From the Boston Business Journal:
As of this week, the state’s Department of Revenue had published newly approved property-tax rates for 341 of the commonwealth’s 351 municipalities, and lo and behold some 94 percent of those communities are preparing to stick homeowners with an average tax hike in the range of 3.5 percent…
Which is not to say Massachusetts tax rates generally are on the rise. In fact, some 127 communities actually will see residential tax rates decline on a year-over-year basis in 2016. At least 131 cities and towns will see declines in commercial rates. If only tax bills followed suit.
Rather, tax rates typically move inversely with property values — meaning if values are on the rise, as they have been for the better part of four years in Massachusetts, rates are likely to fall. That’s about the extent of the wiggle room towns and cities have in determining rates on a year-to-year basis, save for the rare tax override or the addition of newly taxable property. Thus are the finer points of the state’s longstanding tax code forever known as Proposition 2 1/2.
The article also has a town-by-town interactive database.
And due to the statewide disparity between economies, we are seeing a number of communities bumping up against the $25/1000 levy ceiling.
Although the article calls out Longmeadow – arguably the most desirable community in the Springfield MSAa, and certainly the one with the highest real estate prices – as being the highest rate in the state with $24.33, communities like Springfield and Holyoke are effectively higher but are masked due to split residential/commercial rates. Here are the communities closest to the ceiling:
Holyoke: $25 (at ceiling)
Springfield: $25 (at ceiling)
Avon: $24.90
Worcester: $24.50
Longmeadow: $24.30
Pittsfield: $23
Ashburntham: $22.70
On the other end of the spectrum, here are the which are nowhere near their ceilings (due to high property values often coupled with lower levels of service due to being vacation havens):
Hancock (pop: 717): $2.40
Chillmark: $2.70
Nantucket: $3.40
Edgartown: $3.60
Alford: $4.60
Chatham: $5.00
Aquinnah: $5.30
I suppose it’s easy to scorn Western MA communities for simply collecting too much, but the reality is that the property values are far more skewed than the labor markets. Springfield collects an average of about $2,500 per residence; Longmeadow collects somewhere near $7,500 and communities outside Boston can be in the $15,000 range – yet Springfield is deemed to be “too high in taxes” so it has been forced to cut its levy for each of the past 4 years.
Longmeadow’s average property value was $335,000 or so. Granby is $227,000. My town is working with an 11.7% tax increase to fund a school project. Our tax rate ranking would shoot from 77th to 12th. An imperfect measure, but indicative of what’s being asked of a working class town. Something’s got to give. That Springfield and Holyoke were born into the Proposition 2.5 era at the levy limit is criminally insane.
On the other hand, as more (affluent) communities reach their levy limit, the more likely that something will be done. We need a new tax system.
What a town like Granby is facing is similar to what Springfield has faced for a very long time. The labor market doesn’t end at a town’s border. While it’s all theoretically good that a community shouldn’t tax more than 2.5% of its property value in an effort to shield poorer homeowners from the impact of high taxes, the city still has to pay regional-level wages for all of its services.
Those wages are driven by the regional economy – so what is happening is that Springfield residents – with a median household income of $35k – need to pay regional-market wages for all their services. We’re competing with communities who have median household incomes ranging from $105k (Longmeadow) and $96k (Wilbraham) at the high end to $60k (Ludlow & Agawam) in the middle. Holyoke is even worse at $31k.
[Granby, by the way, has a median household income of $80k – so it’s not quite as working-class as you may think. People just seem to be living well below their means there, perhaps the town has attracted wealthier residents who are content with mid-range schools, mid-range services, mid-range houses.]
The point is, even though poorer communities have 1/3 the household income of those other communities, we can’t pay 1/3 the wages to our city employees. We can’t pay 1/3 the cost of road repair. Those services are priced at the regional level, and as the disparity increases, we increasingly can’t compete. The lack of services creates a feedback loop, because wealthier people move out of communities who can’t provide them with the services they need.
That is why economic segregation is so damaging. Yes, you can throw all the poor people into certain communities, but they then can’t afford, at a municipal level, basic services.
The Levy Ceiling is really just a mean-spirited facet of Propositon 2.5. As you noted, Springfield and Holyoke were well above that ceiling when the law was first enacted, so basically the entire state said “screw you guys, you now CUT your existing services because of the law that we just passed”. And that facet is still limiting the city – we fall further and further behind when we must reduce our revenue in a time when our expenses are growing due to the recent economic recession.
Proposition 2 1/2 was more than “mean spirited”, it was and is intentionally racist and classist. It’s proponents, like Barbara Anderson, intentionally pit white middle-class suburbs against minority urban communities. Those at the top (from both parties) did nothing to alter tax policy to blunt the appeal of proposition 2 1/2.
The reason we still have regressive state taxes — proposition 2 1/2, as well as the Lottery and now casino gambling revenue — is that we steadfastly REFUSE to raise taxes on the wealthy.
I invite you to consider the situation of several affluent towns (median household income data from Wikipedia), ranked by total assessed single-family property value (parcels * ave assessment per parcel):
Concord:
Single-family parcels: 4,576
Average single-family home assessment: 969,131
Total single-family assessed value: 4,434,743,456
Median household income: 134,705
Residential tax rate (2016): 13.92
Average single-family tax bill (2016): 13,490
1-year change in ave. tax bill (%): 5
1-year change in ave. tax bill ($): 642
Dover:
Single-family parcels: 1,799
Average single-family home assessment: 1,098,503
Total single-family assessed value: 1,976,206,897
Median household income: 187,829
Residential tax rate (2016): 12.88
Average single-family tax bill (2016): 14,149
1-year change in ave. tax bill(%): 3
1-year change in ave. tax bill ($): 412.10
Lincoln:
Single-family parcels: 1,519
Average single-family home assessment: 1,074,555
Total single-family assessed value: 1,632,249,045
Median household income: 126,395
Residential tax rate (2016): 13.99
Average single-family tax bill (2016): 15,033
1-year change in ave. tax bill(%): 5
1-year change in ave. tax bill ($): 715.87
Carlisle:
Single-family parcels: 1,691
Average single-family home assessment: 790,001
Total single-family assessed value: 1,335,891,691
Median household income: 160,034
Residential tax rate (2016): 17.20
Average single-family tax bill (2016): 13,588
1-year change in ave. tax bill(%): 4
1-year change in ave. tax bill ($): 522.62
Let’s now look at median household income and 1-year change in tax bill, ranked by household income (town | median household income | one-year change in $):
Dover | 187,829 | 412.10
Carlisle | 160,034 | 522.62
Concord | 134,705 | 642
Lincoln | 126,395 | 715.87
I know this will be SHOCKING, just SHOCKING to all of us, but please notice that the INCREASE in property tax values for these four affluent towns gets SMALLER as the median household income of those sames towns gets larger.
The property tax increases on those with the highest household incomes are smaller than the property tax increases on those with the lowest. We have bigger tax increases on the poor so that we can have smaller tax increases on the wealthy.
So much for our “progressive” government and tax policy.
This is how proposition 2 1/2 specifically, and property taxes in general, work in Massachusetts in the 21st century. We Democrats have had a supermajority for more than THIRTY YEARS since proposition 2 1/2 became law, yet the law still stands. It is no more regressive today than it was when passed, and we have done NOTHING about it.
We can wail and whine about those awful Republicans, but WE DEMOCRATS have owned the House during that entire time and done NOTHING.
While our “Democratic” Speaker of the House trumpets, at every opportunity, the lie that “no new taxes are necessary”, this regressive property tax burden is the DIRECT RESULT of our collective decision to avoid taxing our wealthiest residents.
We need to raise taxes on the wealthy. That is the ONLY way to reverse this obscenely regressive property tax burden.
Because state government – and state elites – don’t respect the region (“gateway city” rhetoric notwithstanding), municipal government has to take up the slack.
Hence high tax levies per resident.
Per property.
And I would argue that the depressed property values are the reason for the higher Springfield levy, as there is a base cost to operating a municipality that must be collected from the property tax.
My town is almost on the low list, about a dollar more than Chatham. But our rate is higher because while we have some high-end places, most are more median. Sometimes, the RATE goes up but the actual BILL goes down, as part of the formula is not only how much your house is worth, but how much it is worth vis-a-vis the other properties in your community. A couple of splendiferous properties in Chatham can take up the slack for a dozen small ranches, as the bill is $5 per $1,000 in value and the taxes are collected to satisfy the annual town budget, period, with no Rainy Day nonsense.
Per property.
by No Politician are on the Vineyard. Property value there is through the roof.
That is what I was talking about. He thinks rate, I think values.
Another thing – when we do large projects, we do a debt exclusion instead of an override. That means when the project or bonds are paid off, the rate reverts. If the cost was $.75 on the rate, it automatically drops that much on completion. An override is a PERMANENT hike. We also apply 75% (+/-) of free cash or in expended finds and LOWRY the rate early at each town meeting before RAISING it with votes taken for new ependiture. Our neighboring town has a rate LITERALLY twice as much because they don’t do that. I worked for a man who asked why – if we just skipped applying free cash for a year we could avoid so many overrides. I pointed out that we hadn’the had a 2 1/2 override fail in 15 years BECAUSE people understood that our budget didn’t have any slush funding. We’ve passed at least 10 overrides and exclusions in succession while his town has had as many fail.
In my experience, passing debt exclusion overrides for capital projects is easier. You can point to a project (a new high school, library addition, etc) and ask voters do you want THIS? General overrides to fund the operating budget are possible, but much harder. The worst are the “menu overrides,” which in my experience are hard to pass because the “yes vote” gets split.
As noted above, the tough problem facing a few municipalities is once they hit the “levy ceiling” of 2.5% of total property value, they can’t grow the operating budget, they can only pass debt exclusions. Its true that these cities also get a much larger share of state aid. Nevertheless, they should have the option to pass general overrides to raise the levy ceiling.
If the wealthiest in our state were paying their share, then the state could invest far more in our less affluent towns.
These games you describe are necessary because the wealthy in our state don’t pay enough in taxes.
because the school aid and local aid formulas are rigged to channel state money to large cities mainly inside 128.
If the rich paid more the beneficiaries would not change. Ask Deval – he ran on reforming property tax, remember?
I agree that the current formulas are rigged, that’s one of the things that needs to change.
Your last paragraph contains a non-sequitur. The result of increasing taxes on the wealthy has nothing to do with whatever Deval Patrick ran on — particularly since we collectively did NOTHING about raising taxes on the wealthy during his administration.
There isn’t any way to significantly “reform” property taxes without significant increases on our wealthiest residents so that the state is able to distribute more funds to cities and towns, making them less dependent on property taxes. The issue is the disproportionate burden property taxes play in funding local spending, not how those taxes are collected.
It the rich paid more, then the state could distribute more to cities and towns. This, in turn reduces the property tax burden across the state.
Since the property tax is among our most regressive taxes, this would in fact change “the beneficiaries” a great deal. The rich would pay more, and the rest of us would pay less.
property tax relief and claimed that casinos would make that possible. Then he met the real world and forgot the issue entirely. Granted, the economy didn’t cooperate, but Patrick never figured out how to govern, just how to get elected.
https://en.wikipedia.org/wiki/Deval_Patrick
Deval Patrick “ran on” all kinds of things (“Together we can”).
None of them involved raising taxes on the wealthy, and he didn’t raise taxes on the wealthy during his administration. Casino gambling revenues, even if the do ever materialize, will not be collected from the wealthy.
The non-sequitur of porcupine’s second paragraph is the attempted joining of two disconnected assertions:
1. If the rich paid more the beneficiaries would not change
2. Deval Patrick ran on reforming the property tax
These two assertions have nothing whatsoever to do with each other. The first is a canon of GOP dogma. It has nothing to do with reality. The second is a half-truth about a gubernatorial campaign from six years ago. It has nothing to do with the first assertion.
My assertion about the first is that the if the wealthy paid their fair share, then the state could dramatically increase state funding of cities and towns. This would, in turn significantly reduce or even eliminate their dependence on the property tax.
One mechanism might be, for example, to allow local property taxes paid to be use as a credit applied to state income tax liability and carried forward from year to year, perhaps limited by taxable income (so that it is phased out for high-income tax payers).
Some mechanism may be needed for renters — they do not directly pay property taxes today, so it is unclear to me how best to incorporate them in the needed reform.
The bottom line remains that raising taxes on the wealthy most certainly CAN reduce the impact of property taxes on the rest of us.
I was wondering.
The tax rate for Chilimark is $2.08 per $1,000. My town is at $19 and change. But our property value is a fraction of theirs.
Most people talk about overrides, but most towns to debt exclusions. My town will hopefully do a school project, though at 20 or 30 years it will be like override for my parents or maybe me. I’ll be 82 in 30 years.