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Gov. Cox's veto preserves 'lifesaver' tax relief for low-income seniors, advocates say

Gov. Cox's veto preserves 'lifesaver' tax relief for low-income seniors, advocates say

Yahoo03-04-2025

SALT LAKE CITY — Cheryl and Gary Johnson bought their South Salt Lake home for just $10,500 — more than 60 years ago — hoping to start a family.
The young couple did just that, and the house soon became home for their three kids and, eventually, grandchildren and great-grandchildren. It is filled with photos chronicling the joy and heartbreak of more than six decades living there, but the Johnsons have left a more permanent mark on the home in the form of several added rooms they built in the 1980s that more than doubled the home's footprint.
The couple would plant willow saplings to mark the birth of each child — the two remaining trees now stand more than 40 feet tall.
Cheryl Johnson is particularly proud of the large brick fireplace and hearth her husband built from the ground up in the dining room. She said the company that installed the firebox asked if it could include photos of the hearth in its catalog, but her husband, a brick mason by trade, declined.
'I said, 'Honey, that's an honor. Why would you not want that?'' she recalls telling her husband. 'He said: 'I just don't want anyone to steal my pattern.' ... His dad was a brick and stone mason, and he took up the trade business. He loved it, and he was good. He was the best.'
The home — where Cheryl Johnson, 83, now lives with her cat, Jojo — is now valued at more than $400,000, and the annual increases in property tax have stretched her budget, especially since her husband died in 2013.
'I'm so proud of my home,' she said. 'I'm going to be here the rest of my life. Nobody can take this house; and after, I'm hoping one of my kids can buy it.'
Johnson is able to stay in her house in part because of the so-called Circuit Breaker program, which provides tax relief to older Utahns who may not be able to afford annual property tax payments. Those who qualify based on annual income can have a portion of their property tax bill abated, a program just shy of 10,000 Utahns have taken advantage of in recent years.
'They call it the Circuit Breaker for a reason — because, essentially, this is at the point where people are struggling to keep their lights on,' said Salt Lake County Treasurer Sheila Srivastava, who oversees the county program.
It's a program that has existed for decades but one that Utah lawmakers planned to substantially change by making tax forgiveness unavailable to new applicants going forward — until the governor stepped in and vetoed the bill hours before the deadline to do so last week.
Tax relief for low-income older adults comes in several forms, including the tax forgiveness program and a tax deferral program. The deferral allows homeowners to hold off on paying property taxes until they sell the house or until it is passed down to a relative, at which point the owner would be responsible for paying the back taxes. Other programs provide tax relief for those with disabilities, active duty service members and veterans, among others.
Under SB197, state Sen. Dan McCay, R-Riverton, said the Circuit Breaker program would stop taking new applicants after a couple of years, requiring low-income homeowners to rely on the tax deferral program.
Those already receiving abatement would be grandfathered in, he said, meaning nobody would be kicked off of the benefits they currently enjoy.
As the Circuit Breaker program is designed to prevent people who are 'house rich, cash poor' from being kicked out due to indigence, McCay argues the deferral program still provides relief, while ensuring the county is eventually paid back for those taxes when the homeowner receives the windfall from selling their property.
'If they don't have cash to contribute to the property tax system, we want to make sure that taxes are not the reason that they have to leave their home,' he told KSL.com Monday. 'This person gets a tax benefit for a number of years, but then when they go to sell their home, they pay back the taxpayers, and everybody else's property tax goes down incrementally for paying those property taxes over the years.'
SB197 would also have frozen property tax increases for those on the deferral program even if the value of the home went up, McCay said, adding the difference to the amount to be paid upon sale of the home.
While presenting the bill to the Senate Revenue and Taxation Committee in February, he argued the tax forgiveness program can be used to pass on property to heirs without having to pay taxes on it.
'The idea of protecting the inheritance of a future generation by not having someone pay property tax should concern everybody,' McCay said. 'The key thing here is making sure that low-income seniors are protected and not forced out of their homes for tax purposes.'
SB197 passed on the final night of this year's legislative session after it was amended, with just hours to go, to include a prohibition on receiving Circuit Breaker benefits along with other forms of tax relief. Upon passage, several groups and individuals who had organized against the bill pivoted to urge Gov. Spencer Cox to veto it.
Groups such as the Utah Housing Coalition, Crossroads Urban Center and the Utah Disability Law Center wrote to the governor arguing that the tax relief amounts to only a small expense and said the bill would hurt low-income Utahns. Tim Funk, who works in advocacy for the Crossroads Urban Center, said he has worked with the program since its inception and called McCay's bill 'perplexing.'
'I'm a person who's just short of 80 years old, and I understand what that means in terms of tax forgiveness for people. The reason I came back into working on this, about three or four years ago, was (because) it was obvious that people needed more help,' Funk said. 'It's a humble program. It's not giving away the store.'
Phil Conder, the chief deputy treasurer of Davis County, and others have argued eliminating the Circuit Breaker would lead to some Utahns going without food or medication so as not to leave their heirs with a deferred tax bill upon their death. He said the current program is more cost-effective for taxpayers.
'If you were to take away the Circuit Breaker program, you're going to create a hardship on this demographic that will have to be accounted for in other ways,' Conder said. 'Do we force them into a care center that's now being paid for by different taxes? I believe it's the most cost-effective way to help these people.'
Eventually, treasurers from 27 of the state's 29 counties joined the chorus of voices calling for a veto. Grand County Treasurer Chris Kauffman led a letter explaining their position.
'We are especially concerned that seniors will forgo medicine, food and other essentials in order to stay in their home and avoid burdening their children,' the letter stated.
Srivastava estimated the program in Salt Lake County adds about $3 per month to the average homeowner's property tax bill — an increase she is willing to defend.
'It's going to be a really big impact for the people that it serves,' she said of the Circuit Breaker. 'They come into the office crying and struggling, and this feels like it's a lifesaver for them.'
The governor appeared to agree. On March 27, he vetoed SB197 — one of only six bills he rejected this year.
'A number of our county government leaders expressed concerns and asked for a veto due to administrative challenges with this policy change,' he wrote in a letter explaining his decision. 'They also expressed concerns about the impact this would have on our senior population. I agree with both of those concerns.'
Cox said he believed the bill had 'well-intentioned goals' but said it 'risks cutting off the most vulnerable of Utah's expanding senior population from a critical tax relief lifeline.'
In his letter, Cox said he is 'committed to working' with lawmakers on broader reforms to the state's tax system, and efforts to change the Circuit Breaker should be undertaken as part of a 'comprehensive' overhaul. McCay was skeptical that such overhauls are possible.
'I'm optimistic in that ... we can work on the issue going forward,' he said. 'My confidence in broader tax reform is low, having seen how broader tax reform goes with the public. ... We are far better off looking at small policies and making changes as we can, and I felt like (SB197) was a great step in the right direction. However, this process requires 38 votes in the House and 15 votes in the Senate, and I fell one vote short in the executive branch.'
The bill passed, initially, without enough votes to overturn Cox's veto, and McCay didn't say whether he plans to push for a veto override.
Srivastava was thrilled by the veto.
'I love it so much,' she said. 'I think that hearing (Cox) say those words was a really big testament to the fact that we can come out of this in a better way and that there is hope to see our politicians and our local elected officials working together for the common good.'
Although Johnson's own benefits would remain intact either way, she thinks Cox made the right call and said the veto will continue to let people have the same opportunities she has had — at least for the time being.
'It means a lot to me, and to my family,' she said. 'I don't know what I would do without it, for sure.'

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