Full senior tax break may return

DOVER — In 2017, facing a budget crunch, legislators cut a school property tax subsidy for seniors by 20 percent, reducing it from $500 to $400. Since then, the state’s financial situation has improved considerably, prompting a number of lawmakers to stump for restoring the credit to its prior amount.

Established in the 1990s as part of an effort to discourage seniors, who are more likely than other residents not to have ties to local school districts, from voting against referendums, the tax break has come under fire and seen changes before 2017.

In 2015, then Gov. Jack Markell proposed halving the subsidy, noting the number of individuals age 65 or older in Delaware was steadily climbing and was not projected to stop. His recommendation faced fierce pushback however, with many arguing slashing the subsidy would be unfair to seniors on fixed incomes.

In 2017, legislators voted to change the residency requirement from three to 10 years. One year later, they approved a bill that would set a means-testing requirement, preventing seniors making more than $50,000 a year from receiving it.

However, Gov. John Carney vetoed the means-testing measure, saying it would create logistical problems and should be done as part of a broader effort.

“While I believe it is appropriate for the State to consider means testing tax preferences to help broaden the State’s tax base, we should look at these preferences in the aggregate and not in isolation, developing a streamlined and consistent means test,” he wrote in a letter explaining the veto. “This approach would also help avoid the tax benefit ‘cliff’ contained in this legislation, where $1 of income in excess of the income means test results in the loss of the entire potential $400 benefit.”

That issue came up on Thursday when the Joint Committee on Capital Improvement met to vote on making minor adjustments to the current year’s capital bond bill.

Noting the state’s revenue projections for the fiscal year starting July 1 have increased $200 million since September, Rep. Mike Ramone, a Republican from the Pike Creek Valley area, requested the committee take some of that money and use it to restore the cut.

But other committee members protested such an action would be entirely outside the group’s scope. Not only would the restoration be a much bigger change than the adjustments the committee was making Thursday, co-chair Sen. Dave Sokola, a Newark Democrat, noted the credit falls under the operating, rather than capital, budget.

“This is a decision that should be made upstairs, not downstairs,” he said, describing the issue as one best suited to be brought forth in legislation.

Rep. Ramone replied he introduced a bill to do just that a year ago, but it has not even gotten a committee hearing. He also pointed out the 2017 cut was made by the Joint Finance Committee in the budget.

He was backed up by a few members, including Rep. Kim Williams, who sponsored the vetoed means-testing measure.

“We’ve tried all the other avenues to try to get this done and no one’s listening to us,” the Newport Democrat lamented.

But other lawmakers on the committee, as well as top budget officials, argued restoring the cut through the panel would be a dangerous precedent. Office of Management and Budget Director Mike Jackson went as far as calling it “an unprecedented step” that is beyond the Joint Committee on Capital Improvement’s purview.

“It’s an offense to the procedures we have in place here and it confuses constituents,” concurred Senate Majority Whip Bryan Townsend, a Newark Democrat.

Faced with opposition, Rep. Ramone withdrew his motion, although he took pains to point out he expects other members of the committee to back his bill. Rep. Williams, meanwhile, questioned whether the administration has any desire to raise the sum back to $500.

In response, Mr. Jackson noted the governor will release his recommended budget in later this month and pledged to look into the matter.

Gov. Carney’s office declined to comment.

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