Here’s Steve Bailey, the Globe’s business columnist, on income tax vs. property tax:
The numbers come from the Massachusetts Department of Revenue, which calculated what cutting the income tax rate to 5 percent would mean in the 2008 tax year. For a married couple with a household income of $60,000 (slightly more than the median household income) the tax rollback would cut their state income tax by $143 a year, or $2.75 a week. A married couple with two kids and a household income of $80,000 would save $175 a year. A single person making $50,000 would save $131. A married couple with two kids making $100,000 a year would save $235….
Let’s go back to the Revenue Department numbers. Since fiscal year 2002, the average single-family property tax bill statewide has risen from $3,015 to $3,799 in 2006 — a 26 percent increase, or $784 a year. Check your bill; it may well be higher. Overall, the residential property tax levy has increased statewide by $1.8 billion, or 32 percent.
These are big increases. And your property tax, unlike your income tax, doesn’t go down when you’ve had a tough year on the job. It just demands to be paid, good year or bad….
The result: Across the Commonwealth, local taxpayers are paying more and getting less in municipal services. Four years ago Mitt Romney broke with the Republican tradition of signing the no-new-taxes pledge, calling it “government by gimmickry.” As it turned out, it just wasn’t his gimmick of choice. Shifting the tax burden on cities and towns was.
Just for laughs, I took Bailey’s suggestion and pulled out my own property tax bills. Looks like Medford is more or less in line with the state average: my property tax bill has gone up $715 from FY 2002 to FY 2006.
Bailey goes on to assess the candidates as follows:
Of all the major candidates, Patrick and Gabrieli have emphasized property tax relief the most. Gabrieli has been most thoughtful and most specific. He would devote 40 percent of the state’s new revenue growth to expansion of local aid and new investments, 40 percent to income tax reduction, and 20 percent to the rainy day fund.
I’m not sure I get why Bailey thinks Gabs has been “specific” on property tax relief – his 40-40-20 plan is about the income tax, and doesn’t address property taxes at all except to boost local aid. And at his MassINC interview, Gabs focused on revenue from casino gambling as the centerpiece of his property tax relief plan, which he acknowledges is quite uncertain (“Who knows? I dont think anyone can, for sure, predict.”), and therefore its ability to decrease property taxes is unknown (“And again, youre right, we dont know how much its going to help on property taxes.”).
Patrick, too, hasn’t been as specific as he might be on how increasing local aid, which he says he wants to do rather than cut the income tax, will lead to property tax relief. In response to MassINC’s specific question (“What would you do to ensure that any additional local aid that you were able to provide did result in property tax relief?”), Patrick talked about smart growth, and about “condition[ing] all or some of that [increase in] local aid on better regional planning,” and concluded that “I think if we do this right we will begin and we need to relieve the pressure on the property tax.” Still no clear roadmap from getting to Point A (keeping income tax at 5.3%) to Point B (real property tax relief).
IMHO, Patrick is setting himself up for trouble here. He’s the only candidate in the race who has clearly stated his opposition to doing what the voters said to do in 2000, namely, reduce the property tax to 5.0%. Asked why, he says repeatedly, “the tax to cut is the property tax.” That’s great – but how? When? How will it work? So far, the property tax argument doesn’t seem to me significantly different from this imaginary dialogue – and that’s not going to cut it. The announcement the other day about encouraging school districts to stop charging fees was a good step in that direction, but it was a small step. More, larger steps are needed.
I could not agree with you more. I would like to see a strong position backed up with real numbers by Gabby to support his theory.
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In the LG race the only one who has been consistently talking about property taxes is Mayor Murray. He understands first hand the problems people are having with this increasing tax. Hopefully, he wins and continue to keep the heat on. We need someone who is going to fight for cities and towns and Murray is in my opinion is the clear choice.
Until David posted the link, I had not yet read that MassInc. interview with Deval, but it makes me so happy to see that my candidate understand the connections between municipal land use patterns and local property taxes. He is willing to use state clout to try to change the cycle of dumb decisions that suck up tax revenue at the same time they pave farmland and abandon traditional neighborhoods.
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It’s not a sound bite, and it won’t fit in a 30-second commercial. Like sabutai said, there is a difference between good policy (which this is) and good politics (which this probably is also, but it’s wicked hard to convey to voters).
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Most communities go for short-term gains by promoting any new development that appears to generate new revenue. Very few consider the effect of new development on other property values, or whether new residents or businesses will pay enough new tax to cover the incremental increase in services they will need.
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Taxpayers and communities will win when the Patrick administration strengthens the connection between state aid and smart land use decisions at the local and regional levels.
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Local officials have to stop the mindset of “new development = increased revenue.” Deval gives some credit to the current administration for beginning to push Smart Growth. I’m not sure I would give credit to the current administration for initiating this, but when I was at City Hall, I noticed that there would be bonus local aid for each residential certificate of occupancy issued in the City. Since we had hundreds of older housing units in need of substantial rehabilitation, I spoke to my inspections, permitting and community development departments about how we could rake in more state dough by rehabbing our old neighborhoods.
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You can’t campaign on these kinds of specifics, but Deval is definitely on the right track. He warms my wonkish municipal heart, yet again.
Local officials have to stop the mindset of “new development = increased revenue.”
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Where is that the case? Certainly not in my neck of the woods where any given Sunday you can find stories of local communities trying to reduce the impact of residential 40B developments. These developments are typically not welcomed by communities, and only a handful have been able to earn exemption by developing enough affordable housing.
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If your description of Patrick’s view is accurate, then he is out of touch with the suburbs.
I know that there have been lengthy discussions on BMG about 40B, also known as the anti-snob zoning act, also known as the Comprehensive Permit, in the past. (Sorry, no cite.) Yes, of course, there is often a huge backlash against affordable housing (or mixed market-rate and affordable) developments. Local officials oppose these proposals because they can bypass local permitting processes and standards. Some fear environmental or quality of life impacts from higher density of units per acre; others may simply be snobs who don’t want “those people” moving to town.
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40B is a unique, narrow category of development. I have worked on land use issues at the eastern and western ends of the state, and most municipal officials believe that new growth = real estate tax growth = good. In fact, residential growth almost never covers its own costs in terms of increased demand for municipal services.
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The only issue I would take with your observation is that it has nothing to do with Deval’s position on property taxes or smart growth. Well, except you are also mistaken when you express your anguish that Deval is out of touch with local officials. Also I am intrigued by the impossible leap your comment makes from the substance of my post to the completely unrelated, preconceived, groundless conclusion that you wanted to make. Other than that, your observation about local officials and 40B is accurate.
But the logic of your post was as follows:
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Dumb decisions are being made at the local level.
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Those dumb decisions are going for short-term revenue growth without considering long term consequences.
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Patrick recognizes those dumb decisions.
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Maybe I made an error in interpreting your post, but my conclusion from that was:
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If this logic accurately represents Patrick’s viewpoint, he’s missed the mark for suburbs (aka bedroom communities) because what I’m hearing is that local officials don’t want these large developments to come in via 40B precisely because of their long-term costs.
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My comment was about my region and this one issue because that one issue is really important to my region.
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Frankly, the Patrick interview doesn’t really address the concerns in my neck of the woods except to acknowledge we’re not “near rail” and we have mill buildings. He mentions 40R, 40S, but doesn’t really go into this. Those would still be high density residential developments, and as you’ve stated, the revenue they generate is not enough to compensate for the services they consume
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What you didn’t mention was the part of his answer which may actually help — and that is business development in the western part of the state. I read — on BMG? — that there are high skilled job vacancies in Western MA. If that area can start to attract workers and residents, it might help ease the congestion in this part of the state. But his answer does’t go so far as to make that connection.
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Just to be clear, the question is how will he do it, and not how will he SELL it, right? The “how will he sell it” question seems ot have been taken up by Jon Papelbon.
PROPERTY TAX is the purview of EACH of the 351 cities and towns in the commonwealth, NOT Beacon Hill! Enough of this socialist redistribution of wealth!
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As a decades long resident of a rural town on the short end of the stick for EVERY Boston-created ‘formula’, from local aid, to Ch. 70, to Ch. 90, to EVERY damn thing….LEAVE OUR PROPERTY TAX ALONE!
The property tax shuffle that is being put out there by Deval Patrick is a ruse. Is he saying he is for prop 2 1/2? This initative probably did more damage to municipal budgets than any other law in the history of the Commonwealth. Is he proposing a law that would reduce the property taxes in each city and town, or is he just proposing more local aid? More local aid does not guarantee lower taxes; it just means there is more $ for the town or city to use.
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My property taxes are very high and I quake in fear when I hear that my property will be re-assessed. I just don’t think that Deval is being up front with us. I think he is saying “I’m not like the other guys.”
Patrick could roll back the prop 1/2s across the state that were meant to keep level services. Then, for the towns and cities that couldn’t pass the overrides and just had to slash and hack, restore them back to their previous funding level.
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The “increased local funding” should be allocated for that and the towns should be mandated to lower their taxes by the amount that they were raised during the level-funding overrides (ie, not the overrides to take on debt from building projects, etc.).
You’d need a tax hike to be able to provide sufficient new aid to do this.
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Also, what about communities that made cuts rather than pass overrides–shouldn’t they get some new aid too?
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The state has walked away from the cities and towns for fifteen years. Don’t underestimate the size of the hole that has left! (Warning: 4-MB PDF file)
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that’s why I said this…
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Would it be expensive? Maybe… but most of these overrides happened because of the original cuts; I think the state can afford it.
Some towns actually cut taxes, after the hacking was done. Primarily by chopping away at the roots of the hacks involved.
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BTW – what magic wand do you propose to give Deval to just WIPE AWAY Prop. 2 1/2? It was created 25 years ago by voter referendum – by a sizeable margin – and citizens who WISH to increase their taxes can do so via override, IF they can get fellow voters to agree with them. Instead of 3 of 5 Selectmen.
to the same MassINC question about the income tax and the propert taxes:
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Weak on property tax (though, to be fair, not much weaker than the other two). But at least he agreed with you on the rollback! 😉
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Well, in fairness, boosting local aid is going to take pressure off of the property tax. But a little history review is in order.
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Back in the late 80s, Gov. Dukakis pledged to devote 40% of the so-called growth revenues to revenue sharing. That level of support was really needed because the 2.5% cap on revenues from the property taxes did not keep pace with the growing cost of providing local services, including many unfunded state and federal mandates.
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Gabrielli’s plan, with its 40% for local aid, echoes those days, with one important difference.
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The intervening fifteen years of not keeping paceof not providing anything like 40%–have created huge holes in local services while driving up the property tax. Returning to the 40% of growth revenues, though good, does not fill those holes. (Especially with all the fine print in Gabrielli’s plan: after inflation, etc.)
David, you write:
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”
IMHO, Patrick is setting himself up for trouble here. He’s the only candidate in the race who has clearly stated his opposition to doing what the voters said to do in 2000, namely, reduce the property tax to 5.0%. Asked why, he says repeatedly, “the tax to cut is the property tax.”
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The voters voted to reduce the INCOME tax to 5.0 percent. Their vote had nothing to do with changing the property tax. Peter Porcupine is right, property taxes are set individually by each city/town in the Commonwealth.
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In so far as combating the tremendous rise in local budgets in terms of employee costs: most towns use the previously derided (rightly so), pay-as-you-go system, where current year taxes pay previously made promises in terms of healthcare and retirement benefits. This is the same scheme that is currently haunting major American employers, who have for years underfunded the pension plans as people started living longer and requiring ever more expensive healthcare.
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Except it’s far worse for towns, since most towns don’t have ANY pension and/or healthcare fund for retirees. So as people retire, their expenses are paid for out of current-year-funds. As those expenses increase exponentially, so do town expenses.
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Yet I think it’s crazy to address this on a town-by-town basis, since the public-sector unions would instantly crush it, and the real solution will come from lowering the cost of healthcare through real universal coverage.
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This has to be a statewide solution brought from a strong leader who isn’t in the pocket of unions. The solution needs to be similar to the changes that have occurred in the business community, where money is set aside into a fund for future expenses, instead of expecting to pay every promise ever made out of current-year funds.
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There’s only one person with that kind of independence in this race – and his name is Deval Patrick.