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Seniors Worry about How Budget, Tax Plans Could Affect Them

Between the competing tax plans and the budgets being debated in the General Assembly, seniors and their advocates fear cuts and new taxes could adversely affect them.

By Rose Hoban

As a younger man, David Marshall did everything right in order to be comfortably retired. An engineer, he worked for a big corporation; then the corporation pushed him out of their pension plan and into the stock market to cover his retirement.

He used some of his retirement money to start his own business; it was successful, and he passed it along to his son. He and his wife downsized into a single-story house in North Durham that he owns. His car is paid off.

Then the stock market crashed in 2008, and he lost a lot of what he had invested.

Marshall is still comfortable, netting about $1,350 a month from Social Security and an annuity and getting a little help from his son, when his son can afford it.

maps show the changing number of people over 65 in each county.

Map progression shows the changing number of people over 65 in each county. Although people under 65 can contract Alzheimer’s’, age is the greatest risk factor for the disease.

Nonetheless, Marshall, 76, still works two days a week at a hardware store, where he makes about $4,000 a year. And that helps make ends meet.

“It’s hard, and as the economy and the cost of living escalates, it becomes harder,” Marshall said. “But if you start fiddling with my pensions and Social Security, it’d make life difficult.”

That’s why Marshall has his eye on the competing budget and tax plans that are in play in the General Assembly now – because many of the decisions made by lawmakers in the coming weeks could have profound effects on seniors.

‘Not well-informed’

One of the biggest blows potentially comes to the Home and Community Care Block Grant, a federal grant that provides for many social services.

According to Wendy Marsh, director of the Council of Aging in Buncombe County, her agency uses that block grant money to provide a laundry list of services and activities: hot meals at the senior center for hundreds of people each month, adult day care for dozens, Medicare counseling and advice, installing ramps and grab bars in bathrooms, rides to the doctor – the list goes on.

“A lot of that is funded by the block grant, and that was hit by the sequester,” Marsh said, explaining that the federal sequester cut about $2 million from the state’s federal allocation of the block grant for the coming fiscal year.

Marsh is concerned that both the House and Senate budgets cut the block grant money even more: the House by $500,000 and the Senate by $2.9 million. Both chambers’ budgets would move that money into Project CARE, a program to provide respite for families caring at home for someone with dementia.

“It’s a well-intentioned move; it’s not a well-informed move,” Marsh said.

Across the state, 16,000 people are on waiting lists for meals delivered at home, such as Meals on Wheels, said Mary Bethel, lobbyist for the AARP. And other services have been trimmed, even as the aging population begins to balloon.

“When you look at the population now, the people who are 65 and over are 1.3 million. In 20 years, it’s going to be 2.3 million,” Bethel said. “You have 7,000 fewer people being served today than 10 years ago.

“If we’re already falling behind and you can’t fund these services to keep someone in a home, the chances are that they end up in a nursing home.”

Bethel said people who wind up in nursing homes because they can’t stay at home end up “spending down” all of their assets, and then can qualify for Medicaid to pay for the care. So the state and federal government end up paying, but paying for much more expensive care.

In 2010, about 11 percent of Medicaid beneficiaries were elderly people in nursing homes; their care took about 20 percent of the Medicaid budget, according to figures from the Kaiser Family Foundation.

But baby boomers are about to start retiring, Bethel reminded, and the need for ways to provide long-term care will only grow.

“If you ask people where they want to live when they’re 90, they don’t say I want to be in a nursing home. They want to be at home,” said Marsh. “But they need help staying at home.”

Competing tax plans

Social Security benefits for some higher-earning seniors could be taxed under the plan proposed by the state Senate, while the House keeps Social Security untouched.

But even if neither House touches Social Security – which is considered a politically risky move – some reductions in revenues for counties and municipalities could end up trickling down to seniors, Bethel said.

The Senate plan passed on June 13 would reduce counties’ ability to levy local sales taxes on food and reduce the sales-tax refund for counties.

“That’s about 13 percent of our sales-tax base,” said Rebecca Troutman, who represents the N.C. Association of County Commissioners at the legislature.

The Senate plan would allow counties to hold a vote to restore up to  a 2 percent tax on food back into existence, “but that seems a redundant exercise, because we’ve already levied the tax on food since the ’70s,” Troutman said.

Troutman said counties provide important social services for seniors, such as protective services.

“We’re responsible to do all investigation of complaints of abuse or neglect for the elderly, just like we are with children,” she said. “There was nothing in the budget proposals that would take money directly away from counties for that function, but it’s mainly county dollars.”

The Senate plan would cost counties about $82 million, according to Troutman. The House plan is more favorable to counties; by the 2018 when the sales tax is fully implemented counties could net an additional $74 million in taxes.

If counties lose money under the tax plan, Troutman said there are ways to make up revenue. <http://www.ncacc.org/index.aspx?nid=336>

“We could increase property taxes or cut services,” Troutman said.

And that’s what advocates like Bethel worry about.

“When I was a social worker, working with seniors, property taxes were the straw that broke the camel’s back in people’s ability to stay at home,” Bethel said.

And that’s exactly what homeowners like David Marshall worry about.

“It’d make life difficult, and, in fact, I’d probably have to sell this house,” he said. “And that’s something I don’t want, because that’s my independence.”

Cover image Donkey Hotey, flickr creative commons

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