Seniors Wait For Tax Relief As Colorado Mulls Budget
DENVER (AP) - Bonnie Prante, a 78-year-old Denver retiree, paid her monthly bills recently and had $42 left in her checking account for groceries. She and other senior homeowners are watching closely as lawmakers debating the budget consider reinstating a tax exemption designed to keep people like her in their homes.
It's been more than a decade since Colorado voters approved the property tax break to help seniors on fixed incomes. But lawmakers refused to pay for the exemption most years in order to balance the state budget.
Over the next few weeks, a showdown over the senior tax will play out in the state Legislature. After a three-year absence, the exemption may be reinstated at a cost of some $100 million to the budget that lawmakers will vote on this spring.
"They seem to think, `Senior citizens, they're not so wise, we can put anything over on them,"' said Prante. "Some of them should be careful because we can come down on them real hard."
She lives on $910 a month from Social Security. Last year, she said the property taxes on her home in the affluent Washington Park neighborhood were $1,700. "It's bringing down my savings account to almost nothing," she said. She has lived in her home for 47 years.
The senior homestead exemption allows homeowners 65 and older who have lived in their homes for at least 10 years to deduct 50 percent of the first $200,000 of property value from their taxes.
Under current law, the tax break ranges from $292 for a $100,000 home, to $583 for homes worth $200,000 or more. It benefits an estimated 167,714 seniors, according to legislative staff.
Democratic Gov. John Hickenlooper's economists say the state can't afford to reinstate the exemption because it would force budget cuts elsewhere, including higher education and K-12 schools. Republicans who control the House vow not to pass legislation needed to eliminate the tax break from next year's budget.
The state faces nearly $700 million in budget cuts this coming year, with the general fund budget about $7.4 billion.
"We are not going to increase taxes on those seniors most in need," said Republican House Speaker Frank McNulty.
"Frankly, I think seniors are tired of those games," Democratic Rep. Dan Pabon said of partisan claims meant to placate Colorado's senior electorate.
The House gets the first shot at crafting the budget next month. Both chambers have until April 13 to send a budget to Hickenlooper for final approval.
Pabon, of Denver, suggested meeting Republicans most of the way by funding the exemption at $77 million instead of $100 million. Pabon's bill would have allowed a 50 percent deduction for the first $153,000 of a home's value, as opposed to $200,000.
A Republican-controlled committee rejected the compromise Wednesday.
McNulty called Pabon's idea premature because budget negotiations are ongoing.
Pabon argued that his legislation would have benefited seniors with the lowest property values because those with homes valued between $100,000 and $160,000 would see little or no change to their deductions of between $292 and $466 a year. Those with pricier homes would get a maximum tax deduction of $446.
Critics of the tax break say it also goes to wealthier seniors who don't need it, but any new formula that would account for the wealth of property owners would require changing the state constitution. Some Republicans on the committee that rejected Pabon's bill expressed concern that he was taking away the full tax break for some seniors in higher-priced homes -- those at $200,000 or more -- while keeping the benefit mostly intact for those with houses worth less than that.
Nearly 40 percent of seniors who would benefit from the full exemption own homes valued between $200,000 and $300,000, according to legislative staff. Another 15 percent have homes valued between $100,000 and $200,000.
Bruce and Barbara Dutton, who have lived in their Aurora home for 40 years, said they would favor a partial reinstatement of the exemption. The Duttons said their last annual property tax payment was about $750.
"We understand that the state is hurting and they got it take it from somewhere," said Bruce Dutton, 76.
Other seniors see more urgency.
"People in my situation live on the edge financially," said Ann Mannering, a 70-year-old retiree who lives in Lyons. Mannering lives on a fixed income of nearly $700 a month and has lived at the same home for 39 years.
"Yes, we're not on the streets," she said. "But it's always a very touchy business. Does the money go for heat, or food, or taxes? If it's going to taxes it isn't going to the others."
- By Ivan Moreno, AP Writer
(Copyright 2012 by The Associated Press. All Rights Reserved.)
