Program to assist poor elderly yields surprises

SALEM – An Oregon program to help poor senior citizens stay in their homes by paying their property taxes is running out of money while also covering taxes on some ritzy digs.

Under the program, the Department of Revenue is paying property taxes for nearly 200 residents whose homes are valued at more than $500,000, according to the Oregonian. Eight of the homes are valued at more than $1 million.

The newspaper obtained records detailing the program under the state’s public records law.

The state this year is paying $25,000 in property taxes for a $2.2 million waterfront home in Lake Oswego, more than $15,000 for a $1.1 million Tualatin country home with a pool and tennis court, and $20,000 owed on a $1.5 million home on wooded acreage in Sisters.

It’s legal, as long as homeowners are at least 62 and have taxable income of no more than $39,500. The state is supposed to recoup the money, plus 6 percent interest, after the home sells or the property owner dies.

The tax-deferral program was created in 1963 for seniors and people with disabilities. The account that’s used to pay for it has typically had plenty of money, so state leaders didn’t pay the program much attention. The fund was so flush that in 2008, lawmakers took out $14.2 million to pay for other programs.

Not long after, the recession hit and the number of people seeking help jumped by one-fourth. Now the Department of Revenue warns there’s not enough money in the program to meet demand. The fund is $27 million short of what it needs through June 2013.

Records show the vast majority of the more than 10,500 homeowners in the program live in moderately priced homes.

They include Janice Reeves, 72, who owes about $350 a year in property taxes on her mobile home. Making the payment became tough after she and her husband, Jim, retired.

“For the first couple of years we had to sell a few things to pay the taxes,” Reeves said. “I spend a lot on medications. … Last year, I was diagnosed with stage 1 lung cancer. So, yes, it’s difficult to make ends meet.”

Some lawmakers say that given the program’s financial troubles, they might have no choice but to make changes. Given the newspaper’s findings, Republicans and Democrats agreed the fix might include an assets test, a higher interest rate and a limit on the property value.

“To say that somebody needs to stay in their $3 million home, I don’t think that’s the intent of the senior tax deferral program,” said Sen. Chris Telfer, R-Bend. “We need to evaluate the need for the program and who we’re trying to help.”

One of the million-dollar homeowners is Helen Grigg, 90, who moved into her Lake Oswego cottage in 1957. She and her husband signed up for the state’s property tax deferral program in 1978 because she said it was a smart investment.

Today, the 1927 cottage and prime lakefront property have an estimated market value of $1.1 million. This year’s property tax bill topped $12,000.

“I’m not one of the rich people in Lake Oswego,” she says. “I have no income except for Social Security, and there’s no way I could pay my taxes.”