By Steve Frey
At Monday’s Radford City Council meeting, Mayor David Horton asked Councilman Rob Gropman to lead a “working group” to look at ideas related to tax relief. This study may be very valuable in helping to mitigate the effects of possible tax increases, especially for those on fixed incomes.
Currently, the city has a tax relief program for seniors and the disabled. There are also state or federal programs for veterans with 100 percent disability.
For senior citizens, here are the guidelines from the Radford City website that allow homeowners to have a 100 percent real estate tax exemption: 1. You must be 65 years of age on January 1st of the year of application. 2. Your total income for the preceding year cannot exceed $24,000. This includes the income of a spouse and anyone residing in the home. Income is defined as social security payments; pensions; earned income; interest income from savings, certificates of deposit, etc.; and any other miscellaneous sources. 3. The dwelling must be owned by you and be your principal place of residence. 4. Your assets cannot exceed $70,000. Assets include savings accounts, certificates of deposit (CDs), money market accounts, stocks and bonds, and any value of the home that exceeds $180,000 (a home currently worth $185,000 would place only $5,000 in the assets category, for example). 5. An application must be submitted each year by May 1, so there is still an opportunity to apply for this year!
For disabled persons, here are additional exemptions from the city website: Anyone permanently and totally disabled can qualify without being 65 years of age. The disabled person must provide two certificates of disability (statements from a physician and the Certificate of Disability from the Social Security Administration). The first $7,500 of income of a disabled person is excluded. The first $6,500 of income of anyone living in the home of a qualified person is excluded. This exclusion does not include a spouse’s income.
City Commissioner of Revenue Cathy Flinchum explained that the tax relief programs for senior citizens and disabled persons are currently listed in the Virginia Code. She shared that 62 people in Radford took advantage of the tax relief program in 2018, with 46 of them being senior citizens and 16 disabled persons. She said that reminder notices regarding the program go out on utility and real estate bills.
Perhaps the working group will look at the current levels used for tax relief. Flinchum said that the last change was in 2015 when the income level was raised from $20,000 to the current $24,000 level.
Is $24,000 in income now low? With inflation taking a bite out of purchasing power and expenses like home heating, electricity, medical costs, food, gas, etc. regularly rising, perhaps that income level should be raised to $29,000 or $30,000. Similarly, maybe the assets level could be increased slightly to $75,000 or $80,000.
Retirement is not what it used to be when retirees would receive a pension, could count on social security income, and also have some savings. For many, that “three-legged stool” often has only social security supporting people now.
Today, only 13 percent of non-union, private-sector workers have a fixed-pension program. At retirement, the average amount saved is $84,821. It is estimated, however, that 42 percent of Americans retire with less than $10,000 and a large percentage of those folks have zero savings.
This means that many people will be subsisting near the poverty level with only social security as an income. The president and Republican Senate majority leader have said that they will be looking at cuts to social security even though their tax cuts for the wealthy and corporations created a $1.5-2 trillion hole in the deficit (the president has stated that economic growth will take care of that deficit, but that has not been the case thus far). Senior citizens may have a rougher go of it in the future.
That’s why Radford’s tax relief program for senior citizens and disabled persons is so significant. Radford may have its first tax increase in nine years this year, but the city has made sure that senior citizens and disabled persons on fixed income will get a break if their income levels qualify.
Gropman has also expressed an interest in a recently passed law in the state legislature that allows localities to enter into lease-purchase agreements with private developers to build new solar-powered schools (Perhaps this is a way to pay for Radford City’s proposed Southwest Virginia Center for Innovative Teaching and Learning?). In return, developers cash in tax credits for solar energy and sell excess solar power into the utility grid.
City Manager David Ridpath has said that solar development through the electric company is restricted because the city still has nine years left on a 20-year contract with Appalachian Power that set prices at certain levels. There are penalties if the city uses too little or too much energy. However, a lot has changed in the last 11 years or so, and power companies are looking at ways to develop renewable energy. Perhaps a renegotiation of the contract that benefits both the city and Appalachian Power is possible? This might provide general tax relief.
Speaking of electricity, perhaps the same criteria used for real estate could be used to exempt seniors and the disabled from the local residential utility tax. It might not be a whole lot, but every dollar counts!
It will be exciting to see what new concepts Councilman Gropman’s working group will bring back to the council in the future. One thing’s for sure: The current program in place means a lot to Radford citizens on fixed income.
Steve Frey is a writer and CEO of Ascendant Educational Services based in Radford.