District lawmakers are likely to give initial approval Tuesday to a significant cut in residential property tax bills, one that would keep more than $53 million in homeowners’ pockets over the next four years.
The cuts stand to be politically popular, and they have been promoted by two D.C. Council members seeking citywide offices in the coming months. But some are questioning the wisdom of moving forward with pricey cuts that have not been endorsed by a blue-ribbon commission that recently finished an examination of the city’s tax structure.
One bill, introduced by Anita D. Bonds (D-At Large), would exempt low- and moderate-income homeowners 75 or older who have lived in the city for at least 15 consecutive years from all property taxes.
The other bill, from Jack Evans (D-Ward 2), would cap the yearly increase in a homeowner’s property tax bill at 5 percent, even if the home’s market value increases more than that. Currently, increases in yearly residential property tax bills are capped at 10 percent.
Both council members said their bills are intended to moderate the effects of the city’s red-hot real estate market on homeowners.
“No one is getting a 10 percent increase in salary every year, so the government is just taking more and more of our money,” Evans said. “When we have record surpluses, we [the government] don’t need the money.”
Bonds said her bill, which would apply to longtime residents earning no more than $60,000 a year, would allow more senior citizens to stay in their homes. “Helping those who need the help,” she said. “That’s what we should do.”
But Tuesday’s initial votes on the bill come less than a month after the D.C. Tax Revision Commission, a body consisting of policy experts, business leaders and other prominent citizens, determined that the city’s property taxes should be left alone. Instead, the commission found, low- and moderate-income residents would be better served by cutting income taxes.
Ed Lazere, the executive director of the liberal D.C. Fiscal Policy Institute and a commission member, said the District’s residential property taxes are already among the lowest in the region. And he said the benefits of the lower cap would accrue mainly to owners of the city’s priciest homes.
The institute estimates that two-thirds of the $35.6 million in relief provided by the Evans bill through 2017 would apply to the most valuable one-third of homes.
The commission did not specifically consider a property tax exemption for seniors, but Lazere said there are better ways to offer relief to those in need than Bonds’s approach — such as expanding an existing income tax credit for low-income residents.
“Age alone is not a signal that you’re having trouble paying your taxes,” he said. “It provides really generous tax help to a group of seniors while leaving a whole other group of seniors with no help at all. That doesn’t seem fair.”
Council Chairman Phil Mendelson (D) said Monday it was a “legitimate question” why lawmakers are moving on a major tax policy change before the Tax Revision Commission makes a formal report, which is expected later this month.
Mendelson added that he was skeptical of tightening the cap on property tax increases, saying it could make property tax burdens “inequitable” from neighborhood to neighborhood.
A senior aide to Mayor Vincent C. Gray (D) said the mayor will oppose the bills in a letter that will be sent to lawmakers before Tuesday’s meeting, citing similar concerns. And administration spokesman Pedro Ribeiro said “it might be a good idea to look at what the [commission] puts out before we start tinkering with the tax system.”
Even if the bills pass the council, lawmakers will have to account for their impact in coming budgets — starting with $11.6 million in 2015 — before they can take effect. That could make it more difficult to implement many of the commission’s changes, which are expected to cost nearly $50 million in 2015.
But the bills are expected to win broad support Tuesday, with 10 of the council’s 13 members running for re-election or higher office this year.
Evans, who is running for mayor, said his pending campaign was immaterial. “This is something I’ve been working on for years,” he said. “The timing is the timing.”
Bonds, who is seeking to keep her current seat, said her bill was both good politics and good policy: “This is a responsive way for the government to behave toward some of its prized constituents.”