SOUTH PORTLAND — The City Council on Monday reviewed a proposal to lower the taxes of the city’s longtime, elderly homeowners.

But with two councilors absent, the proposal was sent back to staff to be tweaked, and will be reviewed again at a future workshop.

The idea first came forward last year in response to constituent inquiries about a law passed by the Legislature that would allow qualifying homeowners to defer payment of their property taxes.

The law allows struggling homeowners to pay a reduced property tax rate until the home is sold, when the city would recover the discounted taxes either by taking a portion of the sale revenue or obtaining direct ownership.

But City Councilor Jim Gailey recommended against rolling out the state program because the administrative functions would be too onerous on city staff and could cost the city money.

That concern appears to be shared by other communities, Gailey said.

“To date, I don’t think there is a community out there that has adopted this,” Gailey said.

The income limit of the state program is no more than 300 percent of the federal poverty level.

Councilors are considering rolling out a local circuit breaker program, much like the state Circuit Breaker, for residents over the age of 70 who have owned a home in the city for at least 10 years prior to applying for the rebate.

Gailey said the administrative functions of his proposed plan could be absorbed by finance staff, since applicants would have to already qualify and receive benefits for the state Homestead Exemption/Circuit Breaker program.

If the plan is approved, the city would collect applications through Dec. 15 and disburse whatever amount of money the council allocates in the budget for the program evenly among the qualifying applicants.

Gailey said similar programs exist in Cumberland and Scarborough.

According to a memo to the council, last year Cumberland issued refunds of up to $750 to 81 residents over the age of 67, costing the town nearly $47,000.

Scarborough, meanwhile, gave 256 refunds of up to $500 to residents over the age of 62, at a cost of $111,000.

Gailey’s initial proposal limits each refund to no more than $300, depending on the availability of funds, which would have to be allocated in the budget. Refunds would likely be credited to homeowner tax accounts, rather than having the city write checks.

Resident Albert Dimillo Jr. said he supported the plan, and suggested the council increase the maximum allowable refund to $400. That level would fill in the gap created when the state cut its Circuit Breaker program two years ago by 25 percent, he said.

“I would say put this program in and say you’re making up for what the state stole from us,” said Dimillo, suggesting the city end its program if the state fully restores funding.

Dimillo also suggested increasing the residency requirement. “The people who have been here a long time deserve a break,” he said.

Resident Gerald Jalbert, a real estate broker, cautioned the council against the program, saying there is no mechanism for the city to recover its expenses if a home is sold.

“Eventually all real estate changes hands,” Jalbert said, arguing the program is unfair to other taxpayers. “When that property is transferred or sold, someone walks away with a pile of cash.”

Under the current system, however, the city can recover owed taxes by placing a lein on the delinquent property.

Councilors, however, were concerned about the impact to the budget and wondered whether the local program is needed, given that residents can apply for tax abatements and receive other general assistance.

Councilor Tom Coward, a real estate attorney, shared Jalbert’s concerns. Coward said he understands people’s anxiety about being thrown out of their homes for not paying property taxes, but suggested such municipal action is unprecedented.

“If the council supports this, I will support it,” Coward said. “I’d prefer to go a different route myself.”

Councilor Tom Blake said he still favored the recently enacted state deferment program, even though it may be labor intensive and take up to 12 years for the city to get its money back.

Mayor Rosemarie De Angelis, however, said the program could help elderly residents who do not qualify – or are too embarrassed to seek – a tax abatement. She said she likes how the program fills in the gap left by the state cuts.

“To someone who is on a fixed income, ($300) is a lot of money,” she said.

The council decided to discuss the policy again when Councilors Al Livingston and Jim Hughes were present.

Randy Billings can be reached at 781-3661 ext. 100 or rbillings@theforecaster.net