BU News Service
BOSTON — Worcester homeowner Terrie Cherry, 67, is one of many Massachusetts seniors struggling to stay afloat as property taxes soar.
After Cherry’s husband, Robert, became disabled in an accident and was forced into early retirement, the couple’s income plummeted. They went from making “good money” to just $20,000 a year, Cherry said in an interview.
And as they have depleted their savings, property taxes have risen in Worcester. When the couple bought their house in 1999, annual property taxes were about $900. But as the city expanded over the last two decades, their taxes have climbed to almost $5,000.
“When the taxes go up, you have to decide what you have to give up,” Cherry said.
Property tax bills and late fees have forced Cherry to choose between her house, food and medication. When money is especially scarce, she gives up food to save money for her husband’s insulin.
“There’s a lot of medications we’ve had to give up because we couldn’t afford it with the house payments,” she said, “but insulin’s the one that keeps him alive, so there’s nothing I wouldn’t sacrifice.”
Cherry, who has been a civil rights activist since the 1960s, when she marched alongside Martin Luther King Jr. in Selma, Alabama, said she is afraid she won’t be able to stay in her home without more government assistance if taxes continue to rise.
Massachusetts lawmakers are considering more than a dozen bills aimed at extending aid to homeowners like Cherry across the state. The sponsors of these bills – which would expand the state’s tax deferral program to include a wider range of elderly homeowners – presented their plans at a hearing of the Legislature’s Committee on Revenue last Tuesday on Sept. 24.
Worcester homeowners struggle as the city grows
Sen. Harriette Chandler, D-Worcester, explained in written testimony that seniors and low-income residents in almost every district across the state are being displaced without adequate support from their communities.
“In my own district and across the commonwealth, there continue to be very high rates of people experiencing homelessness and housing instability,” Chandler wrote.
The senator, who filed one of the several tax relief bills for seniors, noted that Worcester and other growing cities are struggling to maintain enough affordable housing for low-income residents.
“A person would have to work 40 hours a week, 52 weeks a year, earning an hourly wage of $18.21 just to afford a moderate two-bedroom apartment in Worcester County,” Chandler explained, citing a 2014 report by the National Low Income Housing Coalition.
Between community building projects, corporate contracts and improved school rankings, Worcester property values and taxes have escalated for longtime homeowners.
In the 20 years since Cherry bought her house, the value has risen more than $200,000. While she and her husband have survived the accompanying tax increases, several of their friends fell behind on payments and were forced to leave the community they lived in for decades.
“You want a bunch of old people living under the bridge?” Cherry said. “Guess what, you’re going to get it.”
Senior property tax deferral: A seldom-used system
Under the current property tax deferral program, cities can authorize eligible residents over age 65 to defer payment of their property taxes until after they die or sell their home. The state sets a maximum interest rate of 8% – which the homeowner’s family must eventually pay in addition to the deferred taxes – but allows cities to lower the rate.
Though the state dictates the framework, participating cities decide whether to expand eligibility. While the state sets a default annual income limit of $20,000 to qualify, cities can choose to raise that limit to $57,000. Several lawmakers argue that the income limit sets too narrow of an eligibility range, which excludes a substantial number of struggling seniors.
According to a report by Boston College’s Center for Retirement Research, 310 of the 351 towns in Massachusetts offer the program, but only 154 of those towns have expanded income eligibility or lowered the interest rate.
Abigail Walters, a senior research associate who co-authored the report, said that while Massachusetts has the second highest rate of elder economic insecurity in the country, most of the state’s elderly homeowners are ineligible for the existing program. Fewer than 900 seniors in the entire state participated last year, which she attributed to poor design, social stigma and a lack of awareness.
“Most homeowners aren’t eligible due to residency tenure requirements and the default income limit of $20,000,” Walters said. “Those who are eligible are turned off by the default interest rate of eight percent or the stigma attached to participating in an income-tested program.”
Only wealthier communities tend to publicize their tax deferral program, she explained. In most participating towns, Walters said, seniors are typically unaware of the potential resource.
While Worcester offers the property tax deferral program to elderly residents with annual incomes below $40,000, Cherry said she was under the impression that her city no longer provided the service.
The 12 legislators who testified at the revenue committee hearing concurred that the system needs significant reform. Though each of the lawmakers proposed different specifications for expanding the program, their proposals included a few common goals.
Widening the income eligibility threshold
The Legislature is considering several bills to increase the cap on a senior’s annual income so elderly homeowners in a wider income bracket could qualify for tax deferrals.
One of those bills, filed by Rep. Ken Gordon, D-Bedford, would raise the floor and ceiling of income eligibility so a senior with an annual income of less than $40,000 could qualify. Gordon’s bill, like several others, would allow cities to increase the income limit to $80,000.
“This just makes an adjustment to reflect the standards of our time,” Gordon told the committee.
The representative said he would like to see more seniors take advantage of the tax deferral program but thinks awareness is lacking.
“There was an article in the Globe last year that calls this the best kept secret in Massachusetts,” Gordon said. “It shouldn’t be so.”
Implementing a grace period
The state’s current property tax deferral plan states that the “payment of deferred taxes and accrued interest is due when the property is sold or you pass away.” As of that date, the interest rate escalates.
Sen. Ed Kennedy, D-Lowell, testified that this rule places the family members of participating seniors at an unfair disadvantage.
“Once the homeowner dies, the interest rate skyrockets to 16% without a reasonable grace period to allow their heirs to sell the property and pay the taxes,” the senator said.
Kennedy’s bill, like some of the other proposals, would give cities an option to provide family members with a one-year grace period before increasing the interest rate after the homeowner’s death.
Adjusting residency requirements
Several bills propose decreasing or erasing the program’s current residency requirement, which states that eligible seniors must “have owned and occupied” their property for at least five years and resided in Massachusetts for at least 10 years.
Rep. Tommy Vitolo, D-Brookline, filed a bill that, among other actions, would remove the state residency requirement.
“We all have growing communities of seniors who struggle with hunger and prescription drug costs,” he said at the hearing. “We need to eliminate the residency requirement.”
Vitolo said he anticipates his bill will improve the fairness of the tax deferral program, while safeguarding community budgets. Though the representative filed his bill to provide relief for elderly homeowners, he testified that he does not think seniors should be given a pass on their taxes.
“I believe that older adults must pay their full share of property taxes, same as everyone,” Vitolo said. “We’re all in this together, and we all pay taxes to our community throughout our lives.”
This article was originally published in the Worcester Telegram.