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APPROPRIATION COMMITTEE—2.020 ATM 25 March 2020 The 41A deferral program is an attractive form of tax relief from the Town's point of view because it is essentially revenue-neutral. While a significant increase in the number of participants could potentially affect the Town's cash flow,there is little risk of loss since the Town is in effect making well-secured loans. The Town anticipates repayment of all deferred taxes with interest,and over time an equilibrium should be reached under which as many deferral agreements are repaid as are entered into. The total amount of deferred taxes now carried by the Town as accounts receivable is shown below. The "41C" Exemption Program For many years,the Town has made available to qualifying seniors a property tax exemption under Clause 41 of G.L. c. 59, §5, and its successor, Clause 41C. Under the "41C" Program, the Town receives partial reimbursement from the State for exemptions defined under the program, subject to appropriation. The portions of the exemptions that are not reimbursed are funded from the Town's overlay account. Prior to 2004, the amount of the credit was limited to $500 per year and eligibility criteria were quite restrictive. Since then, the Town has taken a number of steps to expand both eligibility and the credit amount. Taking advantage of new local options made available by the legislature in 2002, Town Meeting voted in 2004 to: • Increase the amount of the exemption to $750. • Lower the age of eligibility from 70 to the minimum allowed age of 65. • Increase the income threshold from $13,000 (single)/$15,000 (married)to the maximum allowed amount of$20,000 (single)/$30,000 (married). • Increase the threshold for personal assets, not including the home, from $28,000 (single) / $30,000 (married)to the maximum allowed amount of$40,000 (single)/$55,000 (married). In 2005, Town Meeting voted to adopt the provisions of G.L. c. 59, § 5, Clause 41D, which automatically adjusts the income and asset limits for Clause 41 C(but not the exemption amount)by a COLA established annually by the state Department of Revenue. The current income and asset limits are detailed in the table below. In 2006,Town Meeting voted to increase the exemption to the maximum allowable amount of$1,000, and in 2018 voted to double it to $2,000 under the provisions of G.L. c. 59, §5, Clause C''/2. The Senior Service Program Low-income seniors may perform volunteer work for the Town in exchange for a reduction in their property tax, currently up to a maximum credit of$1,540 (see table below). The Senior Service program, formerly funded from the overlay account, is now funded as part of the Town's annual budget and is subject to appropriation. In 2006, Town Meeting voted to rescind its acceptance of the statewide senior property tax work-off pro- gram under G.L. c. 59, § 5K, and to establish a locally controlled program instead''. This gave the Town the flexibility,through its Board of Selectmen,to: • Allow participation by persons under age 60, such as the disabled and handicapped,who might be able to benefit from the program. " In 1999,the state legislature authorized cities and towns,by accepting G.L. c. 59, § 5K,to offer seniors the oppor- tunity to reduce their property-tax obligation by up to$500 in exchange for community service.Lexington,which had earlier maintained its own program, accepted this statute shortly after it was enacted. The statute allows towns to set their own rules and procedures for implementation,but limits participation to persons age 60 or over and also limits the hourly credit to the state's minimum wage. In 2002,the maximum amount of the Section 5K credit was increased to $750. In 2009 it was increased to $1,000, and in 2016 it was increased to $1,500. The 2010 Municipal Relief Act added a provision allowing towns to adopt a local option to set the maximum instead at 125 hours of service at the prevailing minimum wage(with a minimum wage of$12 per hour,the maximum credit is now$1,500,but that max- imum would automatically increase if the minimum wage increases). 58