Local Options for Veterans Tax Relief under the HERO Act

Transcript (~16 min @ 22:46)

Speakers identified by voice; unnamed voices are numbered within this recording. Auto-caption text — verify against the video.

▶ 22:41 Mark Garipay: Public comment is now closed. Next up on the agenda. Um, ID 1 2, 4 0. One local option for Veterans Tax Relief under the Hero Act. Um, Ms. McConnell is here to speak on that item. If you could just come up to the, uh, table. Um, for the, for the council, this item is an informational order that was put in as an informational order 'cause of the quirkiness of I QM two. It came over as a, as a ledger legislative item. But this is an informational order tonight. So, Ms. McClellan, the floor is us.

▶ 23:19 Speaker 2: Thank you. Thank you to the chair. Thank you to the committee for having me here this evening. I'm Sarah McClellan, the Chief Assessor, and tonight I'm presenting information on tax relief options for Melrose Veterans and later seniors. First, under this informational order, I'll outline the new provisions that became available under the HERO Act. These are options with which Widen eligibility criteria and increase exemption amounts for veterans in Massachusetts. So Melrose will be able to adopt these new exemption options for the coming fiscal year in 2026. In order to do this, the new local option or options must be adopted by City Council anytime before July 1st, 2025.

▶ 24:05 Speaker 2: Before I discuss the options for the property tax exemptions, I wanna briefly touch on the Hero Act provision for excise tax exemption for veterans. The Hero Act changed the eligibility for a full excise tax exemption for disabled veterans. And this went into effect immediately. Previously. The Medical Advisory Board within the Registry of Motor Vehicles determined whether a veteran had a qualifying disability for excise exemption under the amendment. Now, a veteran qualifies for a motor vehicle excise exemption if the VA determines that they have a hundred percent disability rating or deems them unemployable due to their service connected disability. So, as I mentioned, this became effective immediately. And the Melrose assessors were able to grant disabled veterans exemptions from their calendar year 2024 excise tax last year. Um, because of the way that excise works, um, they can still, um, you know, learn about and apply for those exemptions to the 24 year continually. Um, and then that would not only be the way that we had identified those, uh, people were through, um, owners in, um, Melrose, who were, who were already, uh, homeowners in Melrose, who were already getting the hun the, um, the real estate exemption for the disability rating of a hundred percent. So we had identified them and then reached out to them to let them know that that new excise exemption, um, eligibility was available to them this year for 2025. The new commitment for excise tax is gonna be going out soon. And we will like, identify the, um, the new, the eligible people who would, who would may not have known about it, um, and reach out to them as well. Um, so the cost of the excise tax exemption, um, that had, um, come from the HERO Act, uh, is fully reimbursed by the commonwealth of mass. So that was another piece of the, um, hero Act related to, um, tax exemption that I wanted to mention before I get into the, to the local, um, options. So as far as the property tax exemptions, the Hero Act introduces two new options, which can be adopted separately on their own or both together. So the first is Clause 22 I, this if, if accepted would increase the amount of the tax exempted granted to veterans by a cost of living adjustment, which is determined annually by the Department of Revenue. The COLA adjustment added with this pre provision has a cumulative effect. So if it's $400 plus the COLA in the first year, the next year it will be that $400 plus that first year cola, and then the second year COLA added onto it. Um, the second new option is clause 22 J if accepted, this provides an additional exemption annually of up to a hundred percent of the tax exemption granted to veterans. So the voted percentage for this clause does not operate cumulative, but it will continue to apply in subsequent years and lessen until another percentage is voted before July 1st of that fiscal year. For these two real estate tax exemptions, there's no state reimbursement for the cost of either of these. Um, and like other statutory exemptions that we have in the city, uh, the additional cost is funded from the city's overlay account, which is raised in the tax rate without appropriation. So, as far as utilization of these exemptions in Melrose, as I detailed in my memo in fiscal 24, there were a 101 eligible veterans under Clause 22. Um, and that exemption under clause 22 is four $400 at this point. And as long as I've known, it's been $400. Um, and there were 26 eligible veterans under Clause 22 E, which is the, um, a hundred percent disability rating, uh, with an exemption amount of a thousand dollars. Um, in the memo that I included, I, I provided a chart with the different options applied separately and together just for, um, demonstration purposes. Um, I also just wanna note that there are other, um, veterans exemptions in, um, Melrose that don't, that this wouldn't apply to. For example, um, if a veteran, um, dyes of service connected disability, that would be a 20 2D um, that would, and that's like a VA rating, um, decision for that, that would become a hundred percent full tax exemption. And we do have a number of those in the community. Um, and I am happy to answer any questions that you have about these specific local options for veterans.

▶ 29:22 Mark Garipay: Any counselors have any questions?

▶ 29:32 Mark Garipay: President Meili.

▶ 29:33 Leila Migliorelli: Thank you. Um, chair Oppe. Thank you Ms. McClellan for being here. And thank you for this walking us through the chart. Um, so

▶ 29:45 Leila Migliorelli: I just, I'm going to actually just ask you to repeat or to just make sure I'm understanding or confirm what I'm understanding here in the chart. So, FY 25, all that was available was 2222 E. And then you, the vote that city council will take, not tonight, 'cause this is informational order, but by July one, is that the

▶ 30:10 Speaker 2: Date? Yes, anytime before July one for statutory exemptions. Okay. We can do, um, changes to the clause

▶ 30:17 Speaker 4: And we would be voting to accept

▶ 30:23 Leila Migliorelli: I and or j. Those, those two? Yes. Okay. And then these, this chart shows the impact or the exemption that the veterans will receive.

▶ 30:38 Speaker 4: Um, the impact

▶ 30:40 Leila Migliorelli: is this just, is this similar to the other thing that's on our agenda tonight? Is the, is the, um, sorry. Is the, um, impact on other tax, uh, property residents? Like is there an impact on them or this is, you said a portion of this is a hundred percent reimbursable or all of it? None of it,

▶ 30:59 Speaker 2: No. So, um, a portion of the, um, of the original, like say for the 22 E, a portion of that is reimbursed by the state every year. Mm-hmm. Um, a portion of that, but the, a portion of the additional amount, 0% of the addition, any additional amount is reimbursable. Okay. But I also just wanna note about this chart is that, and I did note it here, but I just wanna reiterate it, that these were completely for demonstrative, like purposes that I chose a 5% cola, that may not be what the state deter. Like, it's just really arbitrary kind of. Um, and um, I also chose, you know, that it would be a 50% increase at, at the 22 J. Like, it could be a hundred percent, it could be 5%, it could, you know, it could be anything. Okay. Yeah. Thank you. That's all for now.

▶ 31:55 Speaker 4: I might come back with more. Thank you.

▶ 31:57 Mark Garipay: Councilor Ver and then its Councilor Stewart and Councilor Williams.

▶ 32:02 Kimberly Vandiver: Thank you. Chair Repe. Um, Ms. Clell, my question is just around clause 22 and clause 22 E. So they're currently at levels $400 and $1,000. Mm-hmm. And if I understand correctly, 22 E, the one thou, the higher level is, is for com a rating of complete disability? And then would clause 22, would that be, um, is, could you repeat whether is that for a disabled veteran or any veteran or who apply, who qualifies for that? Um, clause?

▶ 32:31 Speaker 2: So these are only, we only have exemptions, um, in Mel. Oh, statewide, I guess for, um, veterans with a service connected disability, there are, well, there are, um, you know, uh, I believe, um, 22, it's like little a, little B, little C, little D. So I believe B or C is like a purple heart, some kind of certain, and like gold star parents, those are, those fall into, um, some of these as well. Yeah. Okay. So, but it's mostly, so the 22 A, which is like our most, um, utilized exemption for veterans, that is the, from 10% to 99% service connected disability rating from the va. Mm-hmm. But that one's the a hundred percent is the 22 E.

▶ 33:25 Kimberly Vandiver: Okay. 22 A though is not changing. We're just talking about 22 and 22 E, right?

▶ 33:30 Speaker 2: No, but 22 is A through D. Oh, okay. All of them. It's also like, includes all of those also a surviving spouse Okay. Of a veteran who was, had a service connected disability.

▶ 33:40 Kimberly Vandiver: Okay. Okay. So there, there are a variety of ways 22 A, B, CDE that lead to the current $400 level, and then the complete disability leads to the current $1,000 level. Mm-hmm. And then, um, we could, we could adjust each of those by either a, a percentage or an inflation adjustment. Mm-hmm. Yes. Okay. Or both. Or both. Mm-hmm. Okay. Thank you. Yes.

▶ 34:09 Robb Stewart: Councilor Stewart? Thank you Mr. Chair. And thank you Ms. McClellan for this information. Um,

▶ 34:20 Robb Stewart: so I'm sorry, I'm still absorbing this. Um, my question is on, you had mentioned that on the excise tax, um, the exemption is gonna be determined by the, the VA's

▶ 34:37 Speaker 3: evaluation, right?

▶ 34:40 Robb Stewart: Yes. Right. And then, then you had said that that is fully reimbursed by the Commonwealth of Massachusetts. So that way, um, excise tax, we pay, we pay to the state, but then it's re it is reimbursed by the state. So that really is outside of the local picture here, right? Mm-hmm. Okay.

▶ 35:00 Speaker 2: Yeah, it was just another, uh, benefit that I wanted to, because we, the assessors, you know, we abate that tax and we provide the exemption for that excise tax. So as an informational piece, I just wanted to provide that, that was part of the, um, the Hero Act provision that we, that we're working with as

▶ 35:19 Robb Stewart: Well. Sure. But it really is outside of the local taxes that we are considering. Okay. Yeah. Okay. That's very helpful, thank you. Mm-hmm. And then, um, on the a hundred percent tax exemption, um,

▶ 35:40 Robb Stewart: so on, on the property tax, right? Yes. Right. So if it, if there's a tax exemption on the property, is it just revenue that the city loses, or does that need to then, uh, get balanced across the other taxpayers?

▶ 35:57 Speaker 2: Yes, it's from the overlay account. So the overlay, which, um, I believe we previously discussed for, um, the, which is for abatements and, um, exemptions. And then anything else, like the senior, uh, property tax work off program is paid for out of that account for any kind of, um, appeals, uh, that are, that go to the appellate tax board with the state that are unfavorable, not in our favor that we lose, um, those, those would, would come out of that overlay account as

▶ 36:33 Robb Stewart: Well. And that overlay account is funded by local taxpayers. Mm-hmm. Okay. Just, just want to be clear with that. Yeah. Okay. Great. Thank you. Mad.

▶ 36:45 Speaker 3: Thank you Mr. Chair. Thank

▶ 36:47 Speaker 8: You, councilor Williams.

▶ 36:48 Ryan Williams: Uh, thanks. A lot of what I had for questions has, has been asked, um, but I wanted to check in again on the date that it has to be adopted by July 1st. Yes. So, theoretically for the council, it really has to be under consideration in June because we have to have three readings to get everything done, but we could accept it at any time, and it would take effect in this 2026

▶ 37:13 Speaker 2: For fiscal 26. And that was the soonest that it could be done, even though the act, you know, the, um, the act was signed last August, the first eligibility date following that, yeah. Was July is July 1st, 2025. So that's the first time that we could put it into place.

▶ 37:31 Ryan Williams: Got it. Okay. That's it. Thank you.

▶ 37:37 Mark Garipay: Any other questions, councilor for the first time? Councilor Stewart,

▶ 37:43 Robb Stewart: Mr. Chair, I'll make a motion to place ID 12 4 0 1 on file.

▶ 37:49 Mark Garipay: Second. Second. We have a motion to place on file by Councilor Stewart, seconded by, uh, councilor Machete. Can we take a roll call? Vote? Mm-hmm.

▶ 37:57 Speaker 1: Hold on one second. Mm-hmm.

▶ 38:01 Speaker 1: Stewart, who just seconded that. I'm sorry.

▶ 38:03 Speaker 8: Uh, council Machete? Yep.

▶ 38:10 Speaker 1: Okay. Councilor Jamine. Yes. Councilor Pinocchio. Councilor Hamilton? Yes. Councilor Chetty. Yes. President Meley? Yes. Councilor Reky. Councilor Romanul? Yes.

▶ 38:26 Speaker 1: Councilor Stewart? Yes. Councilor Vandiver? Yes.

▶ 38:30 Speaker 1: Councilor Williams? Yes. Chair Gar Pay? Yes. Motion passes

▶ 38:35 Speaker 8: And that will be placed on file.

▶ 38:37 Mark Garipay: Recommended a plead placed on file. Um, next up is, uh, ID 1 2 4 0 3. The request for the approval of Petition to Enact legislation authorizing the City of Melrose to establish a means tested senior citizen property tax exemption in the amount of a hundred percent of the circuit breaker income tax credit.