More senior and disabled homeowners in Riverhead could receive property tax exemptions in 2024, if the Town Board increases income eligibility limits authorized by a state law passed this year.
If the board raises the eligibility limit, opening up the opportunity for more residents to qualify for partial real property tax exemptions, the resulting decrease in town property tax revenues would create a hole in the town budget.
A recently enacted state law authorizes municipalities to increase the income limit eligibility for real property tax exemptions ranging from 50% to 5%. The state law authorizes municipalities to increase the income limit from $29,000 to $50,000 per year to qualify for a 50% exemption and from $37,400 to $58,400 per year to qualify for a 5% exemption.
The higher income eligibility limit could result in hundreds more homeowners qualifying for an exemption, though there is no way to precisely predict how many more homeowners would become eligible with the higher income limit in place, officials said during a discussion at the Town Board work session Thursday.
The town currently has 755 senior-owned properties that qualify for an exemption, resulting in $5.8 million coming off the assessment roll, Riverhead Assessor Laverne Tennenberg told the Town Board. Increasing the eligibility income limits to the new maximums would increase the the exempted assessment roll amount to $9.8 million — just for those 755 properties.
“The problem is we don’t know who else would qualify” under the new limits, Tennenberg said. Therefore the town cannot accurately calculate in advance the impact on the assessment roll. “It could be 500 more properties, 1,000 more properties, [or] 2,000 more properties,” Tennenberg said.
The same is true of the properties that currently receive disabled person exemptions. The current exempt value of those properties is $856,000 and that would climb to just under $1.7 million if the town raises the eligibility limits to the maximum now allowed by state law.
The total value of property exempt under the current income limits is roughly $6.6 million and would rise to roughly $10.7 million if new income limits are adopted, according to figures provided to the Town Board by Tennenberg. This would mean a loss of roughly $250,000 in property tax revenue, according to calculations done using the tax rate in the 2023 preliminary budget.
Again, that’s without additional homeowners becoming eligible for an exemption.
The town board would have to budget for the loss either by raising the tax levy — which hits homeowners without exemptions the hardest — or by cutting expenditures like programs or employees.
Town Board members did not express an opinion on whether they would be willing to adopt the increased exemption during the work session, but simply asked questions to the assessor about how the exemptions work and the impact on the tax rolls.
Council Member Tim Hubbard said his concern is that if the town gives greater discounts to seniors and disabled people, the rest of the town would likely have to pay for that lost revenue.
“Of course, we would love to give discounts to seniors and handicapped, without a doubt,” Hubbard said. “But we have to be mindful of how much it’s going to put on the backs of other taxpayers, too. And we have to find a comfortable level for that to happen.”
Seniors make up 27.6% of Riverhead Town’s total population, while people with disabilities under 65 years old make up 7.3% of the population, according to census data. Those groups in Riverhead are proportionately larger than those in the whole of Suffolk County.
In a call Friday, Hubbard said the unknowns related to how many more homeowners will qualify for the exemption make it hard for the board to make an informed decision. He said the board will have to find a way to get a better estimate on that number and then hold another work session to make a decision.
Financial Administrator William Rothaar said if the Town Board adopted the exemptions, they would start in 2024 and be calculated into that year’s budget.
School districts are also authorized to adopt the new income limits under the new state law. Riverhead Central School District Trustees, including school board President Brian Connelly, could not be reached for comment Friday.
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