|
Help save yourself
— join CLT
today! |
CLT introduction and membership application |
What CLT saves you from the auto excise tax alone |
Make a contribution to support
CLT's work by clicking the button above
Ask your friends to join too |
Visit CLT on Facebook |
CLT UPDATE
Wednesday, March 30, 2016
Proposition 2½ is back in the
news
|
A Globe review of state Department of Revenue data for 151
municipalities outside Boston found that between fiscal 2012 and
2016, the average property tax bill for a single-family home climbed
from an average of $5,658 to $6,531, or 15.4 percent.
During the same period, the average assessed value of a
single-family home increased about 9.9 percent, from $409,768 to
$450,248.
The northern suburbs were the hardest hit; of the 10
municipalities that saw the biggest percentage increase in the
average single-family tax bill, six lie north of Boston. Wilmington
led, with an average jump of $1,416 — or 32.6 percent — to $5,759.
Taxpayers often question how their bills can balloon so quickly,
given the state’s tax-cap law, passed in 1980. While the law limits
increases to 2½ percent of the total property taxes collected in a
municipality, it allows for several exceptions, including for new
construction. In addition, voters can choose to surpass the limit by
approving an override, a permanent tax hike, or a debt exclusion, an
increase that lasts only as long as the loan for a particular
project.
Wilmington homeowners, for example, are paying for a new high
school, an appropriation approved by voters in December 2011. The
Massachusetts School Building Authority paid about $38 million for
the project, while the town covered the $44.7 million remainder
through a debt exclusion....
Residents also are shouldering a larger tax burden because of
rising property values: The average assessment for a single-family
home increased 10 percent, from $357,745 in fiscal 2012 to $393,643
this year. Meanwhile, commercial and industrial values have
declined....
In Shrewsbury, homeowners are feeling the effects of a $5.5
million override approved by voters in June 2014 — the town’s first
tax hike to increase operational budgets — and a $13.6 million debt
exclusion approved in 2013 to build a library addition. Several debt
exclusions were passed in earlier years to fund various school
projects and land purchases. The town posted the largest percentage
tax increase west of Boston, with a gain of 25.1 percent. The
average single-family bill jumped $1,039, from $4,139 in fiscal 2012
to $5,178 this year....
In Billerica, where voters earlier this month approved a
temporary tax hike for a new high school, residents have steadfastly
refused to approve any permanent tax increases. Voters defeated 13
override proposals in 1991 and one in 1992. There hasn’t been an
override question on the ballot since. The fiscally conservative
town had the second-lowest increase in the average single-family tax
bill north of Boston between fiscal 2012 and 2016, both in terms of
percentage (7.26 percent) and dollar amount ($317).
The Boston Globe
Sunday, March 27, 2016
How much have your property taxes increased?
How much has your property tax bill gone up?
A look at changes in average single family tax bills between 2012
and 2016.
[Interactive
Map]
The city's auditing firm is once again warning that stagnant
property values and rising taxes are bringing Pittsfield ever closer
to its maximum tax levy ceiling under Proposition 2½.
In briefing the City Council on audit figures for the fiscal year
completed June 30, 2015, Thomas Scanlon Jr. on Tuesday said the
city's taxing leeway continues to disappear. He said the levy
ceiling is $6.79 million for the current fiscal year, down from
$8.45 million the previous year, and well below the cushion of $22
million from fiscal 2009 — when the recession began to negatively
affect property values.
That means the city's ability to raise its tax assessment without
a Proposition 2½ override vote could disappear within a few years if
annual tax increases continue according to the recent average. The
city's levy ceiling already has fallen $1.7 million below the annual
2.5 percent increase normally allowed under Proposition 2½.
Scanlon, of Scanlon & Associates of Deerfield, said Pittsfield is
the first of the many municipalities the firm works with that has
reached its levy ceiling, although others are in a similar position
because of stagnant property values since the recession.
The Berkshire Eagle
Wednesday, March 23, 2016
Pittsfield warned that leeway to tax without an override
disappearing
Auditor Thomas Scanlon Jr. says the city's ability to tax will
quickly erode over the next few years forcing it to either make
significant cuts to the budget or pass a Proposition 2½ override.
"You still do have some levy capacity in there but you should be
thinking for future budgets," Scanlon told the City Council on
Tuesday.... "You are going to be at your levy ceiling," Scanlon
said.
According to Scanlon, there are two state provisions at play —
the levy limit and the levy ceiling.
The limit is calculated by adding 2½ percent and calculated new
growth to the previous year's levy limit. The ceiling is taking the
previous year's total taxable value and multiplying that by 2.5
percent, a restriction in place to ensure that no more than a
quarter of the total property values are being taxed.
This year, the ceiling is below the limit, providing a less
movable Proposition 2½ restriction — only an increase in total
taxable value will raise the ceiling.
iBerkshires.com
Wednesday, March 23, 2016
Auditor's Warning: Pittsfield Approaching Tax Levy Ceiling
|
|
Chip Ford's CLT
Commentary
Proposition 2½ is back in the news.
The details of CLT's 1980 ballot law are somewhat confusing
to some, especially when their property tax rate increases
more than the 2.5 percent limit in a given year.
Variables were built into the law, such as new growth
(additional building), taxing residential and business
properties at different rates, and of course the effect of
override and debt exclusion votes in individual
municipalities.
The Boston Globe analysis of property taxes under
Proposition 2½ noted:
A Globe review of state Department of Revenue
data for 151 municipalities outside Boston found that between
fiscal 2012 and 2016, the average property tax bill for a
single-family home climbed from an average of $5,658 to $6,531,
or 15.4 percent.
During the same period, the average assessed value of a
single-family home increased about 9.9 percent, from $409,768 to
$450,248....
Taxpayers often question how their bills can balloon so quickly,
given the state’s tax-cap law, passed in 1980. While the law
limits increases to 2½ percent of the total property taxes
collected in a municipality, it allows for several exceptions,
including for new construction. In addition, voters can choose
to surpass the limit by approving an override, a permanent tax
hike, or a debt exclusion, an increase that lasts only as long
as the loan for a particular project.
The situation in Pittsfield is a good example of the
limits built into Proposition 2½, which Berkshires.com laid out quite
well:
Auditor Thomas Scanlon Jr. says the city's
ability to tax will quickly erode over the next few years
forcing it to either make significant cuts to the budget or pass
a Proposition 2½ override....
The issue was first raised last fall by former Councilor Barry
Clairmont. According to Scanlon, there are two state provisions
at play — the levy limit and the levy ceiling.
The limit is calculated by adding 2½ percent and calculated new
growth to the previous year's levy limit. The ceiling is taking
the previous year's total taxable value and multiplying that by
2.5 percent . . .
This year, the ceiling is below the limit, providing a less
movable Proposition 2½ restriction — only an increase in total
taxable value will raise the ceiling.
The Levy Limit: Under Proposition 2½
individual property taxes can — but aren't required to — be increased
annually, but by not more than 2.5 percent. "New growth" — new
construction within a city or town — is added to the municipal property
tax base. Occasional re-evaluation by city and town assessors of
individual property values can affect individual tax bills. The
percentage of business vs. residential rates in municipalities that have
adopted "split rates" also can affect individual tax bills across the
board. (Business rate goes up, residential rate goes down and vice
versa.)
Overrides and debt exclusions were created by
Proposition 2½ to allow residents to voluntarily increase their tax
burden by voting to fund specific proposals, or to permanently increase
the overall tax base to fund general operating expenses. This was
included and intended for occasional municipal emergencies, but has
become far more prevalent than we expected. Nonetheless, resident
voters have the final word on imposing, or not, an additional tax burden
on themselves and upon their neighbors.
The Levy Ceiling: Under Proposition 2½
each year municipalities are allowed to increase overall property tax
revenue by not more than 2.5 percent over the previous year.
Excess Capacity: Under Proposition 2½
cities and towns are allowed to accrue (save up) potential
property tax increases never imposed under its levy limit. If a
city or town foregoes increasing its property tax in any given year, it
can "bank" that potential 2.5 percent increase for a future tax hike.
This was put into CLT's law to discourage local officials from
automatically jacking up property taxes by 2.5 percent every year.
Of course municipal officials answer to their voters, so a big and sudden
spike in a property tax rate is a danger to re-election hopes.
Then there are the other often unknown or
unappreciated benefits from CLT's Proposition 2½.
Rental Deduction: As well as providing
significant savings for homeowners in lower property taxes,
Proposition 2½ also passes this savings on to renters as well,
providing them too with significant savings. The
state
Department of Revenue explains it:
A deduction is allowed for rent paid by the
taxpayer during the taxable year for a principal residence
located in Massachusetts. This deduction is limited to 50% of
the rent paid not to exceed a total deduction of $3,000. The
deduction must be for rent that the taxpayer paid to a landlord
for the rental or lease of taxpayer's principal residence in
Massachusetts.
Auto Excise Tax Reduction: Since 1980
CLT's Proposition 2½ has reduced the rate of the auto excise tax from $66 per
$1,000 of a vehicle's assessed value to $25 per $1,000 — a savings of
62 percent on every vehicle registered in Massachusetts. (See
how much this alone saves you every year, year after year.)
Chip Faulkner just informed me:
Most car owners seem to be receiving their
auto excise bill in February with a payment deadline in March. I
paid mine a few weeks ago. It was for $151.25. If it weren’t for
Proposition 2½ the bill would have been $398.64 — a savings of
$247 thanks to CLT!
I checked my own excise tax bill on my admittedly
older vehicle, a 17-year old 1999 Chevy Blazer, and found I recently paid
$63.75. Without Prop 2½ I'd have had to pay an additional
$104.55 — my savings this and every year. Yes indeed, thanks
to CLT for a gift that keeps on giving!
Never have so many taxpayers owed so much to so few:
to you and other members of Citizens for Limited Taxation. Let's hope we
can preserve and protect Proposition 2½ forever.
|
 |
 |
|
Chip Ford
Executive Director |
|
|
|
|
|
The Boston Globe
Wednesday, March 23, 2016
Sunday, March 27, 2016
How much have your property taxes increased?
By Brenda J. Buote
No one likes to pay property taxes. But in Boxborough,
homeowners got some welcome news when their bills arrived
this year.
The town of just over 5,000 residents west of Boston is the
only Eastern Massachusetts municipality where property tax
bills for single-family homes are lower today than they were
in 2012. The average bill dropped $99 — or roughly 1 percent
— from $9,080 in fiscal 2012 to $8,981 this year. That’s
even though the average assessed value climbed 8 percent to
$548,990.
“That mostly has to do with the conservative approach the
Finance Committee and Board of Selectmen take,” noted Ruth
T. Anderson, Boxborough’s assessor. “They choose not to
spend to the levy limit, not even close. Typically, when you
set your levy limit, you take the last year’s limit and add
in 2.5 percent. Boxborough does not add that 2.5 percent.”
But as home values throughout the suburbs continue to rise,
property taxes are creeping ever higher in many other cities
and towns as bean counters struggle to close the gap between
revenues and expenses.
A Globe review of state Department of Revenue data for 151
municipalities outside Boston found that between fiscal 2012
and 2016, the average property tax bill for a single-family
home climbed from an average of $5,658 to $6,531, or 15.4
percent.
During the same period, the average assessed value of a
single-family home increased about 9.9 percent, from
$409,768 to $450,248.
The northern suburbs were the hardest hit; of the 10
municipalities that saw the biggest percentage increase in
the average single-family tax bill, six lie north of Boston.
Wilmington led, with an average jump of $1,416 — or 32.6
percent — to $5,759.
Taxpayers often question how their bills can balloon so
quickly, given the state’s tax-cap law, passed in 1980.
While the law limits increases to 2½ percent of the total
property taxes collected in a municipality, it allows for
several exceptions, including for new construction. In
addition, voters can choose to surpass the limit by
approving an override, a permanent tax hike, or a debt
exclusion, an increase that lasts only as long as the loan
for a particular project.
Wilmington homeowners, for example, are paying for a new
high school, an appropriation approved by voters in December
2011. The Massachusetts School Building Authority paid about
$38 million for the project, while the town covered the
$44.7 million remainder through a debt exclusion.
“The taxpayers of Wilmington have a long history of
investing in education,” said Jeffrey Hull, town manager.
“The high school debt exclusion, which was applied to tax
bills in early 2013, funded a modern educational facility
that provides students with the tools and space they need to
succeed. It was an investment in Wilmington’s future.”
Residents also are shouldering a larger tax burden because
of rising property values: The average assessment for a
single-family home increased 10 percent, from $357,745 in
fiscal 2012 to $393,643 this year. Meanwhile, commercial and
industrial values have declined.
In Shrewsbury, homeowners are feeling the effects of a $5.5
million override approved by voters in June 2014 — the
town’s first tax hike to increase operational budgets — and
a $13.6 million debt exclusion approved in 2013 to build a
library addition. Several debt exclusions were passed in
earlier years to fund various school projects and land
purchases. The town posted the largest percentage tax
increase west of Boston, with a gain of 25.1 percent. The
average single-family bill jumped $1,039, from $4,139 in
fiscal 2012 to $5,178 this year.
South of Boston, Avon posted the largest percentage
increase, 33.1 percent. There, the average tax bill swelled
from $3,611 in fiscal 2012 to $4,807 this year, an increase
of $1,196. The town has just 1,280 single-family homes, so
small budget changes have a big impact.
In recent years, the tax burden in Avon has shifted to
residences from commercial and industrial properties because
of “greater price fluctuations in the residential market,”
said Paul J. Sullivan, assistant assessor. In fiscal 2012,
for example, residential taxpayers were shouldering 33.7
percent of the total taxes in town; their share increased to
38 percent this year. The heftier bills also reflected
temporary tax increases approved in prior years by voters to
pay for capital projects, Sullivan said.
Twenty-nine of the 151 municipalities analyzed by the Globe
saw their average tax bills on single-family homes rise by
20 percent or more from fiscal 2012 to 2016. The analysis
excluded the seven places — Brookline, Chelsea, Everett,
Malden, Somerville, Waltham, and Watertown — that aren’t
required to submit detailed figures to the state because
they give a tax break to homeowners who live in their
properties.
Comparing 2012 and 2016, tax hikes ranged from 5 percent or
less in a handful of communities to the 33.1 percent gain in
Avon, or from as little as $192 in Berlin to $2,514 in
Lexington, where the average assessment for a single-family
home jumped from $697,450 to $887,355. The increase of
$189,905 — or 27.2 percent — is the biggest percentage gain
in assessed value in any suburb.
Not surprisingly, the highest average tax bills in fiscal
2016 (July 1, 2015, to June 30, 2016) are in the 20 towns
where homes often command prices of at least $1 million. All
but six — Manchester-by-the-Sea (average tax bill of
$11,760), Wenham ($10,159), and Winchester ($10,948) in the
north, and Cohasset ($11,483), Sharon ($10,148), and
Westwood ($10,312) in the south — are in the western
suburbs.
Only three municipalities — all of them west of Boston —
have average tax bills that exceed $15,000, including
Sherborn ($15,104) and Lincoln ($15,033). At the top is
Weston, where the average property tax bill is $18,762, the
highest in the state. (The statewide average is $5,438.)
On the other end of the spectrum, the Globe analysis showed
that the lowest tax bills in the region can be found south
and north of the city. Of the eight municipalities with
average tax bills under $4,000, only one, Bellingham, is
west of Boston ($3,930). Wareham has an average
single-family tax bill of $2,674, making it the lowest.
Other places also are holding the line on spending.
In Bridgewater, voters have passed an override only once, in
June 2010. That $2.8 million tax hike was approved to fund
town departments. The town had the smallest percentage rise
in the average single-family property tax bill south of
Boston between fiscal 2012 and 2016, an increase of just
over 8 percent. The average bill climbed $381, from $4,663
to $5,044.
In Billerica, where voters earlier this month approved a
temporary tax hike for a new high school, residents have
steadfastly refused to approve any permanent tax increases.
Voters defeated 13 override proposals in 1991 and one in
1992. There hasn’t been an override question on the ballot
since. The fiscally conservative town had the second-lowest
increase in the average single-family tax bill north of
Boston between fiscal 2012 and 2016, both in terms of
percentage (7.26 percent) and dollar amount ($317).
In Boxborough, where six tax increases were approved by Town
Meeting in 2005, fiscal restraint is now the norm.
Belt-tightening is “always a delicate balance,” said Dilip
Subramanyam, chairman of Boxborough’s Finance Committee.
“Each year, you look at all of your expenses, and then you
decide, ‘Do you really need this, do you really need that?’
”
How much has your property tax bill gone up?
A look at changes in average single family tax bills between 2012 and
2016.
[Interactive
Map]
The Berkshire Eagle
Wednesday, March 23, 2016
Pittsfield warned that leeway to tax without an override disappearing
By Jim Therrien
PITTSFIELD — The city's auditing firm is once again warning that
stagnant property values and rising taxes are bringing Pittsfield ever
closer to its maximum tax levy ceiling under Proposition 2½.
In briefing the City Council on audit figures for the fiscal year
completed June 30, 2015, Thomas Scanlon Jr. on Tuesday said the city's
taxing leeway continues to disappear. He said the levy ceiling is $6.79
million for the current fiscal year, down from $8.45 million the
previous year, and well below the cushion of $22 million from fiscal
2009 — when the recession began to negatively affect property values.
That means the city's ability to raise its tax assessment without a
Proposition 2½ override vote could disappear within a few years if
annual tax increases continue according to the recent average. The
city's levy ceiling already has fallen $1.7 million below the annual 2.5
percent increase normally allowed under Proposition 2½.
Scanlon, of Scanlon & Associates of Deerfield, said Pittsfield is the
first of the many municipalities the firm works with that has reached
its levy ceiling, although others are in a similar position because of
stagnant property values since the recession.
In setting the current city tax rates in November, the council approved
a tax levy of $76.78 million for the current fiscal 2016, up from the
$73.51 million level approved for fiscal 2015.
In November, the total valuation of city property was reported at $3.34
billion compared to $3.33 billion in fiscal 2015.
Acknowledging on Tuesday that "I don't have to run for office in the
city," Scanlon once again recommended raising additional taxes over the
next two budget years before the tax ceiling and the annual tax levy
meet, and placing that money into a stabilization fund.
Scanlon said bonding companies take note of a municipality's taxing
capacity and consider it an asset when issuing a bond rating, which can
affect the rate of interest the city would have to pay in borrowing.
Raising taxes to place money in a stabilization fund could prove an
extreme challenge, as the city faces numerous project or programming
needs, such as for roadwork and wastewater treatment system upgrades,
and calls for more police officers and firefighters and equipment, as
well as for maintenance work on school buildings and City Hall.
Asked how much growth in total property valuation would significantly
raise the city's debt ceiling, Scanlon said it would take about $39
million in new growth — such as construction of a casino — to raise the
debt ceiling by $1 million.
"I think you will be there for a while," he said of stagnant property
valuations.
Meanwhile, the School Committee is beginning its review of the fiscal
2017 budget, which now reflects a possible $2 million tax increase.
Matthew Kerwood, the city's director of finance and administration, told
councilors Tuesday that the administration of Mayor Linda M. Tyer is
exploring all options for creating a climate that fosters growth in
Pittsfield while efficiently managing expenses, including cutting costs
where necessary.
Kerwood said the situation is not a simple one of making cuts or
increasing taxes, adding, "It is much more complicated than that."
iBerkshires.com
Wednesday, March 23, 2016
Auditor's Warning: Pittsfield Approaching Tax Levy Ceiling
By Andy McKeever / iBerkshires Staff
PITTSFIELD, Mass. — Auditor Thomas Scanlon Jr. says the
city's ability to tax will quickly erode over the next few
years forcing it to either make significant cuts to the
budget or pass a Proposition 2½ override.
"You still do have some levy capacity in there but you
should be thinking for future budgets," Scanlon told the
City Council on Tuesday.
The auditor said there is $6.7 million in taxable capacity
in 2016 but that is down from $8.4 million in 2015. In the
next budget, close to $3 million is expected to be added
because of bonds, shrinking the ability to raise taxes even
further. If budgets continue to rise over the next few
years, the city will lose its ability to raise taxes any
more.
"You are going to be at your levy ceiling," Scanlon said.
The issue was first raised last fall by former Councilor
Barry Clairmont. According to Scanlon, there are two state
provisions at play — the levy limit and the levy ceiling.
The limit is calculated by adding 2½ percent and calculated
new growth to the previous year's levy limit. The ceiling is
taking the previous year's total taxable value and
multiplying that by 2.5 percent, a restriction in place to
ensure that no more than a quarter of the total property
values are being taxed.
This year, the ceiling is below the limit, providing a less
movable Proposition 2½ restriction — only an increase in
total taxable value will raise the ceiling.
"With no growth, you are going to be there for a while. That
$6 million, I feel, is going to shrink," Scanlon said.
Ward 1 Councilor Lisa Tully added that if property values
decrease, that ceiling gets lower so the difference between
the ceiling and the city's ability to tax could close in a
hurry.
"In two years time, we could be there," she said.
Scanlon said to raise the ceiling by even $1 million will
take the growth of something like a casino, adding multiple
millions to the taxable value.
"The strategy isn't as simple as raise values or cut
budgets. It is much more complicated than that," Finance
Director Matthew Kerwood said. "We need to build reserves
and that's a piece of this as well."
Kerwood said he is working with Mayor Linda Tyer on the
budget now and is looking for a spending plan that "fosters
an environment" for growing property valuations, building
that reserve, and "reducing spending where needed."
"We are beginning the budget process so collectively we will
be continuing to explore all of these options," Kerwood
said.
Scanlon is particularly urging for reserves to be built up
and that is mostly focused on the city's bond rating.
Scanlon said the excess levy capacity — the $6.4 million the
can raise taxes to without an override — is essentially seen
as credit or a reserve to bond rating companies. If that
levy capacity disappears, that lowers the city's bond
rating, he said.
He suggests adding money to a stabilization fund that
creates a reserve to protect the bond rating so it isn't
impacted as much if, or when, the city hits that levy
ceiling.
"You still have that levy capacity but I want you to think
about the '17 and '18 budgets," Scanlon said.
The issue was first brought out during the City Council's
tax classification hearing. Clairmont, an accountant
himself, brought the issue to the council and called for
keeping more of the city's certified free cash in the
coffers to build reserves. Of the city's $4 million or so in
free cash, $2.25 million eyed to be used to offset the tax
rate. The City Council ultimately reduced that to $1.5
million. In doing so, that raises the tax rates but builds
the reserves.
|
| |
NOTE: In accordance with Title 17 U.S.C. section 107, this
material is distributed without profit or payment to those who have expressed a prior
interest in receiving this information for non-profit research and educational purposes
only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml
Citizens for Limited Taxation ▪
PO Box 1147 ▪ Marblehead, MA 01945
▪ 508-915-3665
BACK TO CLT
HOMEPAGE
|