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Town budget season is upon us in full swing. The Finance Committee has met with the town and schools to review their preliminary budget requests and to ask questions of town staff. Both entities are now finalizing their budgets and the Finance Committee will get one more chance to have a public meeting before voting to support (or not support) each budget. Budgets are then presented by the Selectmen and School Committees at Town Meeting and the Finance Committee (or any citizen) can offer amendments to what is proposed.
Part of the undercurrent in my mind this year is what is a fair tax rate. When I first got on the FinCom 3 years ago, I was told that our tax rate was essentially an artificial number. You took the amount of money that was allowed to be raised under Proposition 2 1/2, and you took the total value of property, and you simply calculated what rate would be charged in order to raise the maximum amount allowed.
I'm beginning to think that our tax rate is not just an artificial number that is calculated by the finance department, but instead is something we have to carefully look at, since it represents what taxpayers are really being charged based on the value of their home.
Before I get into this further, let me digress for a moment. In Acton, we charge the same rate to residential and commercial properties. This year (2007) the rate is $15.19 per thousand. So if you have a $100,000 house, you will pay $1519 in taxes. If you have a business property assessed at $100,000, you would pay $1519 in taxes.
Some communities have adopted a "split" tax rate which allows the town to charge more to commercial properties. This helps relieve the tax burden on residents of the town. In Acton, roughly 20% of the property value has been commercial, but with the recent decline in commercial property values along with the growth in residential construction, this number has dropped to about 10%.
There are some surcharges on the tax bill that all taxpayers pay. We have to pay for any capital overrides that have been approved by the voters. We also have to pay a "CPA" tax. Operating overrides become part of the base tax bill so they aren't added on but they do certainly result in higher taxes.
So are Acton's taxes too low, too high, or just about right?
In Appendix C of the Town Manager's 2008 Budget book, the manager compares Acton to a host of nearby communities and concludes that Acton is "slightly above average" compared to "other communities" for the average single-family tax bill. Acton's Average Value is $542,140, the tax rate (2007) is $14.62, and the average single-family tax bill is $7,926. I have reproduced the chart here. The Town Manager's chart was not sorted, so I've sorted the data by "Single Family Tax Bill" which was the point of the chart.
According to this chart and this metric, Acton is slightly above average. Our tax bill is only $500 more than the average among these communities. That doesn't sound so bad, does it?
But I think there is a better (dare I say, fairer?) way of looking at these numbers.
If you can afford to buy a $542,140 house, your tax bill in Acton will be $7,926. People generally purchase a house they can afford. If they are multi-millionaires, they will generally purchase a more expensive house. So one's ability to pay taxes is probably closely related to the value of one's home.
Let's look at the chart again, but this time, let's take the same house (worth $542,140) and plug it into the chart, and then sort by Single Family Tax Bill, and see what we learn.
The chart is reprinted HERE. Now Acton's bill rises to the top, at $2300 above the average which is about 40% more.
Acton's taxes are clearly above and beyond what comparable communities are paying (using the Town Manager's list of comparable communities.)
As for strategies to reduce our taxes, there are many things we can do, but I think the first step is to realize that our taxes are quite high and are not "slightly above average" compared to other communities. And then we need to take a hard look at how we are spending money, including overrides, CPA funding, our costs of delivering services, having a split tax rate, and ways we can be more efficient at delivering services.
And now hold on to your hats. The 2008 tax rate in Acton is $15.39, with an average single-family tax bill of $8051. (Boston Globe Northwest Weekly, page 8, January 31, 2008). If you look at the residential tax rates as printed in the paper, Acton's is the highest, by far. Out of 34 towns listed, the only town that comes close is Boxborough, at $14.14, a full dollar less. And then we have a few in the $13 range, and a few more around $12. The chart doesn't average, but it looks to me like the average is around $11. If Acton's tax rate were in this range, the average homeowner would save about $2,000 per year.
Allen Nitschelm is an editor of the ActonForum and a member of the Acton Finance Committee.
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F. Doug Williams
The Excel documents look quite good and do begin to better illustrate what Actonians pay for living in Acton. What is missing, of course, is the detail that sheds a clearer light on the numbers:
- What services make up the budget (does it include sewer or water, trash pick-up, etc. A $10.00 tax rate that includes trash pickup is a lower than a $10.00 tax rate that does not)
- How many people are served by the budget (relationship between the budget and population -- does it take $10 or $1000 per resident to run the town)
- Why were the selected cities and towns used in the comparison (are we comparing apples to apples or oranges – what relationship could there possibly be between Acton and Canton, for example or Acton and Weston)
- What part of the budget is paid for by the commercial establishments (if a town's total budget is $1,000,000 and the commercial establishments pay $100,000 then the 900 homeowners pay the balance and have a tax rate of $10.00 but if the commercial establishments pay $10,000 then the property tax rate for the homeowners is $11.00)
My major complaint with town meeting and the selectpersons has not changed in the thirty-five years my wife and I have lived here. No significant data is presented to justify an action! There should be a specified list of towns we ALWAYS use for comparison and the list should be agreed to via a written ballot. The actual number of employees AND THEIR SPECIFIC functions should be included with EVERY budget (does anyone truly know how many people who are paid through the school budget are teachers, how many are administrators, how many are maintenance staff, etc. I never worked for a corporation which could not quickly and easily generate a list of who does what and for how much). The voting citizens of Acton are always asked to make decisions based on personal value judgements rather than make informed decisions. Voting on a school budget, for example, should not be limited to a comparison of how much it costs to run the school system in Canton but on how well we wish to have our school system run. If Concord has one administrative employee for each pupil should we strive to meet that goal?
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