HOUSE BILL REPORT
HB 2284
As Reported By House Committee On:
Finance
Title: An act relating to property tax exemptions for senior citizens and persons retired for reasons of disability.
Brief Description: Changing property tax exemption provisions.
Sponsors: Representatives Rockefeller, DeBolt, Skinner, Conway, Lantz, Kastama, Alexander, Haigh and Kessler.
Brief History:
Committee Activity:
Finance: 4/9/99 [DPS].
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Brief Summary of Substitute Bill
$Deducts health care insurance payments and veterans benefits for service related disabilities from income when determining eligibility for the property tax relief program for senior citizens and persons retired due to disability.
CIncreases from one acre to two acres the land eligible for relief under the property tax relief program for senior citizens and persons retired due to disability.
CProvides higher income thresholds for veterans of the United States armed forces with 100 percent service-connected disability.
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HOUSE COMMITTEE ON FINANCE
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 9 members: Representatives Dunshee, Democratic Co-Chair; Thomas, Republican Co-Chair; Carrell, Republican Vice Chair; Reardon, Democratic Vice Chair; Cairnes; Conway; Cox; Pennington and Veloria.
Minority Report: Do not pass. Signed by 1 member: Representative Dickerson.
Staff: Rick Peterson (786-7150).
Background:
Some senior citizens and persons retired due to disability are entitled to property tax relief on their principal residences. To qualify, a person must be 61 in the year of application or retired from employment because of a physical disability, own his or her principal residence, and have a disposable income of less than $30,000 a year. Persons meeting these criteria are entitled to partial property tax exemptions and a valuation freeze.
Disposable income is defined as the sum of federally defined adjusted gross income and the following, if not already included: capital gains; deductions for loss; depreciation; pensions and annuities; military pay and benefits; veterans' benefits except attendant‑care and medical‑aid payments; Social Security and federal railroad retirement benefits; dividends; and interest income. Payments for the care of either spouse received in the home or in a nursing home and payments for prescription drugs are deducted in determining disposable income.
Partial exemptions for senior citizens and persons retired due to disability are provided as follows:
A. If the income is $24,001 to $30,000, all excess levies are exempted.
B. If the income level is $18,001 to $24,000, all excess levies and regular levies on the greater of $40,000 or 35 percent of assessed valuation ($60,000 maximum) are exempted.
C. If the income level is $18,000 or less, all excess levies and regular levies on the greater of $50,000 or 60 percent of assessed valuation are exempted.
In addition to the partial exemptions listed above, the valuation of the residence of an eligible senior citizen or disabled person is frozen at the assessed value of the residence on the later of January 1, 1995, or January 1 of the assessment year a person first qualifies for the program.
The program applies to the dwelling and the land on which it stands up to one acre.
Summary of Substitute Bill:
The income used for determining eligibility for senior citizens and persons retired due to a disability program is reduced by payments for health care insurance and veterans' benefits for disabilities related to the performance of military duties.
The parcel size limit for the exemption program is increased from one acre up to two acres if land use regulations require the larger size.
Low income veterans of the United States armed forces with 100 percent service connected disability are eligible for property tax relief on their homes. Those with income below $35,000 have the assessed value of their home frozen and are exempt on all excess levies. Those with income between $29,000 and $23,000 have additional regular property tax relief on the greater of $40,000 or 35 percent of the home value not to exceed $60,000. Those with income below $23,000 have additional regular property tax relief on the greater of $50,000 or 60 percent of the home value.
Substitute Bill Compared to Original Bill: The substitute bill limits the tax relief for veterans with 100 percent service-connected disability to those with incomes below $35,000. The original bill did not place an income limit on tax relief for these veterans. The substitute bill restores language that allows land up to five acres to be included in the property tax deferral program.
Appropriation: None.
Fiscal Note: Requested on April 2, 1999.
Effective Date of Substitute Bill: Ninety days after adjournment of session in which bill is passed.
Testimony For: This bill will reduce senior citizen property taxes. It will allow seniors to live their lives in dignity without the fear of needing to sell their homes to pay taxes. Seniors that are able to stay in their homes live longer healthier lives. Medical costs are rising rapidly, allowing a deduction will ease senior property tax burden. The increase in the exemption from one to two acres is a start to fairly treating homeowners in rural areas. Since most zoning restricts these lots to five acres the acreage allowance should be increased to five acres. Veterans have given so much to our country they deserve property tax relief. The bill allows relief for those that are 100 percent disabled.
(Concerns) Through its history this program has provided tax relief based on ability to pay. The bill will allow some people to get relief based on their disability status only. The income of similarly situated persons with non-veteran disability income, such as Social Security, will still be counted when calculating the amount of relief. The bill appears to reduce from five acres to two acres the land for which taxes may be deferred.
Testimony Against: None.
Testified: Gene Forrester, AARP and Olympia Area Retired Officers Association; Joseph K. Johnston, Northwest Chapter Paralyzed Veterans of America; and Patrick J. Farrell, Northwest Paralyzed Veterans of America.
(Concerns) Peri Maxey, Department of Revenue; and Fred Saeger, Washington Association of County Officials.