CITIZENS   FOR  LIMITED  TAXATION
and the
Citizens Economic Research Foundation

Barbara's Column
January #2

Why are my taxes so high?
Even Prop 2 can't help this Marbleheader
by Barbara Anderson


The Salem News
Thursday, January 12, 2006

-- First of two parts --

Aieee, is that my new property tax?!

A 13-percent increase over last year?

Somebody should do something!

Wait, I thought someone did.

Calling, calling.

Me: "Hello, Citizens for Limited Taxation? With Proposition 2, how did my property taxes go up 13 percent?"

Chip Faulkner, associate director, CLT: "Barbara, is that you? Didn't Marblehead have an override last year?"

Me: "Well, yes, but a 13-percent tax increase! Help!"

Oh all right. Calming down. I do know how it works.

Prop 2 allows each community's overall property taxes to increase 2.5 percent over last year's levy, plus a factor for new growth, plus debt exclusions and overrides. My town had a humongous override last year no fault of mine and now that tax increase is on my new tax bill.

The teachers got another pay raise, and I get a pay cut since I assure you my income has not increased 13 percent.

Since the Prop 2 levy limit applies to the city or town as a whole, not to individual properties, some taxpayers can get a bigger annual increase than others in the same community. This is determined by regular revaluations to determine the "full and fair market value" of each property.

Marblehead doesn't do classification assessing commercial/industrial property at a higher rate than residential so we didn't see the recession-caused shift from the former to the latter the way many cities and towns did. Our adjustments, I'm told, came as local assessors caught up with the price escalation on certain types of residential properties or in previously under-assessed neighborhoods.

This value is always computed as of Jan. 1 of the previous year, so my new tax bill reflects the value of my property on Jan. 1, 2005. Marblehead assessors have determined that last January, my property was worth $419,400, up from $376,400 the year before.

No way my five-room cottage is worth that much! Oh, wait. No one is saying it is. The tax bill shows that my century-old bungalow is worth just $118,400. It's the land value of $301,000 that is driving my assessment.

So here I am, in the assessors' office, getting an abatement form. This year, for the first time, I am thinking of appealing, and you may come along for the experience. You can appeal your own assessment too; we must act by the end of January.

This will be a two-part column because we first have to understand some things.

The state Constitution requires that all property be assessed at "full and fair market value." Once upon a time, in many communities, taxpayers who had recently bought their homes were assessed at what they had just paid, while long-standing homeowners were assessed at much lower values. The former went to court and won the "Sudbury Decision," which ordered all communities to do revaluations.

The value was the price a willing seller and a willing, informed buyer could agree on for a particular piece of property. For awhile that seemed to work. Most of us knew that if our home went on the market, we could get the assessed value for it.

As the years passed, my neighborhood changed. Open space vanished. Cottages like mine were enlarged, and some were torn down to be replaced by much larger homes.

I used to idly wonder if these bigger homes increased my value or if my house, with its multi-shaded shingles replaced one side at a time, and dandelion-speckled lawn, brought their value down.

At the assessors' office, I asked a helpful Mike Tumulty, the town's full-time assessor, who said that rule number one is to set the land value first.

"Marblehead is a unique community historically and geographically. There isn't enough land in town to satisfy the demand," he noted.

I get it so far. Despite the factors that are causing an exodus of productive citizens, people still want to live in Massachusetts, especially near the coast. Many of them want a Marblehead address, even if the house is sitting on ledge, along a busy road, jammed in with other houses.

So the assessors figure someone would pay $419,400 for my 6,500 square feet, either because there's little else available that "cheap," or because the buyer planned to tear down the five-room cottage and build a much larger house over the watery, ledge-filled basement and dandelion garden.

Here's where I get confused. Mike assures me that assessors decide land value based on what it would be worth with no building on it at all. But it seems to me that the land value has to reflect the houses nearby that buyers may be willing to pay more to move into a neighborhood of McMansions.

I think the property should be assessed by what someone like me, with my limited income, and my preference for cozy over large homes, would pay to move into my cottage and keep it as it is.

So I would argue that I can't afford my house at its present assessment! And I suspect that argument would lose.

This is all going to take a little more thought. Next week, I'll try to fill out the abatement form.

-- Go to Part II --


Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem News, Newburyport Times, Gloucester Times, (Lawrence) Eagle-Tribune, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence Journal and other newspapers.