Chairman Evans and members of the Committee, thank you for the opportunity to testify today. My name isJenny Reed, and I am the Policy Director of the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low- and moderate-income residents.
I am here today to testify in support of fully funding the improvements to DC’s low-income property tax credit, more commonly known as Schedule H, that were adopted last fall. Available to both renters and homeowners, Schedule H helps DC residents who have high property taxes relative to their income and can be an effective tool to help ease some of the impacts of gentrification that affect so many DC neighborhoods. DCFPI urges the DC Council to find funding in the FY 2014 budget to move Schedule H off the revenue contingency list and make the improvements a reality for DC’s low- and moderate-income residents.
Until last December, Schedule H had not been updated for 35 years when, thanks to your leadership Councilmember Evans, the DC Council passed B19-0164, “The Schedule H Property Tax Relief Act of 2012.” This bill made significant improvements to Schedule H that will increase both the reach and effectiveness of the credit at helping residents who have high housing costs relative to their income.
Schedule H is what is known as a circuit breaker program, meaning that it kicks in when property taxes become too large as a share of one’s income. The credit applies not only to homeowners but also to renters and assumes that renters pay a share of property tax indirectly through their rent. (Currently, Schedule H assumes 15 percent of rent paid is passed on to cover the property tax payments.) In 2010, the year that data were most recently available, approximately 6,400 filers received schedule H, with an average credit paid of $570. Nearly 80 percent of filers who applied for the credit were renters.
The improvements made to Schedule H are critical because current rules limit participation in, and the effectiveness of, Schedule H as a property tax relief mechanism for low-income residents. For example, the current income ceiling hadn’t been updated in 35 years and thus failed to keep up with inflation and the rising costs of housing in DC. In addition, onerous rules about who could apply for the credit left many residents unable to claim the credit despite need. Some of the notable changes in passed in “The Schedule H Property Tax Relief Act of 2012″, include:
- Raising the income ceiling from $20,000 to $50,000
- Raising the maximum credit from $750 to $1,000 and adds an adjustment for inflation each year.
- Changing the requirement that all people living together must file together for Schedule H, even if they are not related and file separate tax returns.
To read the complete testimony, click here.