Tom Iacobucci Describes Impact of Freeze 65+

Mayoral candidate Tom Iacobucci today calculated that, if his Freeze 65+ program had been in place two years ago, participating senior citizen homeowners would have saved an average of $593 on their FY05 tax bill.

“We calculated that the total revenue impact of the program could have been as high as $326,328, for FY05,” Iacobucci said. “That would have been about half of the automatic increase in the Town’s levy limit that year, under Proposition 2_. We could have reduced the levy limit to cover the costs of the program, so the costs would not come out of anybody else’s pocket.”

Iacobucci has proposed freezing the property tax valuations of homeowners who are 65 years of age or older, who have owned property in Amesbury for at least 10 years, and who are retired. This would help stabilize senior citizens’ property taxes, which have skyrocketed in recent years.

To pay for the program, Iacobucci has proposed reducing the automatic annual increase in the amount of taxes the Town can assess each year under Proposition 2_. “If we cut the levy limit by the costs of the program, each year, that would keep the program’s costs from being passed along to other taxpayers,” Iacobucci said. “It would force the Town to slow its spending growth a bit, but that’s not a bad thing.” Proposition 2_ limits the total amount of tax revenues assessed by the Town. The law allows an automatic 2_ percent increase in the levy limit each year. The “automatic growth” allowed for FY06 is $655,514.

“We identified 550 homes that are owned by people age 65 and older. Between FY04 and FY05, the assessed value of those homes increased by an average of $41,666, or almost 18%,” Iacobucci said. “If the Freeze 65+ program had been in place, and every single one of those homeowners had participated in it, the revenue impact would have been $326,328.”

“Of course, we don’t know how many of those homeowners would have been eligible. We don’t know how many of them are actually retired, and we don’t know how many of them have owned property in Amesbury for 10 years. We don’t know how many of them are already in the tax deferral program,” Iacobucci said. “So the $326,328 calculation is an ‘outside number’. The revenue impact would probably have been lower that that.”

Under current law, most senior citizens can choose to defer their tax payments until their property is sold, and the deferred amounts are paid by other taxpayers. “If every one of those 550 senior citizens had been in the property tax deferral program in FY05, the revenue impact would have been $2.36 million,” Iacobucci said. “That’s huge. But the tax burden has grown so much, in the past few years, that people are being forced to choose between selling the homes they love, or signing up for tax deferral.”

Over the past five years, the average senior citizen’s tax bill has grown by 55%, which is more than 10% faster than the Town’s average tax bill has risen.

“I don’t want to see anybody forced out of their home. I also don’t think that Amesbury can afford to have all of our seniors join the tax deferral program. Our senior citizens are a vital part of our community’s fabric,” Iacobucci added. “My goal with Freeze 65 is simply to stabilize the tax bills of our senior citizen homeowners, so they can all afford to stay as current taxpayers.”