LEBANON — The City Council has made adjustments to its tax exemption program for elderly residents, who have been adversely affected by inflation and the tax impacts of surging property values.

At a public hearing Wednesday, councilors voted unanimously to increase the amount of property value exempted for eligible seniors by an additional $50,000.

Under the newly approved rates:

■Residents ages 65 to 74 will be eligible for an exemption of up to $116,000 of their assessed property value;

■Residents ages 75 to 79 will be exempt for up to $164,000 of their assessed property value;

■Residents ages 80 and above will be exempt for up to $290,000 of their assessed property value.

The action is intended to help offset the impact of last year’s citywide revaluation. According to city officials, many elderly residents who had previously been fully exempt from property taxes received tax bills recently because the increase in their home value exceeded the value of their tax exemption.

Since 2021, assessed values of single-family homes in Lebanon increased by an average of 27%, and apartment buildings increased in average value by 55%.

West Lebanon resident Gerri Griggs, 87, said the assessment of her home increased by 33% last year, despite there being no improvements or additions to the property.

“This is going to make people like me sell their house,” Griggs, 87, told the council.

Resident Betty Prime, 68, said her home was built in 1778 and is one of the oldest standing structure in the city, according to Prime. She first applied for the city’s elderly tax exemption in 2019 following the death of her husband, David.

“The tax exemption has been a savior,” Prime told the Valley News. “I’m a widow and trying to hold everything together.”

Prime had been exempt from paying taxes on $66,000 of her property’s assessed value, which was the standard exemption amount for residents ages 65 to 74.

Last year, the assessed value of Prime’s home jumped more than $60,000. Because the increase in value was almost as much as her tax exemption amount, it erased nearly all the tax saving she was receiving, Prime said.

Assessors for the city said the $50,000 adjustment was based on the median tax increase for Lebanon homeowners by the revaluation and is intended to offset the tax increase for most seniors who receive the exemption.

Some city councilors also want to consider raising the income cap for elderly tax exemption eligibility, after hearing from seniors that the income cap is preventing them from qualifying for an exemption.

Lebanon’s elderly tax exemption eligibility is limited to single residents earning $45,000 or less annually or to married couples earning $65,000 or less per year. Eligible applicants are also limited to $100,000 in held assets.

At a meeting on Feb. 1, resident Mary Davis described how she failed to qualify for the exemption this year because her prior year’s income was above the threshold. Davis said that last year she held a part-time job to help pay for living expenses. Davis also noted many seniors need additional income to afford their needs and basing eligibility for tax relief on income could leave out some deserving residents.

“The income is not profit; it’s survival,” Davis explained. “For most of the elderly, there is very little, if anything, left over. And I’m not sure what the ratio is between income and (the cost) of personal expenses, but I know that is changing constantly, with the personal expenses rising.”

According to city assessors, it is state law that mandates municipalities use an applicant’s previous earning year when determining income eligibility for a tax exemption, though municipalities can adjust the income caps.

Lebanon already raised the income caps last year from $36,000 to $45,000 for single residents and from $50,000 to $65,000 for married couples. But some councilors have said they need to be revaluated again.

According to City Manager Shaun Mulholland, the adjustments to the elderly tax exemptions is projected to increase the overall city tax rate by 4%, though the actual tax impact of the budget and exemptions will not be determined until the fall.

The Lebanon School Board is proposing a main operating budget of $49.7 million for the 2023-2024 school year plus $473,000 in additional warrant articles to fund new collective bargaining agreements with school support staff, school administrators and administrative assistants. The property tax impact of the proposed budget would be an additional $1.03 to the tax rate if all warrant articles are included.

Patrick Adrian may be reached at padrian@vnews.com or at 603-727-3216.