NAUGATUCK — The Board of Mayor and Burgesses last week approved an ordinance to provide senior citizens some additional tax relief, but officials aren’t giving away anything for free.
The Senior Tax Deferral Program Ordinance works in concert with the state’s senior tax abatement program, known as the Circuit Breaker Program. The state’s program provides tax credits to eligible residents. According to the state’s Office of Policy and Management, credits can go up to $1,250 for married couples and $1,000 for a single person.
The credit amount is calculated by local assessors and applied by local tax collectors to the applicant’s real property tax bill. The state reimburses a municipality for the taxes abated under the program.
Under the borough’s program, residents can apply to receive an additional 50 percent of what they receive under the Circuit Breaker Program. For example, if a resident receives $1,000 from the state, he or she could be eligible for an additional $500 from the borough.
The program replaces the borough’s freeze program, which gave seniors an additional 20 percent of what they received under the Circuit Breaker Program. Unlike the freeze program or the state’s program, however, the new program is a tax deferment program rather than a tax abatement program.
Any taxes deferred under the deferral program will be applied as a lien on the property, which must be paid off once the property is transferred or sold.
“We put together a program we thought would be in the best interest of seniors,” Assessor Carol Ann Tyler said.
Tyler, Tax Collector James Goggin, and Board of Finance member Dan Sheridan worked on a committee to develop the ordinance.
Each lien placed on a property is subject to an interest rate, which will be set by the Joint Board of Mayor and Burgesses and Finance in January, Sheridan said.
“Rather than a free handout, here’s a win-win situation. You get some help while you are alive, but when your house is sold the town gets its money back with some interest,” Sheridan said.
The ordinance requires residents to meet certain conditions. These include first being accepted into the Circuit Breaker Program, having been a resident of Naugatuck for at least five years, and not owning a home with an assessed value of more than $200,000.
“So if you have a net worth of $500,000, even if it is all in your house, you don’t need the town’s assistance and probably need to figure out a better way of dealing with your problem,” Sheridan said.
If a resident does qualify for the tax deferment program, the combination of the Circuit Breaker Program and the deferment can’t cover more than 75 percent of a resident’s tax bill, Sheridan said.
“They are still going to have skin in the game. They are going to have to come up with at least 25 percent of their taxes because nobody should have a free ride,” Sheridan said.
Mayor N. Warren “Pete” Hess said, although the taxes are deferred as a lien, the ordinance will still benefit seniors more than the freeze program.
“Persons who received the 20 percent, next year this would arguably be better for them because the 20 would go to 50 percent,” Hess said. “We are attempting to increase benefits for worthy people, but at the same time the town will get that money back as people can afford to pay it when their properties are sold.”