Acton’s Tax Rate Calculation

Now that we have all received our most recent tax bill, the following is a brief explanation of the calculation. Thanks to Charlie Kadlec for taking the time to research it and to prepare the numbers.

First, the total tax levy this year vs. last year increased from $64,053,135 in FY 2010 to $65,825,191 in FY 2011 a 2.77 % increase. How come this was more than the 2.5% increase limit set by law? The answer is that last year we increased budgets slightly less than the maximum, and so this year Acton is making up that difference.

Second, the total town valuation decreased from $ 3,741,421,414 in FY 2010 to $ 3,640,773,825 in FY 2011 -- a 2.69 % decrease. Why is this? It is because the housing market is slowing, and housing values have declined. You should see your house assessment decreased somewhat.

Third, this caused Acton’s tax rate to increase 5.61 % to 18.08 in FY 2011; it was 17.12 in FY 2010. While 5.61% seems high, this was due to taxes increasing while housing values decreased. The math is:

FY 2010: (64,053,135 / 3,741,421,414) * 1000 = 17.12 ($ per $1000 valuation)
FY 2011: (65,825,191 / 3,640,773,825) * 1000 = 18.08

To give you some perspective of what this means, the Department of Revenue calculates the tax bill for the "average single family home." The value decreased from $512,103 in FY 2010 to $500,492 in FY 2011 -- a decrease of 2.27 %. The FY 2010 "single family home" tax bill was $8767, increasing 3.22 % to $9049 in FY 2011.

In summary, Acton’s budgets increased by 2.77% while town valuation dropped by 2.69%. The tax rate increased by the combination of the two and therefore average tax bills increased.

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Comments

Prop 2 and a half

I guess I'm confused - I thought Prop 2.5 limited the increase in tax rate (or taxes (with an exception for "new growth")). It appears that the town is saying that prop 2.5 applies to tax revenue. That is, if property valuation dropped by 50%, they would be allowed to double the tax rate.

Does a decrease in valuation allow for an increase in tax rate?

What do I not understand?

Answer to Snape re Prop 2 and a half

Prop 2 1/2 applies to the town's revenue -- called the "Levy", which is the total of all property tax bills issued by the town. The Levy can increase by up to 2.5 % each year without an "override", regardless of property valuation changes. The tax rate is calculated from the Levy and the town valuation as shown in Clint's article. Yes, if property valuation dropped by 50% (and the Levy stayed the same) the tax rate would double. The tax bills would remain the same.

A good explanation of Prop 2 1/2 is here :

http://www.mass.gov/Ador/docs/dls/publ/misc/levylimits.pdf

CharlieK