A popular Delaware property tax credit for senior citizens has been restored to a maximum of $500, at least for one year.
That’s what the break was before Gov. John Carney’s new administration cut it to $400 upon taking office five years ago during a state budget shortfall. But the boost falls far short of a legislative proposal to raise it to $750.
Even though the state’s fortunes have reversed and officials are forecasting a nearly $700 million general fund budget surplus for the fiscal year that starts July 1, Democrats who control the General Assembly decided a smaller increase to $500 was more acceptable. Whether it will be extended beyond one year is uncertain.
For the fiscal year that ended in June 2021, about 70,000 homeowners received a credit at a cost of $24 million to the state.
Based on the 2021 usage, the increase from $400 to $500 would only cost the state about $6 million extra a year, for a total of $30 million. The increase to $750 would have cost a total of $45 million a year – or $21 million more than the 2021 total.
To get the break, a person must be at least 65 years old and own their primary residence. Those who have moved to Delaware after Jan. 1, 2018, aren’t eligible until they have lived in the state for 10 years.
The program was created in 1999, and allows one credit per property annually. Those who qualify will get a 50% credit against their property tax bill or a $500 credit, whichever is lower, when they pay their bill this year.
State Rep. Kevin Hensley, a Middletown-area Republican who sponsored the bill to raise the maximum to $750, says “something’s better than nothing, for sure.”
Yet he’s disappointed with the compromise.
“We’re right back to where we were several years ago,’’ he said. “But the goalpost has moved, with inflation and things of that nature.”
Indeed, inflation in the United States reached a 40-year high last month. Gasoline is now more than $5 a gallon at many stations in Delaware. Food and power costs are up, as are interest rates.
“The administration was not in support of the adjustment” to $750, “and the majority party frankly did not have the appetite to take it beyond the 500.”
Democrats control the House by a 26-15 margin and the Senate by a 13-7 tally.
The state has responded to the spike in inflation by issuing $300 checks last month to all Delaware taxpayers.
The Carney administration has not responded to repeated requests to explain why a larger credit is not feasible, given the surplus. But Hensley said he was told by administration officials that Carney is not supportive or he would have included the measure in the budget proposal he unveiled in January.
Carney’s $4.9 billion budget proposal puts hundreds of millions more dollars toward environmental, education, infrastructure projects, plus raises for state workers.
Democrats ‘thought the $500 was a win’
The decision to raise the credit back to $500 instead of $750 or not increase at all was made by the bipartisan legislative Joint Finance Committee. It’s a 12-member panel that finalizes the governor’s requested budget before it’s voted on by the General Assembly. The group is currently controlled by Democrats 8-4.
Hensley is a member but his proposal was rejected during negotiations. Instead of passing Hensley’s bill or a measure by fellow Republican Mike Ramone to raise it to $500, lawmakers simply wrote it into the budget for fiscal 2023. Lawmakers are expected to include the measure when they approve the state budget later this month.
Democratic lawmakers “thought the $500 was a win,’’ Hensley said. “That’s the best that we feel like we can do.”
He said some lawmakers reasoned that while “we’ve got a significant surplus this year, we may not have it in the out years. I understand that line of thinking, but at the same time, you can’t tell me that with close to a $5 billion budget that we couldn’t find the extra money in the budget in the out years to provide what I feel is critical relief to our senior population.”
Democrat Kim Williams, who represents the Newport area west of Wilmington, was satisfied with simply restoring the credit to pre-2017 levels.
“For many seniors throughout the state, an extra $100 can mean the difference in paying a utility bill, groceries, or even prescription medication,’’ Williams said.
Democrat Sen. Jack Walsh of Pike Creek said “seniors on a fixed income are being asked to stretch every dollar as far as it will go, and this tax credit combined with the tax relief rebate program … will help provide them with the breathing room they desperately need.”
Ramone said he was “thrilled” that his proposal will be enacted, at least for a year. “I have been fighting for restoration of the credit for multiple years now, and finally being able to tell our senior citizens that some financial relief is coming their way has made it all worth the work,’’ Ramone said.
Carla Grygiel, executive director of the Newark Senior Center, echoed Hensley’s sentiments.
“Every little bit counts, but it’s not an easy time economically for anyone, including seniors,” Grygiel said.
She pointed out that most still drive and they “have all the same household expenses that other people have. And I guess for those who do have a little bit of a nest egg, if it’s in the market that has been affected and it’s at a time when they’re probably not putting money into it.
“Retirement isn’t easy” because all medical expenses aren’t “covered by Medicare,’’ she said. “There are various premiums and copays that people still have to deal with. You’re not home free after you hit 65, let’s put it that way.”
Many retirees are also looking for work, she said. “They find themselves in a bit of a financial predicament because if you read the statistics, people really haven’t put enough away for retirement. But in many ways, they did the best they could.”