From MassBeacon a clear eyed,uncolored analysis of the House Ways and Means municipal finance bill’s impact on Prop 2 1/2.
All you municipal leaders in BMG land must have an informed opinion. RMG folk think they do.
The complicated new battle over property taxes
judy-meredith
| Fri, Apr 23, 2010
5:38 AM EST
(You don't need to support someone to sign their papers. - promoted by Charley on the MTA)
Discuss
46 Comments . Comments are closed.Silly RMGers
It's unfortunate that Citizens for Limited Taxation can't tell the truth about the legislation. Prop 2 1/2 was a good idea, but they hurt their credibility by claiming this is a 5% property tax increase and that's it's now "Prop 7 1/2".
No. There may be some increase in taxes because the portion of the tax levy devoted to overlay accounts is now freed up for general spending and the overlay account is in addition tob that.
But communities can also take this as an opportunity to reduce taxes. If you can save the money in the overlay account instead of putting it in free cash, you don't have to keep raising money for the overlay account every year. There's no law that says you have to raise property taxes until you reach the levy limit. We try to stay 3% under in Great Barrington. But you do have to fund the overlay account because sometimes people will win abatements.
Also, I am seriously offended by this claim that any tax increase would be done without a vote. Maybe in cities, and I'll let the people who live in cities address that issue. But in towns, you still have to go through Town Meeting. You don't have to do a separate vote for an override, but town meeting, also known as any voter who cares enough to show up, gets to vote. Note to Republicans: sometimes democracy means not getting your way. And I hope it means more often than not if you keep acting like petulant children.
P.S.
Even if you do keep raising taxes to the levy limit, this is still a good idea because the new the tax revenue goes to useful things like schools and police, instead of having to raise more money every year for an account that doesn't provide services.
In my town...
...overrides must go through both town meeting and a secret ballot at a later date. This has always been a progressive dilemma. If we go too far with property taxes they tend to be regressive absent some sort of "circuit breaker". On the other hand that is how things we care about such as libraries, schools, and emergency services are funded. Prop. 2 1/2 has done nothing but damage to my town. It has closed schools, libraries, and fire stations over its 30-year history. I for one take any chance I get to whack at it, usually unsuccessfully, though we did pass debt exclusions in 2002 for the library and police station and I was proud to have chaired the campaign to do that.
Good point
The better way to fund these things would be income, capital gains, and estate taxes, taken out at the state level and given back to cities and towns in proportion to their population, with perhaps an extra share of the money for those engaging in more worthy projects.
I don't think the idea of
forcing anything beyond level funding to a vote is a bad one, but the problem with prop 2 1/2 is that it cuts deeply into level funding. So I don't like the concept of trying to 'destroy' 2 1/2, or smacking it around, I just think it needs to be fixed. If health insurance is going up 10% every year, towns can't cope with that when they can only raise taxes 2.5% each year. But an expansion on programs, or new school? That should be voted on.
Gov Patricks position
from SHNS
Oh well.
Thanks for front paging this, but I think, you should
re read Conor's informed analysis on MassBeacon. This ain't sloppy work, many experts in municipal finance think this is good public policy that should have been passed long ago, and should not be sacrificed on the alter of "Don't Touch 2 1/2."
It may well be fine public policy.
But it was evidently not very smart politics. And the former isn't much good without the latter.
Color me silly...
why not just start by changing the rules so that money put in the overlay can (a) be rolled over FY to FY, and (b) only be spent for those things, not converted to free cash?
Then they don't have to do the 2 1/2 end-around, they get better accounting principles, etc.
Cut in property tax levy
That would amount to a one-time decrease in property tax levy for the town.
The way I understand the issue, the town puts aside 2% into the overlay account, and can only spend 98% of the property tax. If they give out no abatements, they can then roll the 2% back into free cash and spend it.
Allowing rollover and preventing it from being spent would be a one-time cut in the budget because that 2% could never be spent.
Allowing the 2% to be raised outside of Proposition 2.5 would segregate the overlay from the budget money, but this would be a one-time increase in the budget because 2% more would be raised one year.
2% doesn't sound like much, but think of a city -- Springfield, for example, where the property tax levy is $170m. A $3.4m tax cut is a decent chunk of change, especially when the state is talking about 5% local aid cuts (which translates to a 3% budget cut -- $15 million -- when 70% of your budget comes from local aid).
So why not split the difference?
Why not allow a town to budget $x in an overlay account off of 2.5, but only with the vote of the town? And, while on the books it's a one-time injection, it doesn't have to be collected that way; it could be spread over a few years if that makes it easier, similar to a debt exclusion.
Assumptions Required
In order for this to be a cut in the property tax levy you have to assume that the City or Town would just shift the difference to the overlay account and not go back up to the max.
For example, take a town at the limit (no excess tax capacity) which right now does 98% operating and 2% overlay. If the rule changed you would only have a cut if the town stayed at 98% with 2% in the new overlay account. The next year the town would then need to stay at the prior year's 98% plust 2.5% growth. In this way they would be growing an excess tax levy account or,put another way, foregoing the ability to charge maximum taxes in the year of implementation.
In my opinion, the lure of additional tax revenues would be too much and the first year would have a tax levy of 100% and 2% which results in an increase. The next year would be 100% grown at 2.5%. Therefore, no tax levy decrease.
It may be a good idea but in the current climate people are fed up with taxes and this would be a potentially large increase to tax bills in November. This just happens to be right around election time making this change next to impossible with the Governor, Speaker and the 2 other leading Gov candidates all coming out against it.
potentially large?!?!
You just wrote it yourself, 2%.
OK, so if it's 2% of the total budget (not of the portion from property tax revenue) it might actually be around 3%. In addition to the 2.5% increase. So, we're talking about an increase of something like 6% instead of 2.5% for one year, then back down to the 2.5% increase.
It's not zero to be sure, but it's not a massive increase. For many towns, tax is approximately $10 per thousand -- this would increase it by another 30 cents.
That's an extra $7.50 per quarter per $100k of home value.
It's real money, and it's a real increase above and beyond 2.5, but is it really potentially large? I'm not seeing it.
an answer to David's question
because he's a DINO?
I hate to side with DeLeo
But on this one Gov Patrick looks like the one parroting Republican talking points.
I don't think so.
Patrick offered constructive suggestions for additional revenue - like removing the absurd sales tax exemptions for soda and candy - that could have avoided cuts to local aid. But instead of adopting those suggestions, the lege started monkeying around with the tax Patrick specifically campaigned on cutting - the property tax - and that, in light of the Prop 2-1/2 history around here, would predictably lead to exactly the kind of brouhaha that we are now seeing.
All so that DeLeo can proclaim that "there are no new taxes in the House's budget proposal." Why is that so important? Why is that more important than, for example, preserving local aid?
Patrick's approach was better, IMHO.
Where is the support for this statement?
Do you have a source for this statement that can back it up with #s?
Sure.
The Governor's budget as filed included some new taxes (like the soda/candy thing, along with a few others), as well as a modest withdrawal from the rainy day fund, and avoided cuts to local aid. Unfortunately, mass.gov seems to be down so I can't link to it right now. Will do so later if it comes back up.
Links
Governor's budget
Gov's message explaining that local aid would not be cut under his proposal.
Deval's credibility is zero..Where is my property tax reduction?
Raising any tax hurts the economy. The answer is private sector jobs.
In terms of credibility around here...
credibility(Deval Patrick) credibility(johnny reason)
Johnny boy
You asked for numbers, then you just whine, whine, whine when you get them. Take a hike.
he's also completely paranoid
Over on RMG he's accusing the BMG editors of revealing his secret identity. As if anyone cares....
True story
By the way...a different name was being used at the time and the "outing" occurred 6 months ago. Do you trust the management?
sure it is
The funniest part of the RMG discussion is Peter Porcupine jumping in to bash BMG without mentioning the BMG editors protecting her anonymity:
PP was outed on a blog run by a frequent BMG blogger
So what are the rules? Do the editors of any blog get to pass along info such as identity if they figure out who is posting?
no she wasn't
As PP herself says:
This blog has a clear policy on anonymity:
The fact of that matter is the BMG editors have protected both PP's open secret identity and eb3's truly secret identity. Why on earth would the editors "give up" yours?
The exact quote
I was referred to as a "frequent poster on BMG." The source is credible, the source knew stuff that could only have been understood with knowledge of my comments, and the source was corrected because he/she had incorrect info passed to he/she. The incorrect info was that I used that handle frequently. I had only used the handle on a few occasions, but my posts were not flattering to the Governor.
So is this how it all works? Critical comment is not cool I guess.
sounds like a fishing expedition to me
If your real life personality is anything like your persona on here, I'm certain it wasn't hard to do the math.
Hey Dave, Bob, and Chuck
I have been told that you guys are good guys and you guys would never "out" someone even if you disagreed with them. Sorry guys. Perhaps if you have thoughts on who would do such a thing you could email me. Regards and sincere apologies for ever questioning your integrity.
It'll never happen again. :)
Got it backwards
I think you're confused.
This is a community blog. Its essentially a conversation.
Disagreements fuel conversations.
No one is going to take revenge on you for disagreeing. If there were no disagreements, there'd be no BMG.
IT'S Baaaaaaaaaaaaack Removing Soda and Candy exemption from sales tax
Click on the Ad at the top of this page for an update. or go directly here.
FOR IMMEDIATE RELEASE: April 23, 2010 CONTACT: Yawu Miller, ONE Massachusetts, 617-821-8552
Statewide coalition calls on Legislature to approve new revenues
With the House Budget calling for $1.4 billion in cuts to programs and services, a diverse, statewide coalition of organizations is calling on House members to support budget amendments that would bring in an additional $550 million in revenue. The amendments, filed by representative Matthew Patrick (D-Falmouth) that would restore the tax on dividends and interest to 12 percent and remove sales tax exemptions from soda, candy and smokeless tobacco products.
Coalition members will speak out at 11:30 on Monday, April 26 outside the House chamber as representatives prepare to debate the House budget.
Representatives from the following organizations will be present:
ONE Massachusetts Mass Teachers Association Coalition Against Poverty Coalition for Social Justice Boston Parent Organizing Network Mass Community Action Network Mass Society of Professors at UMass Amherst Mass Home Care Project RIGHT Yes! Northampton Mass. Public Health Association Health Care for All Mass. Senior Action Council Public Higher Education Network of Mass. New England United for Justice
When: 11:30 a.m., Monday April 26
Taxing the air we breath
Judy would tax the air we breath if she could
Clean air you breathe just doesn't happen
And neither does clean water you drink.
On Earth day we were reminded how dirty the air was 40 years ago and what it took for our state local and federal governments to clean it up by imposing new tough regulations, targeted taxes and big fines on manufacturers and polluters-- from power plants to auto manufacturers to tobacco industry. And, through our taxes,we all contributed to support and maintain new public structures like the environmental protection agencies and to strengthen existing public health agencies to monitor and enforce clean air and clean water standards. Nobody but the polluters screamed about big government
And some businesses were smart and cleaned up their act. Just one example is the federal regulations around the oil rigs in the Gulf of Mexico that require strict containment policies to prevent massive oil spills in the case of a blow up like the one the other day.
The fish and the birds are glad and the retired folks on Anna Maria Island are glad. "My money well spent" my friend says.
The fish and the birds are glad
Swell!
So you neither breathe, drink, nor bathe?
Here's a bit of advice
Make some sense for a change
OK, you first!:)
Politics
Raise taxes and you DO NOT get reelected.
Rubbish.
It's high time Democrats got out of this silly Republican mindset.
Maybe they understand the politics better than you
Raising taxes this year is economically stupid and politically insane. Thus it will not happen.
Or they can do what is right...
...and heck with politics!
True
Remember how Bill Clinton got shelled by Bob Dole?
New math
If/when a town over-tax its residents, the town must give the money back. One might (erroneously) conclude that this reduces the town's tax base, but in practice they don't account for it that way, and for good reason.
The way it works is that a town determines their total allowable property tax levy and then they distribute the burden proportionally across all the residents and businesses that are subject to the property tax. How they do that can be a complicated calculation, but the goal is that everyone is tapped for their fair share.
Now, if a town mis-calculates someone's share (e.g. by over-estimating the value of some property), that doesn't mean the town is not entitled to the full tax levy. It only means that the town should have tilted the tax burden just a bit more in that person's favor, and added a teeny bit to everyone else's tax burden.
But mistakes do happen, especially given the difficulty of maintaining a completely accurate assessor's database for an entire town. How should a town deal with these inevitable errors? Right now, towns have to eat their mistakes, reducing their property tax revenue by some percentage every year. One might argue that this is an incentive to make fewer mistakes, but 2% of a town's budget is a rather harsh penalty for failing to accomplish a nearly impossible task, IMHO.
Not that it feels like a penalty, since the town has already budgeted the overlay account and is thus working from a reduced tax base from the start.
The real point of this proposal is how to handle the leftover funds. Right now, the excess goes back into "Free Cash", because there is no other place for it to go. The way I understand it, the new law would establish something like a "Revolving Fund" for abatements, which is an account where a town can manage money from year to year for a specific purpose. As a member of a town finance committee, this makes a lot of sense to me.
But then we get into whether these funds should be raised outside the Prop 2 1/2 limit. That's a little bit harder to grasp. It does make sense if we assume that all the funds raised outside the Prop 2 1/2 limit are eventually returned to taxpayers. In that case, it's not really a tax increase at all. However, we would be removing one incentive to keep the assessments accurate. We would also be tasking the state to monitor all these individual town funds to ensure they don't grow too large. So, it's a bit messy.
outside the Prop 2 1/2 limit?.
Thanks for posing -- and answering the real question.
It's "messy"(6 of one and a half a dozen of another), and like many public policy decisions basically a matter of trusting our own local public officials to make an informed judgement.
The House Ways and Means proposal to is good public policy and CLT was quick point out it could possibly be exploited by local officials, so they put the "gut 2 1/2" litmus test to it and everyone fell in line like a line of dominoes.
Too bad.
The easy answer...
(and I mean in terms of practice, not politics) is to repeal Prop. 2 1/2. Let this become a completely ad hoc political decision. Towns that are pure democracies have to approve their budgets by popular vote each year anyway, which includes both revenues and outlays. City Councils should be able to raise taxes just like other legislative bodies and get voted out if the people don't like it. On the funding end I'd like to go to a statewide system anyway, like NH has courtesy of its supreme court.
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