The Oregon Legislature took a meaningful step last month to try to ensure elderly and disabled residents can stay in the homes they own.
But a couple of the details in House Bill 2543, combined with a short timeframe for homeowners to re-apply for a property tax deferral program (the deadline is July 25), could end up harming some of the Oregonians the legislation is intended to help.
First, though, the good parts.
HB 2543, which the Oregon Senate passed by a 29-1 margin and the House by a 56-4 vote, makes needed changes to the state's Senior and Disabled Property Tax Deferral program.
Started in the 1960s, that program allows homeowners who are 62 or
older, or who have certain disabilities, to defer their property taxes
until they move or sell their home. At that point the homeowner, or the
person's estate, has to pay back the state for the taxes, plus interest
at 6 percent.
Not surprisingly, demand for the tax deferral program has escalated during the economic downtown of the past few years.
In Baker County, the number of homeowners enrolled, after averaging about 10 per year through 2007, has risen to about 62 now.
Statewide, about 10,800 homeowners receive the tax deferral.
Trouble is, as The Oregonian documented in a story earlier this year,
about 200 of those people own houses worth more than half a million
Obviously these homeowners are not the sort that state officials had in mind when they set up the tax deferral program.
Nor are those expensive properties representative of the Baker County residents who benefit from the program.
County Assessor Kerry Savage said most local residents who participate have homes worth less than $100,000.
HB 2543 imposes for the first time a ceiling on home values as a qualification for the tax deferral.
The ceiling is based on a formula - for Baker County, the home must be
valued at less than the median price of $99,600, Savage said.
The legislation also imposes a limit on the total assets a homeowner
can have, and tightens the previous limits on annual income.
The asset limit is $500,000, not counting the value of the home.
The annual income limit remains at $39,000, but for the first time it
includes non-taxable sources such as municipal bonds or an inheritance.
These changes should go far toward disqualifying homeowners who aren't
in danger of losing their home because they can't pay their property
Moreover, the revamped program will be on more solid financial footing,
which makes it more likely that the program will survive to help
homeowners who truly rely on the tax deferral - people in Baker County
and other rural areas, for instance, who own modest homes and who have
similarly modest incomes.
The solvency of the program is no sure thing, either.
Last year state officials announced they had enough money in the
program to pay just two-thirds of the estimated $20 million in property
That means the state had to borrow money this year, and probably will
have to do so again in 2012, to cover all the enrolled homeowners' tax
For all its good points, we aren't completely satisfied with the new tax deferral program.
In particular, we're bothered by that July 25 deadline for homeowners
to re-apply. And we oppose the requirement that participants must have
owned their home for at least five years.
The glaring problem with the program is not recent homebuyers who
overestimated their ability to pay their tax bill. The problem is
people enrolling who don't need the state's help.
The new asset, home value and income limits deal with that latter problem.
There was no need to potentially cause trouble for some of the homeowners who are the reason the program exists.