he said, the program forced the poor to pay for the poor.
Olson passed legislation that lowered the interest rate, shutting off funding for the elderly assistance program. He said he believed the state should directly subsidize property taxes for low-income seniors, but the final version of the bill didn’t include money in the state budget.
But that same year, the Maricopa County Supervisors, with the support of then-Treasurer Charles “Hos” Hoskins, depleted the fund to help the county balance its budget, leaving $11 million. The lifespan of the fund dropped to four years.
Olson left the Legislature in 2017, leaving behind the funding efforts.
How should the Legislature protect seniors?
Flora, who succeeded Hoskins as Treasurer in 2017, wants to try a different approach: lowering the property values on which poor, elderly people are taxed.
Under the bill introduced this year by Sen. Judy Burges, R-Sun City West, low-income seniors would receive tax bills based on 5 percent of their home’s value, instead of the 10 percent most homeowners pay.
The seniors’ properties would join a tax classification currently used to incentivize renewable energy plants, businesses within foreign trade zones and historic homes.
“We give this same benefit to the well-heeled in the historic district,” Pearce, who used to serve as Senate president, told lawmakers at a recent hearing.
Sen. Warren Petersen, R-Gilbert, agreed that historic homes probably shouldn’t get special treatment. But neither should other groups, he said.
“I’d like to see a single rate. I worry when we do some of these special things. And now we’re going to add this one?” said Petersen, who voted against the measure. “Every time we throw something like this in there, it’s harder to unwind it.”
But Sen. David Farnsworth, R-Mesa, recalled the financial difficulties his parents went through to stay in their small, adobe house.
“When you think of an older couple who have struggled their whole lives being put out of their home because they can’t pay taxes to the government, it just seems wrong,” said Farnsworth, who voted for the bill.
Will seniors in million-dollar homes get a tax break?
The Arizona Department of Revenue counted nearly 500 homes in Maricopa County above metro Phoenix’s median home value of $252,000 that would qualify for the low-income senior tax discount. Two of the homes were valued above $1 million.
“The main thing that concerns me is the $1.6 million home that I see on this list,” Rep. Kevin Payne, R-Peoria, warned.
Previous versions of the bill capped homes eligible for the program at $600,000.
Seniors on limited incomes shouldn’t be punished if they inherited an expensive property or their home gained value over the decades, Pearce said.
Lawmakers can “fix that later if it’s really an issue,” he said.
If poor seniors pay less in taxes, will I pay more?
To make up for tax breaks that low-income elderly homeowners would receive, other property owners would likely pay more to assure schools and local governments aren’t impacted.
The average homeowner could see an increase in property taxes of about $3 per year, while businesses could pay about $24 more per year, according to an analysis by the non-partisan Joint Legislative Budget Committee.
However some local entities wouldn’t be able to recoup the money by charging other property owners more.
Fire districts, which provide emergency services for 1.5 million people across the state, could see their budgets decline if they serve large swaths of low-income seniors and their tax rates are already at the maximum allowed by the state.
Fire districts make up a tiny portion of taxes statewide, chief deputy treasurer Pearce argued.
But Rep. Vince Leach, R-Tucson, said some of his constituents in fire districts “have their hair on fire, no pun intended” about the bill. “They are lighting up.”
Meanwhile, the state budget would actually benefit, Pearce noted.
Arizona would pay out $2.7 million a year less in homeowner rebates to seniors in the program, according to the JLBC report. Flora said losing the rebates would be a wash for seniors.
Will tax assistance for seniors survive?
After multiple bills failed in previous years, Flora said he feels confident in success this year after Gov. Doug Ducey’s office signaled support and the Senate voted 28-2 to pass the legislation.
The bill, which cleared a key House committee in February, is expected to receive a final vote in the House soon.
Standing near the pink and yellow lantana in her front yard, Rogers said she hopes lawmakers will save the assistance program.
“That would be wonderful because there’s a lot of us who just don’t have that kind of money,” Rogers said. “A lot of us are living on very, very tight incomes.”