Income tax numbers at the accountants office
The state recently approved new tax rates for almost all of the municipalities in the commonwealth and the results are mixed. Some rates went up, some went down, but as usual, most homeowners are going to see a modest increase in their property tax bill this year.
Taxed To The Max
For the third consecutive year, Longmeadow has the highest residential tax rate in the state at $24.33 per $1,000 of assessed value, up from $23.62 last year (in 1961, it was $58 per thousand). It is the highest the town’s residential tax rate has been since at least 1996, and closing in on the $25 per $1,000 limit set by state law.
Longmeadow Finance Director Paul Pasterczyk said the town expects to hit that limit in 2021 or 2022, unless it sees significant growth, which he says is unlikely because the town is close to being fully built-out and 95 percent of it is residential.
Once a municipality reaches the $25 per thousand ceiling, state law prohibits tax overrides.
Pasterczyk said Longmeadow home values have shrunk significantly since 2006 and rates had to be raised to generate enough revenue to cover the budget voted for by Town Meeting. Like all municipalities, property taxes are Longmeadow’s primary source of revenue.
“We’ve also passed a number of debt exclusions,” Pasterczyk said. “We just built a new high school, which added $1.55 to the rate.”
Pasterczyk said town residents pride themselves on the quality of their school system and like the relatively high level of town services. One way to decrease the tax rate would be to charge fees for things like trash pickup, but he said residents prefer those services be paid for by property taxes so they can be deducted from their income taxes. Fees are not deductible.
“We know we’re going to hit that limit without more growth,” Pasterczyk said. “Then we can’t do another override. There hasn’t been a great deal of conversation about it, because I think many people are hoping property values bounce back, but at some point we will be confronted with the ceiling and there will be heated debate.”
How It Works
While many towns will see their residential tax rate go up in 2016, that’s typically because assessed values have fallen and towns raise the tax rate to make up the difference in revenue. So, higher tax rates don’t necessarily mean higher tax bills.
Conversely, rates are often lowered when assessed values rise because – by state law –municipalities can’t increase their total town-wide levy on existing properties more than 2.5 percent in a given year, thanks the law known as Proposition 2 ½ .
Barbara Anderson is the executive director of Citizens for Limited Taxation, a group that worked to pass Proposition 2 ½ in 1980.
“Proposition 2 ½ allows municipalities to collect no more than 2.5 percent over the previous year’s levy,” Anderson said. “We wanted to make sure assessors were never pressured to raise values in order to raise new revenue.”
Geoff Beckwith, executive director of the Massachusetts Municipal Association, said municipalities are required to re-evaluate property assessments once every three years, but when home values go up, it doesn’t necessarily mean homeowners’ tax bills will increase.
“When assessed values change, it impacts the amount homeowners pay relative to their neighbors,” Beckwith said. “It doesn’t translate directly to higher tax bills.”
Low-Tax Towns
Hancock, a small town in the Berkshires on the New York border, has the lowest tax rate in the state, $2.40 per thousand, down from $2.84 in 2015. Town Assessor Linda Burdick said the town’s residential property taxes are low because they have no police, fire or highway departments, and it receives payments in lieu of taxes for 10 wind turbines every year, which help subsidize residential rates.
“We only have about 727 year-round residents,” Burdick said. “We level-fund our budgets and keep them low and we apply a big chunk of free cash toward the budget, too.”
The residential tax on the average home in Hancock will be $638.49 this year.
Chilmark, on Martha’s Vineyard, has the second-lowest residential tax rate in the state, $2.71 per thousand. The residential tax on the average home in Chilmark will be $4,533.10 in 2016, more than six times higher than the average home in Hancock – because the average home in Chilmark is assessed at $1.88 million.
A Tale Of Two Suburbs
Burlington and Newton, suburbs in the Route 128 corridor with nearly identical tax rates, are very different cities.
Burlington’s residential tax rate is $11.46 per thousand, which is well below the state average of $15.11 per thousand. The town has a lot of commercial properties which shoulder much of the tax burden. The commercial tax rate is $28.28 per thousand, more than twice the residential rate.
Newton’s residential tax rate is $11.38 per thousand. The commercial rate is $21.94, but there are comparatively few commercial properties in that city. In spite of similar residential rates, Newton homeowners’ tax bills are more than twice as high as those in Burlington because the average home in Newton is assessed at twice the value of the average Burlington home and it has three times the population.
The state-approved 2016 residential tax rates can be seen on the state’s Department of Revenue Division of Local Services’ website.
