Taxed beyond relief (School and Property Taxes in PA/NJ)

The Philadelphia Inquirer ^ | October 4th, 2005 | Rita Giordano

[2banana]

Taxed beyond relief

Rising tazes, shrinking nest eggs and other surprises force some to make hard choices.

By Rita Giordano and Lini S. Kadaba

Inquirer Staff Writers

Third of four parts

To Art and Marian Arakelian, family was everything.

So three years ago, the retired engineer and his wife moved from Texas to a new active adult community in Sicklerville to be near their two sons and two little grandsons.

"We thought this was it," said Art, 68.

What they didn't know was how unforeseen financial setbacks, capped by escalating property taxes like those hitting many in Philadelphia's suburbs, can tear asunder even the most deliberate of retirement plans.

They didn't know that their IRA would take a big hit from a downturn in the stock market. They didn't know that Art would get sick and have to give up the part-time job that brought in extra cash.

Most of all, they didn't know that their property taxes would jump 34 percent - from $6,100 to $8,200 in just three years, with no sign of stopping there.

By the spring, Art began contemplating something he never imagined: leaving the kids and grandkids and moving away. His sons didn't want to hear of it. Marian, 61, teared up just talking about it.

Art wasn't seeing many other choices.

"I'm not a dreamer. I know prices of things are going to go up, but I never thought it would be like it is right now," Art said. "We made sacrifices so we could benefit in the future. I'm not sure what kind of benefits I'm going to reap right now."

•

Property taxes in Philadelphia's Pennsylvania suburbs have shot up 21 percent on average in the last five years - far more than the 3 percent in the city.

In New Jersey, with one of the highest property-tax rates in the nation, homeowners were hit even harder. Tax rates in Camden, Burlington and Gloucester Counties climbed an average of 23 percent.

No one tracks how many older people, faced with rising property taxes and other costs, give up their dreams of aging where they are - whether in longtime homes, condos they bought to be near grandchildren, or over-55 communities that seemed to offer it all.

But recent years have brought increasing tension between senior homeowners and suburban communities seeking tax hikes to benefit schools or make up for shortfalls in state and federal support.

Officials with the Pennsylvania and New Jersey AARPs say that existing tax-relief programs don't go nearly far enough.

"Property taxes are one of the main issues our members in Pennsylvania want government to help them with," said Angela Foreshaw, state AARP spokeswoman.

At least half of AARP's 1.3 million New Jersey members are on fixed incomes that have not kept up with tax increases, according to state president Marilyn Askin.

"Property taxes have risen more than 50 percent in the past 10 years, forcing seniors out of their homes or to make choices on whether to repair the roof or pay the taxes," Askin said.

One startling fact: Nearly 40 percent of the 65-plus homeowners in the suburbs live alone and must shoulder rising costs on their own.

At particular risk are those who spend at least 30 percent of their income on housing costs, including electricity and taxes. About 19 percent of the 470,000 people age 65 and older in the seven suburban counties are saddled with this burden.

Ruthann Wohlforth of Ocean View in Cape May County says her latest property tax bill was $3,478. Her annual income from Social Security disability checks and bonds is less than $8,000.

To pay her taxes, Wohlforth borrows money, expecting the state to reimburse part of it under its Property Tax Reimbursement Program, which allows some seniors and disabled people to freeze taxes but still requires that they first pay their full bill.

She also has applied for the Fair and Immediate Relief plan, which gives rebates regardless of age.

Although she has received partial refunds under the programs, she said, the amounts have fluctuated based on what the state can afford, leaving her uncertain year to year whether she can repay the loans.

"I am scared to death because I know if I can't pay back the loan, my house is gone," said Wohlforth, 63.

Levittown retirees Marie and Earl Wisler, 79 and 81, respectively, say their taxes have become such a drain that a few years ago they started charging friends for candy they make and used to give away.

"Everything we make from it, we keep aside for school taxes and real estate taxes, which keep going up," Marie Wisler said.

After a car accident put her on disability, Camden County real estate agent Jean Oberholtzer held on to her beloved four-bedroom home in Magnolia for as long as she could, even renting space to tenants.

Five years ago, property taxes shot to more than $3,500. She thought that she had to sell. An avid crafter who knits for charities, Oberholtzer, 67, now lives in Glendora in a subsidized senior apartment - "a big closet" - in which she can barely fit all her crafting supplies. The move "was horrible," she said.

"I lived in that house 371/2 years. I raised my kids there."

Helen Nolan, 68, a retired Social Security administrator, and her husband, Robert, 72, a retired printer, moved last year to Delaware, where property taxes are lower, from an over-55 community they loved in Mansfield Township, Burlington County.

Helen was president of the civic association, and they had good friends. Still, their vision of retirement included taking a trip now and then, and, Helen said, that wasn't going to happen paying the $7,000-plus in property taxes.

"We didn't want to leave," said Helen, a lifelong Jersey resident. "We really figured we would be there forever."

•

Art Arakelian thought he was on sure ground when he retired in 2001.

He had about $150,000 in an IRA, he said. The plan was to live on his Social Security income - about $1,500 a month after paying $260 for Medicare supplemental insurance - plus money from part-time jobs. Marian, long a homemaker, was working for Target. Art got a job at a Chick-fil-A.

For these frugal, modest, churchgoing people, it seemed to be enough.

But then their IRA lost about $40,000, Art said. In 2003, after they moved to New Jersey, Art got shingles and had to stop working. To pay their rising tax bills, they started spending their retirement fund. "How many years can you be living in the red?" he asked. "It's taking the funds I was planning on using to enjoy the rest of my life with my wife."

They gave up dreams of trips to Europe. Instead of eating out once a week, they go once a month. Instead of going to community theater, "we end up staying home and watching TV."

Art found that they were ineligible for the senior tax freeze program; they hadn't lived in the state for 10 years, nor in their home for three.

They did get about $1,200 back in each of the last two years from the FAIR tax-relief program, but their taxes continued to rise.

Reluctantly, Art began researching other places to live. What about a condo? one son asked. But Art figured that there would still be taxes and he didn't think he could get used to apartment living.

Florida's housing prices and taxes seemed reasonable, he thought, and the weather would be easier on his leg that was struck by polio as a child.

But the prospect of splitting up the family was painful for all the Arakelians, who have moved several times to be with each other.

Sons Jason, now 35, and Rich, 37, followed their parents to Texas after Art's job relocated him from New Hampshire 16 years ago. When Jason, a graphic designer, married a Jersey girl, the pull of family brought them all back East.

One evening in July, a still-undecided Marian began to cry as she talked about all the little things she would miss doing with her grandsons, Jay Jay, 5, and Joshua, 4.

"When you think about leaving the kids and the grandkids and my daughter-in-law, they're all my kids, it just tears you," Marian said.

"We'll always be up for any special occasion," Art told her, looking for a bright side.

"They won't be able to sleep over," Marian said.

Both sons said they would pay the taxes if they could. Rich, a computer programmer, recently had a big property tax hike. He ate sandwiches for a while and got a raise. He knows his father isn't getting any raises.

"My parents have worked all their lives, and they earned the right to be able to do whatever they want," Rich said, "and they can't - not here, anyway."

•

How the baby boom generation - the 78 million Americans born between 1946 and 1965 - will fare as their later years unfold is yet to be seen. Experts, though, are concerned.

A computer study by Temple University professor Jack VanDerhei, found that six out of 10 people will not have enough money for retirement.

Only 21 percent of American workers have traditional pensions, so many boomers will have to finance largely on their own what's expected to be unprecedented longevity.

"I think you've got a huge problem out there with individuals who have been handed the keys to their retirement future without an owner's manual," VanDerhei said.

Many boomers had children later and will be paying college costs at a time when past generations saved for retirement. Many will help pay for the care of their longer-living parents.

Most of those aged boomers will be women, who typically made less in their lifetimes. Many will find their savings sharply depleted by a husband's illness and death.

"It's this combination of forces at work that makes us skeptical about how prepared people will be for retirement," said Sandra Timmermann, director of MetLife's Mature Market Institute.

•

One evening in August, after they'd returned from Florida, Art and Marian sat together on the sofa of their tidy living room, discussing their hard-made decision with their sons.

They'd put a deposit down on a house in an active adult community in Lakeland. The brochures showed a pleasant-looking home. The cabinets were new; the porch sunny.

The mood in their South Jersey home was anything but.

"It's not going to be a gold mine down there," Jason said.

"If we come here as often as once a month, we'll still be ahead of the game," his father replied.

Rich mostly looked sad, toying with the heel of his sneaker. And Marian couldn't help crying when she recalled what little Jay Jay asked her just days before:

" 'Mom-Mom, why are you moving away from us?' "

--------------------------------------------------------------------------------

Contact staff writer Rita Giordano at 856-779-3841 or rgiordano@phillynews.com.

[Michael Barnes]

I couldn't imagine 20K in property taxes..That's criminal.

[Physicist]

I recently fled Lansdowne (just outside of Philly) for Gilbertsville (halfway to Reading). The tax rate here is less than half what it was in Lansdowne, and EVERYTHING is better...except the radio reception! LOL

[Mo1]

Your kidding right? I don't remember hearing that..Not that I doubt you

Not kidding .. it was a few years back that the State had to come in and take over because Philly School Administration was so messed up

[Mrs. Shawnlaw]

"We made sacrifices so we could benefit in the future. I'm not sure what kind of benefits I'm going to reap right now."


Oh, cry me a river, Puh-Leze! I am so sick of hearing about retirees 'but I'm on fixed income (sniffsniff)' Well guess what geezers so are us younger folk raising kids on more money going OUT of our paycheck because of YOUR precious Socialist Security!!

Go get your free shoes from Medicare and your freebie Fat People Cart and take up the whole aisle somewhere else!! Don't forget to thank the professional pedicurist for me as you walk out the door too!

This totally frosts me. I bet a dollar if they moved the kids might move too. They got to take most of their paycheck home when they were my age. Now I have to give up more and more of it for them and government schools.

Thanx FDR!

[silverleaf]

Mom-Mom and Pop-Pop could have probably moved to Delaware and kept family closer. Or the two sons could have paid Mom-Mom to babysit (assuming one of both of them are paying for child care). Or Mom-Mom and Pop-Pop could have considered a reverse mortgage and spent their kids' inheritance. But it sounds like a new house in Del Boca Vista Florida was part of the attraction. Florida will be a cold and lonely place for a lot of old peoplr with no local support network.

I worry about rapacious property taxes too. No longer can see long term plans to stay in my house. Yes, we do not own property anymore in America, we are "leasing" from the government.

[Skooz]

Property taxes are immoral.

[Mrs. Shawnlaw]

Property taxes are immoral.

Totally agree. It's an envy tax. You've got more than me so you should pay up! It's the same with cell phone use legislation. You've got one, I don't, pay up. (Despite the fact that taxes on phones exceeds the contract use).

[Dont_Tread_On_Me_888]

Move to Florida!

No state income tax.

I live in a suburb of Orlando in Seminole County. Look at the cap in property taxes we have:

Effective January 1, 1995, the annual increase in value for residential property with a homestead exemption is limited by constitutional amendment approved by the voters. State laws and regulations have been put into force to implement this limit.

The “Save Our Homes Amendment”, (sometimes referred to as “Amendment 10”) became effective January 1, 1995 as an amendment to the Florida Constitution.

It was voted upon and passed by a Florida citizen’s initiative on November 3, 1992. The amendment stated that the annual assessment of homestead property shall not exceed the lower of either three percent (3%) of the assessment for the prior year or the percent increase in the Consumer Price Index (CPI).

So, there you have it. Very low cap on property taxes and ZERO state income tax. Leave the BS behind and come to Florida.

[Spirited]

You have to understand that it is the right of the illegals to have their children educated even though they don't pay the taxes. In fact the State also pays for their college education deficit since they are allowed to pay in-state tuition scales and get most of the scholarships available due to "need".

[Nat Turner]

Goodbye FROST/RUSTBELT

Hello SUN/BIBLEBELT

[Mamzelle]

re: 3. I am sorry that seniors are being forced out of their housing due to high taxes. Have they voted for candidates for lower taxes?)))

My thoughts along the same line. Both PA and NJ are old, corrupt Democrat regimes. I'll bet these crying folks came from union families who couldn't think of voting any other way but Democrat. Now they've discovered that their middle-class lifestyles have made them into the bad old rich people they loved to hate--only now the taxes are driving them from their homes.

Does Rendell care?

[chiefqc]

While the tax payers pay more, fast eddie and our other elected officals give themselves a fat increase in pay in the dark of night.

[Michael Barnes]

Been very busy with work..How much did they dole out themselves?

[Michael Barnes]

Been busy with work, AND not keeping up..

[Fudd]

Move to Florida!

And deal with the maniacs on I-95?

[chiya]

You understand correctly,

[chiya]

Hey it is, at the home health agency where I work we have several patients that the PDA waiver program (funded by the lottery) pays us to send a nurse out monthly or bi-monthly to cut their toenails.


I went to nursing school to cut toenails. yeah right.

[Moby Grape]

You mentioned that the ASSESSORS are coming over tonight....This is how they come through the back door to make sure that the educrats still get more money to waste...

The fine folks in Alabama voted down an education tax increase, by more than 60%...so here come the property tax assessors, RAISING property values, which means they will get their money to waste.

[Huck]

It's pathetic. I'm sitting in here with the shades pulled. I just don't even want to see them. Something tells me if they see the inside, the price will go up, so I don't want them to come in. They're probably trying to do the same thing here. The good folks in Sussex County NJ believe it or not are pretty stolid folks. We keep voting down the educrat referendums. You see plenty of signs against at voting time, nary a sign pro.

[Huck]

Attractive offer, but I love mountains too much to ever live in FLA. We just have to get our messes straightened out.