In my small, working class town, our town meeting had a lively debate about whether or not we should spend twenty thousand dollars to rezone some areas in town. Supporters of the article hope that we can begin to attract business and take some of the fiscal pressure off homeowners. Our finance committee articulately demonstrated what I, as selectman, already knew: we couldn’t attract enough business to make a significant effect on our budget.
Granby lacks a much of a commercial and industrial base. They provide us with about $600,000 a year in property tax revenue. Most of our revenue, therefore, comes from residential property taxes. Our only source of additional income, the tipping fees from a landfill, will end in December. With schools that need building, costs of waste disposal, and maintenance of existing services, we are in deep, budgetary trouble. Existing commercial and industrial property brings in $600,000 a year in property tax revenue in Granby. $6.25 million in new property would only bring in about $80,000.
I should mention that the budgets of our town departments have been pretty much level for years. For the third year in a row, we’ve asked the heads of our town departments for three budget scenarios: level-funded; minus 5 percent; minus ten percent. We are at the margin now. We’ve trimmed the fat. We’re now at bone. The next step is amputation.
A town resident recently asked me how we were going to change our fiscal direction. My was as simple as it was out of my control: the Commonwealth would have to start increasing state aid. Since 2008, the Town of Granby has seen state aid drop 41%. This year we’ll receive $453,329 less than we did then. We’re not alone. Most communities across the Commonwealth have seen state aid drop by that much. That’s a lot of money when our $19 million budget is already operating on a shoe string. For several years, our departments have been slightly less than level services.
Granby has fiscal problems that state aid cannot solve. I’m sure most municipalities have their own idiosyncrasies, but a 41% drop in state aid is turning normal problems into inexorable ones. We are more vulnerable than more affluent or commercialized towns, but our trouble would be more manageable if the state were keeping up its part of the bargain. Unfortunately, state aid has dropped 58% since I graduated from Granby High School in 1982.
But between the economy and the 1998 tax cuts, we’re in a bind. As the Mass Budget and Policy Center explains,
Three of these income tax cuts were particularly costly to the Commonwealth: 1) a cut from 5.95 percent to 5.3 percent in the tax rate applied to wage and salary income, 2) a cut from 12 percent to 5.3 percent in the tax rate applied to dividend and interest income, and 3) a doubling of the value of the personal exemption from $2,200 to $4,400 for single filers and from $4,400 to $8,800 for married couples. The combined effect of these three cuts is now a loss of some $3.0 billion in annual revenue.
The effect of these tax cuts were masked by the strong economy of the last half of the 1990s. Once the inevitable recession–this one the worst since the Great Depression–hit, and recessions always come, the pain and cuts came with it.
Once something is given, it’s hard to take back. Once in crisis, it’s even harder. These advantages are complicated by the fact that our diminished revenue didn’t present much of a problem when they were passed. Unlike many in our state legislature, Governor Deval Patrick appreciates the predicament of cities and towns. The rest of our Beacon Hill leadership may be shaking their heads, but our governor has at least started the discussion about revenue.
Prior to the Governor’s proposal, some progressive legislators brought forward An Act to Invest in Our Communities. In a nutshell, the legislation would implement a graduated income tax that would have little affect on most people. A person earning a gross adjusted income of $100,000 a year would pay an additional $100 in personal income taxes. Here’s what does:
1) Restores the income tax rate from 5.3 percent to 5.95 percent while raising the personal exemption enough to hold down increases for middle-class families.
2) Raises the tax rate on wealthy investors, but provides a targeted exemption for middle-class seniors.
3) Raises $1.37 billion in net additional revenue to maintain funding for our communities, schools, health care needs and public safety services.
The bill has sponsors in the House and Senate: Sonia Chang-Diaz, Patricia Jehlen, Ellen Story, Kenneth Donnelly, James Eldridge, Daniel Wolf, Denise Provost, James O’Day, Ruth Balser, Alice Wolf, Kay Khan, Frank Smizik, Carl Sciortino, Marcos Devers, John Fresolo, Patricia Jehlen, Sean Curran, Elizabeth Malia, Angelo Puppolo, Paul Mark. Some of these would likely support Patrick’s plan.
Speaker of the House Robert DeLeo is concerned about transportation and willing to look at new revenue to support it. He told the Boston Chamber of Commerce
that in March or early April the House will put forward an alternative revenue plan that must be enough to address two key issues. There is a $140 million deficit in the MBTA operating deficit for next year. In addition, the state is paying highway workers with borrowed road construction bond money. Mr. DeLeo said using bonds to pay highway workers is costing Massachusetts about $250 million a year.
Lawmakers in both chambers of the General Court have also filed The Transportation Investment Act that would address these issues. Transportation is crucial to the health and welfare of our state and economy, but too many fiscal burdens have fallen to cities and towns. As the MMA explains,
Reductions in state aid to local government, particularly municipal aid, have translated into deepening over-reliance on the property tax and cuts in core services to residents and businesses. This is a trend that places enormous fiscal stress on cities and towns and undermines their ability to take care of basic obligations, including schools and public safety.
This is what’s happening in my town. Is happening in yours?
Discuss
45 Comments . Leave a comment below.I am in Newton, a much larger town by population. We have an override vote on Tuesday (three votes actually). We have more students in the schools now than there were in the early 70s, when we had more schools. We are projected to have something like 40% more students in the system in 2015 than we had in 1980.
Although we have our new and very expensive Newton North High School, we also have a number of school buildings that are crumbling. One of the overrides is to replace an elementary school that is 2nd or 3rd on the state’s emergency list. We’d also be rebuilding the Newton Centre fire station, which is too small for the trucks to exit quickly. Our departments have had some funding issues too. Last year the teachers signed a new contract reducing raises and making them pay more of their healthcare costs, relative to the prior contract.
Our current overrides (which are expected to pass) would be our first in a decade. The 2002 “yes” vote was actually the only one in our history. The opponents are very upset because (1) the overrides would increase the base for Prop 2.5; (2) with more crumbling schools, they predict there will be more override requests.
As I see it, we’ve got to pass these, but I do feel their pain. We have a reputation as a wealthy city, and there is plenty of wealth here, but there’s also a sizeable working class and elderly population whose incomes have not kept pace with the increase in the value of homes they bought 20 years ago or more. Even without overrides we’ve been raising the base by 2.5% year after year and they’re squeezed.
Seems to me Washington cut taxes and dropped aid to states and cities, and Beacon Hill cut taxes and dropped aid to cities and towns. Then when local officials have to raise taxes to maintain services, they’re the ones run out of town on a rail.
I won’t be run out on a rail as selectman (it wouldn’t matter much to me, if I were). We have town meeting and they are the legislative body. I look at my job as setting the table for town meeting. It’s their job to decide whether to eat or skip the meal. It’s my job to make sure they get the nutritional details and understand them.
We’ve had very few overrides, but we can’t even override ourselves out of our coming hole. A tax increase of 1% yields about $100,000 in revenue.
I’m glad to hear Newton’s having problems too. Misery loves company.
…and elected town bodies should have the authority to raise taxes.
New Hampshire.
Poor people, poor towns, and local services in general do not do so well under that system.
Funding schools, police, water, sewer, fire, and streets with a good chunk of the income tax is a much better system.
It worked well when we did it and we should return to it.
I believe NH has a statewide property tax forced on them by the state supreme court so at least some of that disparity can be alleviated. I agree that income tax is preferable, but meanwhile I’m happy to go with property taxes for the same reason given in the classic quote for robbing the bank – that’s where the money is. In the town in which I grew up Proposition 2 1/2 held us back because we did not have revenue we could easily have raised, though I am open to circuit-breakers and other methods to ameliorate the pain. I’m arguing to give towns and their elected officials the freedom to do this. Whether they actually should or not like you are arguing is and should be an ad hoc political question.
doing it via the income tax is that it requires the state to pass the money on. When, as recently, the state has a budget crunch, it may fail to do so. Unless we dedicate, by law, a certain percentage of income tax revenues to local aid for these purposes.
In one sense, I’m not sure the property tax is “where the money is.” Here in Massachusetts many homes are worth a lot more than when purchased. In towns like Newton, people whose income has not gone up at the same rate as their assessed value often feel a big squeeze even with a 2.5% cap.
As a member of a younger generation that knew nothing of affordable housing prices, my thought is that they should be happy with their quite low mortgage on a house that would cost me $700,000. But in their minds, they’re squeezed, and the political will might not be there in most towns.
I would add that elected local officials having the right to raise taxes without the Prop 2.5 cap is not just “New Hampshire,” it’s also “New York.” And in the suburbs there it’s normal to have property taxes of $15K to $20K a year on a modest house.
I think Granby is $16.00 per $1000.00 which is high for Massachusetts.
Prop 2-1/2 forces the town government to make an argument for higher taxes. You need a 2/3s majority at Town Meeting and a majority at a public vote.
You don’t make the argument – you don’t get the tax increase.
In New York – the rate is set by I believe the local government – think your town could survive with a $60.00/1000 tax rate?
You are misinformed.*
*Town Meeting could decline to appropriate some of the budget and thus lower the tax rate, but there is no special 2/3 threshold involved.
reject the budget, or a portion of it. Town meeting is the legislative body of the town. Nothing can be spent without it being approved by town meeting first. That means budgets or other town meeting articles.
Roark is talking about an override, and he’s right about the process. To increase the tax rate beyond 2 1/2 percent of the levy, you first need a 2/3 majority at town meeting and then passage at the ballot box.
But
The law says (perversely) that the Selectmen are the appropriating body for the purpose of placing overrides on the ballot:
Town Meeting can ask, but not compel, the Selectmen to place an override before the voters. Town Meeting’s approval is not required and Town Meeting cannot prevent the Selectmen from putting such questions before the voters.
How do you do things in Granby, and under what authority? Do you have a home-rule amendment to state law? Or is thus just a political custom, that the Selectmen will not authorize their authority without consent of 2/3 of Town meeting?
What I was trying to say was that the select board can’t unilaterally raise taxes. We can raise them 2 1/2 percent each year, if the tax levy allows, but that’s it.
The board must seek override approval from town meeting, which then agrees to it or not. If 2/3 of town meeting agree, it is then put on the ballot for an override vote. Only the town can raise the taxes; the select board can’t.
I like the fact that town meeting has to decide whether to raise its own taxes. Why should I, as selectman, decide for them? We are going to look into building a new elementary school. As part of that committee, there are two things I accept ahead of time: 1) regardless of what I think, regardless of the need, the town can reject the building 2) my job is make arguments and inform, not “sell” the project.
The problem Granby has is the failure of the state to provide state aid.
Rather than our tax rate, our taxes are better shown by our average tax bill: $3500. In more affluent communities, with higher-valued homes, $16 per thousand would indeed by high.
And then allow the individual committees/departments to make the argument.
With overrides – at least in our town – the warrant committee also takes a yes/no vote – and the committee members are appointed by the town moderator.
the more I learn – the more I find the ways of town government interesting.
We also have open town meeting. We are the warrant committee. The select board speaks on the warrant if we bring it forward, although our chief of police spoke on an article cleaning up an outstanding issue with the Quinn Bill.
I want to see the people we elect be able to speak on an article they’ve brought forward. I want to see know that they understand what they’re bringing forward. For budget requests or capital items, we expect the department heads to make their case. They all live in town and are much better than you would expect for a town like ours.
In my town Town Meeting was the easy part; getting it to pass on ballot was a much greater hurdle. In 2002 I chaired a campaign to pass debt exclusion questions for a new library and police station. Both passed with 55% of the vote which I believe is directly attributable to the fact that for once we actually campaigned. A couple of years ago we did it again for major renovations to the high school, again after a very well-done campaign.
John at Tehans dot com
We never did talk last month when you were considering a net-metering credit agreement, I’d love to talk about that. Also, isn’t Granby part of the Hampshire Council? They have some money saving energy programs, let’s talk when you have a minute, ok?
Springfield is at the levy ceiling, I think for the second year in a row. While state aid for the schools has increased each year, general government state aid has dropped about 50% in the past few years. We can’t do an override because of the ceiling, so the tax levy is actually decreasing even though state aid is also decreasing and everything is getting more expensive.
We need to come up with a more balanced way to raise revenue. State aid is too easy to cut, it isn’t reliable. Property taxes are stable, but unfair between communities. People can’t seem to realize that the less government does, the more people have to pay out of their own pockets. How many people need an expensive car because the roads don’t get plowed well or because there are potholes? How many need big play sets in the yard because the parks are being cut? I remember having to buy a more expensive baby stroller because the sidewalks were so uneven, the cheap one was too prone to flipping.
When you pool your money, you save.
on the news about this. I couldn’t find anything online about it. Can you explain how the levy ceiling works and why it’s a problem?
The “2.5″ in Proposition 2.5 has two different meanings; first, a community’s levy cannot increase by more than 2.5% over the prior year’s levy (excepting new construction). Most towns are familiar with this.
The second part is much more constraining, especially to lower-income communities; the total tax levy cannot be higher than 2.5% the total assessed value – a $25/1000 tax rate.
When Proposition 2.5 went into effect, several communities were over $25/1000. Springfield was one of them. It triggered massive layoffs at the time, and sent the city reeling. The city had to reduce the total amount of property taxes it collected – something most other communities did not have to do because their property values were higher.
Springfield has flirted with this ceiling a couple of other times, I think after the real estate bubble of the late 80′s. And again now.
The underlying premise is that if your property values are low, you probably don’t have enough money to pay very much in taxes, and I can buy that argument to a certain point. However, the real estate crash did not cause a reduction in city services – quite the opposite, as the city now has to contend with the problems that accompany a lot of empty buildings.
So here we are again – as most communities can depend on a 2.5% increase in their levy each year, Springfield has actually had to cut the tax levy the past two fiscal years
Our levy was $163m in FY09, $170m in FY10, $166m in FY11, $169m in FY12, and $167m in FY13.
Older and poorer communities like Springfield are already under the whammy of not having much new growth – which is like a slush fund for newer growing communities, allowing revenue to increase at higher than 2.5%.
Springfield is also highly dependent on state aid, which is very, very inconsistent, many years it is either frozen or cut.
The proponents of Proposition 2.5 promised that the state would make up the difference as communities relied less on the property tax. That is a distant memory. Now it is everyone for themselves.
I don’t understand how we can have a revenue system in this state that basically forces us to have high property values. A place like Springfield – with housing that is very affordable – is getting crushed because it can’t raise enough revenue for basic services. I know that most communities believe that an average new development house price needs to be in the $400k range in order for the town to not “lost money” on services – in Springfield, we have many single family houses in the $100k range, and we have a lot of housing units that are in the $50k range or lower (for example, a 4-family building might sell for $200k).
If a $400k house is what is needed, that means communities like Springfield are simply not viable.
We have all brand new elementary and middle schools, so the kids are very lucky. I think the state paid 90% of the construction costs.
Waltham has a large commercial base which feeds City Hall. We have some nice restaurants that attracts people and the city takes .75% of the tab. The old Polaroid land is being developed, and 200 acres of Fernald Land is being sold by Deval, but we control the zoning, so now it is a temporary wildlife reserve for coyotes, turkeys, and deer.
Waltham has debt obligations of $519 million in health care and over $100 million in pension. We have over 110 municipal employees hauling in over $100,000, so I’m in no mood for paying higher property taxes, even if they say it’s for the children.
some communities such as Chicopee and perhaps have diversified tax bases.
My bet is that it’s the latter.
My bet is that lots of those 110 are police officers, and that salary includes detail work — which, in many cases, doesn’t come out of the city budget.
My bet is that some of those are [or will be] DPW guys working tons of OT to deal with our wintery storms. You can’t solve it with staffing because they need to respond en masse to infrequent events.
What are the details?
Deep Breaths
As you know, you are all “subdivisions of the Commonwealth” and subject to legislative control.
We on Beacon Hill determine what you must fund with your budget, and we control how and how much revenue you can raise to pay for those things. Remembers: only regressive local taxes are allowed!
So, time for a little tough love here, Granby and Springfield whoever else is having problems. (Sheesh!) These are complicated fiscal issues and our message is: it’s all your fault.
Why do you guys have so much difficulty balancing your budgets? Why is it so hard for you to make the tough choices? We’ve had to do that a lot, like when we cut local aid. Problem solved, there.
Why don’t you do that?
Sincerely,
The Legislature.
A few tens of million dollars worth of senior housing would drive property tax revenue, not increase the school budget, and as a bonus could be 15%+ affordable, bringing you closer to 40B compliance.
50 units, worth $300k each, is $15,000,000 in property which, for Granby, might generate $200k/yr in revenue with little impact on operating budget.
is our lack of infrastructure. No water or sewer to speak of.
But it’s a good thought.
People in eastern MA have no idea what goes on in the west.
$300k for a senior housing apartment? Don’t make me laugh. I don’t think there is a single house in Springfield that would sell at $300k. Right now, there is one ridiculous house for sale for $1m in Springfield (used to belong to the owner of Peter Pan Buses), three spectacular houses in the low $300′s (one of which is not even geographically in Springfield), and one “build to order” house for $300k.
I can find you a house in a good neighborhood of Springfield for $75k. It might need some work, but you still could move right in. There are about 40 houses for sale for under $50k, with one for $10k and another for $5k!
The housing prices are a sign of the inequality in this state. How can a 1,600 square foot house sell for $10k while in another community that would sell for $500k?
Services, that’s the difference. Plus the fact that a lot of people in the state don’t want to live in the neighborhood because of the types of residents who live there, notably skin color.
but I was also thinking about the additional property value of the community center, the pharmacy, whatever other amenities are on-site. Yeah, $300k is still too high, that’s a fair critique. But I’m not sure how enlightening comparing a 50-100 year old house which “needs work” with a modern, ADA compliant, central air and heat equipped, life-services containing* senior living center.
P.S. It’s not just services — it’s proximity. Schools, police, etc. are all important factors, as are the existing demographics of the community. So are culture, etc. But proximity is key — it explains why the property value falls in rings around Boston even when you compare across communities with approximately equal levels of service.
I understand why a small rural village is difficult to maintain — there’s just not very much economy there. It’s a problem that would exist even if property tax wasn’t the main funding mechanism. Switch to income tax, same problem. Lack of economy of scale, so to speak. What I struggle with is Springfield. Springfield’s a victim of 2.5. No way around it.
* fibulator, etc.
Property tax is regressive and sales tax is regressive. And those are your local sources of revenue.
Not to mention the blatant unfairness of expecting poor and middle-class communities to pay a higher financial burden for students who need more resources (what’s the percentage of ESL students in, say, Springfield vs. Weston?)
Putting the financial burden on the smallest possible political unit (cities and towns) is supposed to be great for local control. What it actually does, though, is pit communities against each other.
How many major developments are sited near a town line in order to minimize impact to that town while getting maximum revenues for itself and stiffing its neighbor (which ends up with a lot of the traffic but none of the money)? How many towns no longer want affordable housing for families — not because they dislike the young and unwealthy but because they fear the increased burden on their small communities of higher school costs?
The state is now coming down on Framingham for not providing enough resources for low-income and non-native-English-speaking students. That would be laughable if it weren’t so serious. It is nuts that one town in the area is supposed to ask its residents to pay still more for this — and, with revenues finite and inadequate, cutting other services for residents — instead of having all the wealthier surrounding communities pitch in. Or, in other words, have the Commonwealth and the federal government fund these extra costs, not a few thousand property tax payers disproportionately.
Hey, maybe we could take all the toll money collected at exits 12 and 13 of the Mass Pike and send it to the Framingham school system instead of for funding the underground Central Artery in Boston….
I read the assertion that property tax is regressive around here all the time, but it’s not so obvious to me that it is. Got a citation?
I suspect that in some income ranges property tax is regressive, but I don’t believe that it’s regressive across all income ranges. Furthermore, it sure seems like folks at many income levels are volunteering to pay more property tax than they “have” to by living in bigger homes than similar sized families were living 50, 40, even 30 years ago. The average size of a home has doubled since 1950, and it isn’t because the 1% are living in homes 100 times bigger than they were 60 years ago. Moving ain’t easy, and there will always be individuals for which it is particularly hard due to circumstance. But, on an individual basis, one could take Kerry Healey’s comments to heart and save on one’s own tax bill.
that is, Roach, Brian. 2003. “Progressive and Regressive Taxation in the United States: Who’s Really Paying (and Not Paying) Their Fair Share?” Working Paper no. 03-10. Medford, Mass.: Global Development and Environment Institute 8:
Rebuttable to be sure, got anything to the contrary?
Current mortgage standards require a first-ratio (mortgage principal, interest, taxes, and insurance) of 30% (some relax that to 33%) of gross income. When I first entered the market in 1979, the standard was 25%.
That is a difficult threshold for many households, especially first-time home buyers. Meanwhile, the 1% income threshold is in the vicinity of $500K/year. That translates to a mortgage threshold of $12.5K. That translates to a mortgage in excess of $10M. Even in Massachusetts, most properties are well under that.
Property value, and therefore property taxes, are likely to be a much smaller share of annual income for upper-income households. Since the property tax rate is the same on a property valued at $250K as one valued at $2.5M, and since the cost of the $2.5M property is likely to be a much smaller share of income for high-income households, the property tax ends up being regressive.
This discussion also intermingles wealth and income, which is its own kettle of fish. A wealthy family is far less likely to have a significant portion of its wealth invested in (taxable) property in comparison to working-class families.
I don’t have an axe to grind, to be sure, and as I wrote above I agree with somervilletom that at the upper end of income it is regressive — he at the 95th percentile of income probably pays a higher percentage of income in property tax than he of the 99th percentile.
And yes, those who aren’t working [retired, etc] really do skew the data a good bit, and are worthy of a separate study.
The study trickle-up cites states in the overview that
so, my question is — if we ignore those in the top 10 percent of income, is property tax *still* regressive? Frankly, I don’t give much of a damn if a household making $2,000,000 a year is getting a better deal than a household making $500,000 a year. For the sake of this discussion, I care about the households with earners making $20,000 – $200,000 a year. Is property tax regressive in this wide range of incomes?
The plot on page 16 maps all state and local taxes together. Some states have progressive income taxes, and the paper states that state and local sales and excise taxes are more regressive than property taxes… so its very difficult to tell *from this paper* the extent or income range in which property tax is regressive.
I worry about municipalities using an income tax because it swings so much from year to year. What’s “nice” about cities and towns using property tax, user fees, tickets and fines as their major source of income is that the budget is far more stable. In my Town, the *source* of instability is the Commonwealth. We have to plan around a number of budget scenarios that come out of Beacon Hill. We know that most of our revenue is secure — we know how much property tax revenue, and roughly how much in fines and permit fees. Construction permits swing with the economy, and so does state aid.
If income tax was a substantial portion of our local budget, we’d have a heck of a time planning how much to spend in the future, and would constantly be scrambling to keep the books balanced.
is the need for regionalization, particularly with smaller towns. Such as is occasionally done with schools, towns should look to creating regional groups for other functions of government to spread the cost of providing these services among more people. There is little reason for the small sized towns to maintain their own police, fire, and many public works depts besides ego.
Some 20 years ago, while living in CT, I saw this in practice with regional health groups. These independent groups provided health services from food service inspections to septic inspections for new construction, and saved towns from having to maintain full time professional staffs for their own when sharing them with other towns made perfect fiscal sense. At the time, I proposed broadening the idea of regionalization to other functions, but local egos prevented the idea from gaining acceptance. Maybe today, the time is right.
Regional dispatch makes a lot of sense – but a state wide – DPW – it would be horrible – or a state wide police force – we already have that – and they are impossible to deal with.
What is good about local government – its at a small enough scale that you can make sure your funds are spent wisely.
My town government would never give money to a film company to produce a film in our town, allow employees to retire after 20 years of service – or lend non-recourse money to private companies.
But we do spend money to build a new high school or library – or fund our music and arts department.
anything like a statewide DPW. I agree that it would create an unapproachable bureaucracy that would fail to solve the problem. No, I’m thinking of strictly local regions, made of of communities that are neighbors who have common issues, and could benefit from common solutions to them.
high school. In my estimation, this is our biggest fiscal problem. Adjacent communities have no appetite for regionalizing. They are all 2 to 3 times our size. One of them is South Hadley of Phoebe Prince infamy. Working with them would be problematic on both sides. Another is Belchertown, which continues to expand and has no need of us. Ludlow is farther away and again able to do without us.
We have have regionalization of health insurance. We’ve had it for a very long time. We also do some purchasing of electricity and stuff like asphalt and road salt through them. I think Western Mass, or at least Hampshire County, is ahead of the curve on regionalizing.
Among all this discussion over revenue, we miss the basic question: what does a town pay to service a resident in this state? Maybe that’s where we need to focus efforts.
Naturally there will be a wide variety due to the very different and individual nature of each of our communities, but some basic costs should be more or less the same based on certain attributes. For example, you should be able to calculate a formula for a fire department based on number of structures, types of structures, square miles of town, housing density, cost of living, social factors which cause more fires (i.e. poor people tend to heat with space heaters), and a basic response time required.
Do this for each department, for each basic service, and determine how much each community needs to provide basic services. At the very least, I think the study would be enlightening.
Then the next step would be to develop a system by which the state provides this minimal amount to each community, either by extending the existing system (property taxes coupled with state aid) or with a completely new system.
The current system doesn’t work very well because, as mentioned above, state aid is the first thing to get cut, so time after time the communities that need more help aren’t getting it, and this is causing the other communities to become stronger as people flee the poorer communities.
There should also be a provision that discourages “arms races” – once all communities have basic services, there might be a temptation for all the wealthy communities to distinguish themselves from the poorer communities by adding new services – free internet and cable, for example. There should be a provision that once a certain percentage of communities add a service, that service is then considered “necessary” and basic funding would be provided to all communities.
Just at a very rough high level, I looked at the expenditures per capita on the state’s website. The range was astounding – from a low of about $1,100 in towns like Adams, Dudley, and Hancock to a high of $4,500 to $5,500 in Weston, Dover, and Wayland (I excluded Cape Cod and the Islands since they skew things due to small and seasonal population – they were in the $6-8k range on the islands).
Where does a city like Springfield fall? #82, at about $3,000. Granby is #209 with $2,322. It should be clear how regressive these costs are when you compare them to household income; Springfield’s household income is estimated at $36,235 whereas Granby is $67,123. Weston is $197,587. That means Springfield is spending 8.3% of each household’s income in services, Granby is spending 3.5%, and Weston is spending 2.8%. Weston is spending almost twice as much as Springfield on a population that doesn’t need the services as badly.
When you look at the property taxes collected per resident, Weston collects $5k per resident (2.5% of their household income); Springfield collects about $1k per resident, (2.9% of their household income).
So Springfield residents are paying more of their income and are receiving about half as much spending on basic services and probably about 1/10 when compared to needs.
These numbers should disprove that Proposition 2.5 was all about keeping government services down. It was about keeping government services away from those who can’t pay for it.
Those aggregate numbers are pretty meaningless without taking individual needs into account. Departmental numbers are provided on the same state site (though they are probably still hard to compare).
For example, Springfield has a fire spending ranking of #149 at $114.42 – Granby has one of #300, at $25.92. Why the 4x difference? Lots of reasons: pay rate in Granby for a firefighter is probably quite a bit lower since they don’t respond to as many calls. There is probably no equipment and/or training costs associated with fighting fires in skyscrapers in Granby. There probably isn’t a HAZMAT team in Granby. The response time is probably a bit slower in Granby due to not having to worry about a fire spreading to nearby structures (Granby’s housing is much less dense). Another issue is that Springfield is dealing with legacy retirement costs associated with a much larger department (needed in the past).
These are the kinds of analyses we need to have because I don’t think people really understand how unequal this state is. I can’t blame them – I don’t have time to survey the entire state, nobody does. But the differences need to be called out because they are big and very real.
one critique (I’m sure many are possible) is the problem of integers. You can’t have half a fire department. If your fire fighters are full-time, you need multiples of four firefighters, as well as an integer number of trucks. Sure, you can divide this a little bit by sharing services amongst multiple communities, but it still is a challenging problem for small communities, because you can’t simply have a fraction of a fire truck or snow plow.
Fire departments are a little lumpy, but you can still have bigger or smaller ones and rely to some extent on mutual-aid agreements. Snow plowing is mostly contracted out these days, though tends to be related to miles of streets rather than population.
Even large communities do these things.
There are common expenses to operating these functions such as one fire commissioner and every departments basic, fixed expenses, or training, or unique pieces of equipment, rarely used, that could be shared where savings could be found. Maybe it could be in the location of stations that allow service without an eye to where town lines are, but where the need exists. Mutual aid agreements are long standing efforts to do this. No one is suggesting that Middleton join a region with Norwood, but perhaps Middleton, Topsfield, Hamilton, and Wenham, to throw out 4 names could find that regionalization might work well for them.
mutual aid agreements alleviate but don’t eliminate the problem, and they do include an additional layer of bureaucracy. Economies of scale exist in government, just as in lots of other capital intensive or specialist-personnel operations. Some of the hurdles can be minimized, but lumpiness is very real and it does come with cost.
The problem is truly complex.
Property taxes are determined by property value. In addition to local and regional market conditions, residential property value is pegged to the number of bedrooms, the total finished area of the property, and the lot size. These latter properties tend to be driven by local zoning ordinances — those ordinances tend to be blind to the cost they imply for the town. Please allow me to elaborate, based on my experience as a fincom member in Billerica in the 1980s (little has changed since then).
For both builders and brokers, the cost of a three bedroom house is about the same as a four or five bedroom house. It costs about as much to build one bathroom as three, four, or five. Absent zoning restrictions, none of these has much to do with lot size (once the lot is large enough to build a house at all). Thus, the choices of how many bedrooms, how many bathrooms, and so on tend to be driven by whatever the builder and/or broker think is the “sweet spot” in the market for when the new house will be ready to sell. That sweet spot, absent zoning, has virtually NOTHING to do with the cost of services.
So here’s what happens. The market pulls builders and brokers towards, for example, four bedroom homes on 3/4 acre lots. Most of the time, new four bedroom homes are bought by families with at two or more children or families who expect to have two or more children. That means that each of those newly-built homes is going to add two or more children to the local schools within five to seven years. A three bedroom home is likely to be sold to families with fewer children, but will bring in less property tax revenue because it will have a lower market value. The increased property tax derived from that extra bedroom is almost NEVER as large as the increased school costs imposed by the children who will live in that bedroom.
Similarly, water and sewer costs tend to be proportional to the number of bathrooms (every house has at least one bathroom and one kitchen). A new four bedroom house is likely to have at least two and half baths — a powder room downstairs, a full bath for the grownups off the master bedroom, and another full bath for children and guests upstairs. The increased property tax revenue from the extra bathrooms seldom matches the increased cost of providing water and sewer service to the residents who use those extra bathrooms.
The problem comes when comparing the increased property tax revenue (to the town) to increased value (to the builder/buyer) for a 3-bedroom, 1.5 bath home compared to a 4-bed, 2.5 bath home. The builder/buyer almost always wants to build bigger — the town almost always wants them to build smaller (if the town is paying attention to the cost of services).
Even in towns with private water/sewer, similar conflicts arise. A septic system for a 1.5 bath home is MUCH smaller than the septic system required for a 3-4 bath home. In outlying areas, high prices tend to drive large lot sizes. Ten new houses on two acre lots require LOTS more pavement than ten new houses on 1/2 acre lots (I’m ignoring cluster zoning for now).
The point of all this is that powerful market forces drive property values in ways that drastically escalate costs — zoning is typically hard to pass and harder to enforce, and zoning boards all too often become tools of local developers.
This is an area that would benefit enormously from real data provided in a form that allows “big data” analysis techniques. We can all guess at what we think the results will be — it reminds me of trying to do performance “optimization” without measurements of what the current performance actually IS.
If your goal is to maximize (property tax revenue – cost/child * children), then you:
1. Encourage senior housing. Low property taxes, very low services.
2. Encourage non-residential not-for-non-profit development. Higher property taxes, mixed service requirement.
3. Encourage fewer bedrooms.
4. Encourage more bathrooms (and other non-bedroom-able rooms).
That was easy
Isn’t this a perfect example of how, everyone working separately, in their own “best interests”, actually come out worse off? Should towns be shooting for a “sweet spot” in housing? If so, then why build anything other than the sweet spot? Where would other people live?
And if Billerica is having trouble with providing services to a 4-bedroom, 2-bath house on 1/2 acre (selling price of $339k, $4k in taxes), how is Springfield supposed to provide services to a 3-family house with 3 bedrooms per unit (total: 9 bedrooms) on 0.11 acres for a selling price of $89k ($1.8k in taxes)? Keep in mind that many families who would live in a 3-bedroom apartment typically have more children than a family living in a 4-bedroom detached house in the suburbs; I’d bet the Springfield house has 8-10 children in it as compared to 2-3 in the Billerica house.
Zoning and other laws are creating these “sweet spots” and are causing trouble spots in other communities. That is why the state needs to analyze, and then equalize things better.
« Blue Mass Group Front Page
Wed 19 Jun 9:41 AM