WEST LEBANON — For Betty Prime, covering her costs during retirement is a month-to-month exercise.

Prime, of Lebanon, retired in 2020 from the Hanover School District, where she worked as a paraeducator for 20 years.

Her sole income is her Social Security benefit. Her husband, David Prime, who ran a drywall business, died in 2019 at age 73 after a four-year battle with cancer.

“We were (financially) in survival mode for those four years,” Prime, 68, said in an interview, adding that her husband continued running his drywall business until the month before his death.

Prime manages financially by minimizing her living costs. She fully owns her car, a 2011 Prius, and paid off the remaining mortgage on her house in 2020. She spends “a couple hundred” dollars per month on groceries, “eating hamburger instead of steak,” she said to illustrate her frugality.

Most of her income goes to heating fuel and utilities and less frequently to expenses plowing and home maintenance.

“There’s not a whole lot left over after that,” she said.

But for many New Hampshire retirees, including in the Upper Valley, a central source of financial anxiety is the property tax — New Hampshire residents bear the third-highest burden in the country, according to a study by personal finance website WalletHub. For seniors on a fixed income, being taxed based on their home’s assessed value rather than on their liquid assets can be a heavy burden to shoulder.

Property assessments soar

The last three years have posed multiple fiscal challenges for senior citizens living on fixed incomes. Since 2021, food prices have increased by 12% and are projected to rise an additional 8% this year, according to the U.S. Department of Agriculture. Consumer inflation overall has increased by 18% during that time period.

The price of heating oil has nearly doubled since 2020, despite a recent decline, and many New Hampshire utilities raised their rates significantly in 2022, some even doubling them due to the rising cost of natural gas.

Lastly, a surge in housing demand during the pandemic dramatically drove up home prices and property values across New England, which had a big effect on property taxes.

In Lebanon, a citywide revaluation in 2021 raised the assessed value of single-family homes by an average of 27% and the value of of apartment buildings by 55%.

In addition, the rise in residential property values has so greatly outpaced that of commercial properties that Lebanon residents saw a 4% increase in their share of the total tax burden this year.

Prime, who owns a historic home built on 10 acres of land, saw her property assessment jump in a single year from $172,000 to $232,000. This increase erased thousands of dollars in savings she was receiving from a Lebanon tax exemption for elderly residents with low to moderate incomes.

New Hampshire’s elderly exemption program allows income-eligible seniors ages 65 and older to exempt a portion of assessed property value from taxation. The amount of these exemptions, and the allowable income to qualify for the program, is determined by each municipality.

Prior to February, Prime was exempt from paying taxes on $66,000 of her assessed property value, which was Lebanon’s standard exemption for eligible residents ages 65-74. But those savings were offset when her property assessment increased last year by $60,000.

Fortunately for Prime, the Lebanon City Council voted unanimously in February to raise the amounts of their elderly exemptions to help seniors whose tax bills were increased by the surge in property values.

Prime’s exemption is now $116,000 of her assessed property value, a tax savings of 50%.

“It makes a big difference,” she said.

But many Upper Valley retirees say that New Hampshire’s elderly exemption does not help enough senior citizens, largely because of restrictive eligibility requirements.

Income and taxes

Lebanon resident Mary Davis, 76, retired in 2007 from SAU 70, where she worked as a school administrative assistant. Her primary income is her New Hampshire retirement and Social Security, though she also owns a two-bedroom mobile home that she rents to a tenant for $1,100 a month.

Until this year, Davis also worked part-time at a convenience store, approximately 12 hours a week on weekends.

But that job made Davis ineligible in Lebanon to receive the elderly tax exemption because her income narrowly exceeded the city’s allowance for eligibility, which is limited to single residents earning no more than $45,000 a year and to married couples earning up to $65,000 a year.

Davis exceeded the city’s income limit by just $2,000.

In a phone interview, Davis said that the exemption application asks only about a resident’s income without taking into account a senior citizen’s living expenses, which range from mortgage payments to utilities, food and medicine.

“They are treating our income as pure profit, but it’s not. It is survival,” Davis said. “That’s what we have to live on. They don’t look at what we have left over or what we have to pay out.”

Davis said the low income threshold puts her in a dilemma between working part-time to earn a little more money or not working to qualify for the property tax savings.

Lebanon officials said in January that they might discuss adjusting the income limits, which the City Council raised last year. But municipalities cannot factor an applicant’s living expenses when determining their income eligibility unless the state Legislature enables it in law.

State Sen. Sue Prentiss, D-West Lebanon, said the legislature has not proposed reviewing the elderly exemption statute. Prentiss said if the income restrictions no longer align with today’s cost of living, she would support studying whether to set higher adjustments.

Nancy Rollins, a former New London Selectboard member, said the Legislature needs to update the state’s elderly exemption law, which was last reviewed in 2006 and whose minimum allowances are “absurdly” behind modern living expenses.

The current law allows municipalities to limit the income for eligibility to “$13,400 if single and $20,400 if married.”

Rollins added that discouraging seniors from working also hurts local businesses that need part-time employees.

The income limit also discourages Davis from raising the rent on her mobile home, which has increased in taxable value from $17,000 to $44,000 since 2020.

The mobile home, a 12-foot-wide unit built in 1971, no longer complies with the city’s current width requirements for mobile homes. Davis said she is allowed to rent it only because it was grandfathered in before the zoning changes.

“It doesn’t have any resale value anymore,” said Davis, who sought an abatement of the mobile home’s assessed value but was denied.

Prentiss said there may be more effective ways to help New Hampshire’s senior citizens than the elderly exemption program, which is designed specifically for seniors of low to moderate income. For example, Prentiss mentioned state Senate Bill 36, a bipartisan proposal that aims to expand the state’s system of care options for the elderly, including home and community based services. Last month the Senate Finance Committee voted unanimously in favor of the bill.

Reducing the cost of home-care services will benefit a larger number of New Hampshire seniors and provide needed services to allow elderly citizens to remain in their homes and communities, according to Prentiss.

“Not only is this a more cost-effective model (of care), but it’s a model of dignity that is going to let people stay in their homes longer,” Prentiss said.

Affording retirement

Marlene Green, a personal finance advisor from Lyme, is just a couple of months away from her official retirement date. The recent spike in living costs, as well as her property taxes, make her anxious, however.

“I have a real sense of concern that I’m not going to be able to live here in the future,” Green said.

Green and her husband, Thomas “Dan” Green, live in a three-bedroom ranch home built in the 1960s. Their property, totaling 318 acres, was part of a larger pony farm that Dan Green’s grandparents gave to him and his sister.

All but 18 acres of the Greens’ property is in current use, a state program that assesses farm and forest land at its use value, rather than at its higher market value, as a means of encouraging land conservation.

Green, 65, has retirement accounts including an IRA and 401K, “but it’s by no means millions, and we will need to make it last,” she said.

The Greens also have a small Christmas tree farm, with about 1,000 trees, which helps pay their annual property taxes. They sell their trees at $35 apiece to make them affordable for families.

While Lyme is a wealthy community overall — the median household income in 2021 was $125,000 and less than 1% of residents were below the poverty line, according to census data — there is a “subculture” of Lyme natives from established farming families who are not wealthy, Green said.

And the property taxes in Lyme are high. In 2021, the Greens — whose property was assessed at $289,600, paid $6,900 in local property taxes, an 18% increase from the previous year. And this year their property taxes are projected to be over $8,000.

“My salary didn’t go up 18%,” Green said. “Nothing in my life has gone up 18%. That’s when it really hit me that we couldn’t afford this rate of increase.”

Last year, Lyme voters passed a petitioned article at Town Meeting to raise the amount of exempted property value to $215,000 for residents ages 65-74, $270,000 for residents ages 75-79 and $320,000 for residents ages 80 and older. The article also increased the income limit to $40,000 for single residents or $50,000 for married couples.

The new adjustments increased the number of eligible exemption applicants in Lyme from three residents to 20.

Green recently had to watch her own childhood home in Lebanon go to auction when her parents could no longer afford to keep it. Her parents, Paul and Mary Ann Mason, had retired with “a small pension,” their Social Security benefits and Medicare to help cover their health costs.

The couple also opened Mascoma Valley Firewood during their retirement to help pay expenses. But Green’s father developed Parkinson’s disease in his 70s, combined with dementia and kidney ailments. He was no longer able to run his business and eventually had to move into an assisted living facility. He died in 2014 at age 82. Unable to keep up with the expenses, the family lost the house to foreclosure.

“My heart breaks for these people who have built their homes and now they are struggling,” Green said.

Davis and Prime similarly worry about higher living costs in their retirement.

“Everything keeps going up except our incomes,” Davis said. “Most of us cannot do a full day’s work. People get stuck in that quagmire.”

“Life should be easier later on,” Prime said. “But it’s not.”

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

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