Housing is often the biggest cost families face, and with rents rising and the cost of homes getting out of reach for many in the District, affordable housing is in short supply. This is an issue we need to grapple with as a city. A bill before the DC Council this week will help address this critical issue in a novel way, by providing up to $1,000 each year to lower-income residents with high property tax bills or rents. There’s just one problem: the Council will pass the bill subject to appropriation’which means that there’s no money to pay for it right now.
The bill ‘ the Schedule H Property Tax Relief Act ‘ was introduced by Councilmembers Jack Evans, Phil Mendelson and Michael Brown, and it has been shepherded through the Finance and Revenue Committee by Chairman Evans this fall. The bill updates a property tax credit for low-income homeowners and renters that currently works very poorly, going to only 12 percent of eligible households because it hasn’t been modified in 35 years.
The credit is based on both a family’s income and its property taxes. The credit amount is greatest for very low income families with high housing costs, which means it is targeted on those who need it the most. The credit applies to rents as well as homeowners, because it assumes that a share of monthly rent payments is for property taxes passed on by the landlord.
Here are some of the things the new bill would do:
- Raise the income eligibility level. The bill would raise the income eligibility level to $50,000 from $20,000. The last time the eligibility level was set was 1977, when the cost of housing in DC was much, much less. Raising the income eligibility would make about half of all DC households potentially eligible and would include the vast majority of those with severe housing cost burdens.
- Increase the maximum credit. The current bill would increase the maximum credit to $1,000 from $750, or about $60 a month. Once again, that amount was set in the mid-1970s.
- Make it easier for eligible families to apply. The current Schedule H rules are complex, and that contributes to the very low participation rate. The new bill would eliminate many cumbersome rules, such as the requirement that people sharing housing file for Schedule H using combined income, even if they otherwise file taxes separately.
While the price tag for these reforms — about $11 million per year ‘ is not insignificant, the changes would update a program that has not been updated for 35 years. And the reforms would help thousands of DC families and individuals, most of who have very high housing costs and have limited opportunities to access housing assistance program, given enormous waiting lists.
The Council’s adoption of Schedule H reforms is a great step forward to helping residents pressured by DC’s high and rising housing costs. The next step is to make these reforms real by funding them, in the budget for fiscal year 2014 or sooner.