Starting in the early 70s, Tennessee provided property tax relief to low-income elderly or disabled persons, as well as disabled veterans and their surviving spouses. The state would pay the first $175,000 of appraised value on the disabled veteran’s home, or the first $25,000 value on the home of a low-income person who was elderly or disabled.
The Comptroller of the Treasury administers the Tax Relief Program. Funds are allocated by the Governor to cover Tax Relief in the state budget every year. As the data and chart here shows, Tennessee maintains a consistently low base amount of funding for Tax Relief, despite the fact the actual cost of the program is consistently rising. Typically the Governor compensates for this “shortfall” by allocating supplementary funds for the program. For example, $2.5M in supplementary funds was allocated for 2013, $2.75M for 2014, and $3M for 2015.
Unfortunately, Governor Bill Haslam failed to allocate any supplementary funds for the Tax Relief program in the 2016 budget when faced with a roughly $7M shortfall between the base and estimated costs of the program, despite the fact that the State was running a $150M budget surplus and found room in the budget to abolish the Hall income tax as well as allocating hundreds of millions to the failed TNInvestco program. Interestingly, the previous year Senator Mark Norris, who now plans to run for Governor, and Representative Charles Sergeant, filed SB2599/HB2503, which sought to adjust tax relief payments on an annual basis in order to keep all payments within the limits of the base appropriation. The Tennessee veteran community became aware of the Bill, and it was quashed before becoming law.
After the Governor failed to allocate the proper funds for Tax Relief in the 2016 Budget, Senator Randy McNally, who this year became Lt. Governor, along with Representative John Ragan, filed legislation that drastically diminished the tax relief program, particularly for disabled veterans. The veteran community was understandably upset by the change, despite promises by lawmakers to try to correct the budget issue in the future. This year three different sets of Bills have been filed to restore the disabled veterans’ tax relief back to previous levels:
HB0005/SB0025 by Senator Mark Green and Representative John Ragan which will restore the available tax relief for disabled veterans from the $100,000 value cut in 2015 to the previous value of $175,000
HB0023/SB0021 by Senator Mark Green and Representative Timothy Hill which is virtually identical to HB0005/SB0025
HB0020/SB0023 by Senator Mark Green and Representative Joe Pitts, which will restore the $175,000 assessed value relief for disabled veterans, as well as restore the $25,000 assessed value relief from the $23,500 assessed value amount for low-income homeowners who are elderly or disabled.
Although these Bills do nothing to address the budgetary issue which precipitated the 2015 Tax Relief cuts, they are a necessary and welcome improvement for the disabled veterans of Tennessee. Those disabled veterans who benefit from the Tax Relief program are so profoundly disabled that they are unlikely to seek or find gainful employment, and a doubling of their annual taxes that could typically range from $500 to $1,000 in additional tax obligation is a heavy burden to bear for men and women who have already given their country everything short of their last breath.
Tennessee legislators will need to think seriously about their spending and taxing priorities in order to insure the program’s continuance well into the future. Tennessee voters should remember what an important role the Governor plays in insuring the future of Tax Relief when vetting candidates during the 2018 Gubernatorial race.