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Spokane, Washington  Est. May 19, 1883

Tax Breaks For Low-Income Elderly Cost $10 Million

Associated Press

The Office on Aging has launched a campaign to encourage thousands of elderly poor to apply for a special state-financed property tax break that already is siphoning more than $10 million from the treasury.

Director Arlene Davidson advised legislative budget writers on Tuesday that nearly half of the elderly homeowners who qualify for the so-called circuit-breaker property tax reduction are not applying for it.

“At the request of the Tax Commission, our ombudsmen have been providing information to seniors about the program through presentations, press releases, posters and flyers,” Davidson said in a statement provided to the Joint Finance-Appropriations Committee. A successful campaign would add at least $3 million to the price tag of the tax break if the new applicants qualify for just the minimum benefit.

Meanwhile, the House narrowly voted to consider limiting the potential economic impact of legislation by Democratic Floor Leader James Stoicheff of Sandpoint to make more disabled veterans eligible for the circuit breaker. Stoicheff proposed excluding from the eligibility calculation disability payments for active-duty injuries. Tax analysts said that would add at least $800,000 a year more to the cost of the tax break. Rep. W.O. Taylor, R-Nampa, who himself receives veterans disability benefits, wants to strike a compromise to reduce the drain on the treasury.

The circuit breaker has been the one program a number of lawmakers have viewed as the real answer to complaints about escalating property tax burdens on the elderly because it directly benefits those who need help the most in meeting tax burden. But only modest adjustments have been made - and none to the eligibility standards - because of the cash it would take away from other state programs and services.

State Tax Commission officials said it was too early to assess the impact of the Office on Aging campaign, begun last year, until applications for relief for the 1997 property tax year come in this spring.

The income ceiling is adjusted annually to reflect inflationary pressures. In 1996, the maximum annual income to remain qualified for the minimum $150 in relief was $18,380.

The maximum amount of tax relief is also being increased over four years to $1,200. For 1996, the maximum was $900, and the state approved over 24,600 tax-relief claims totaling more than $10.3 million. The average relief payment was $419.

For the 1997 tax year that will be processed this spring, the income ceiling is $18,920 a year and the maximum relief payment is $1,000. The Tax Commission estimates payments will total $11.2 million before the impact of the recruiting campaign.

But analysts point out that bringing in another 20,000 applicants to those already benefiting from the circuit breaker could easily push its cost beyond $20 million a year.