Great Barrington — Tax relief that would cut 11 to 20 percent off the property tax bills for 80 percent of households could sweep through these hills as early as Fall of 2017 if progressive tax reform measures are considered and adopted by the town within the next year.
Finance Committee member Michael Wise Monday (April 27) presented the Selectboard with the numbers he’s been crunching over the last year, and the strategy to, he said, make Great Barrington more affordable by implementing a residential property tax exemption combined with a split-tax rate and other tax relief programs. Fourteen cities and towns in the state currently use this combined tax format.
Wise, a retired public service lawyer whose last job was with the Organization for Economic Cooperation and Development in Paris, says that property taxes “feel higher here because family and household incomes are lower,” and that “in relation to median income, are the highest in Berkshire County.”
It explains why many Great Barrington residents feel crucified by their tax bills, which, Wise says, are increasing partly because the town is the only “hub” for miles around with top-of-the-line services like the Mason Library, police and fire departments. There is also the cost of the Berkshire Hills Regional School District, which has “increased faster than town government,” Wise told The Edge, wondering why it is that the town, despite the same health insurance increases as the school district, is keeping a handle on its budget. Reduced state aid as a factor, he added, “isn’t as much as I thought.”
The director of the Massachusetts Municipal Association told the Boston Globe that widespread property tax increases over “each of the last 10 years” are partly due to “decreased local aid from the state due to budget constraints, and the costs of distributing services outpacing municipal income.”
Wise says there’s another reason: “The value of property in Great Barrington is stratospheric; higher than in Williamstown and Lenox — as a result, we get no sympathy.” Wise says it is to the town’s credit that it is not “taxing at the max,” and staying “below the legal limit on what the state says the town can raise.”
“The state says you could tax yourselves more — why don’t you? So here’s a way to help people in trouble and get the same revenue.”
“We do have cause for concern here,” Wise told the Selectboard. “Our population is diverse, we have a high average property value, yet the typical house is worth $230,000.” He said Great Barrington’s property taxes look like Williamstown’s, but that Williamstown residents have higher incomes.
The average Great Barrington family property tax bill for 2015 is $5,138. Williamstown’s is $5,552. The Berkshire County average bill is $3,288; the state average is $5,525. The median household income in Great Barrington (from the 2009-2013 U.S. Census) was $48,561, which is $100 more than the Berkshire County median. Across the state the median is $66,866, and for the U.S. it is $53,046.
A residential exemption would cut most tax bills in town, he says, which includes the charge from the school district. Based on his research, homeowners with homes assessed below around $470,000 would see a progressively lower tax rate, and since three-quarters of residences in town fall below that “break-even value,” as Wise calls it, “the effect is clear,” and would be concentrated in Housatonic Village and Risingdale, where “most tax bills would drop by at least 20 percent.”
For example, the median-value assessed home in town is $294,400. That tax bill would be cut by 11 percent. Homes near the break-even point of $470,000 would not see much of a change either way, but “for the 100 high-end homes valued over $850,000, half of which are second homes, the tax bill would increase by 7 percent of more,” Wise wrote in his analysis.
“This is an imperfect way of making property taxes progressive,” he told the board.
Here’s the imperfection: this could make trouble for seniors on fixed incomes who still live in expensive houses. Wise says this must be addressed if the plan is to go forward. His solution is for seniors to make use of state tax relief programs like the refundable income tax credit known as the Circuit Breaker for those 65 and older whose property tax is more than 10 percent of their income.
There are other programs, as well, Wise said, including a program for deferring property taxes. “Many towns do this,” he said, “but none in Berkshire County.” Wise thinks that these measures could be implemented relatively soon.
Wise says another tool for cutting struggling resident’s bills is to combine the exemption with a split-tax rate, which in this case, will “shift part of the load disproportionately to businesses,” by making them pay a higher rate than residents. All the towns he studied that use a residential exemption, Wise said, combine it with a split rate. The goal, he added, is to make the two rates the same, which can only be done by using the combination, and only “if the parameters are right.”
If the business rate were raised 10 percent it would raise the tax rate to about $15.85 per thousand, Wise wrote in his proposal, and would fund the proposed town budget that includes the school assessment, while also lowering the tax bills for 80 percent of homeowners.
That extra “load” on businesses and homeowners with the most expensive houses could be sticky, Wise says. “It might make the town less attractive for expensive second homes,” he wrote. And since it would increase the taxes on rental property, “landlords might try to pass that through to tenants.
Wise also says that the increase for businesses must be modest enough that it won’t “drive out jobs or even reduce tax revenue.” He says a 10 percent shift shouldn’t hurt too much. Five towns in Berkshire County use a split-rate: Adams, Lenox, New Ashford, North Adams and Pittsfield. Surprisingly, Great Barrington has the same proportion of businesses as Lenox. Wise said that Great Barrington’s business rate would be lower than Lenox’s, which “shifts about 20 percent more to the business side.”
Another challenge is administering the changes. Towns that have adopted a residential exemption, Wise said, advise hiring someone to help the assessor, with a year of lead-time.
Wise came out with his ideas last fall at a Finance Committee meeting, and has continued to hone and sharpen them while gathering additional data. He recently sent copies of his proposal and analysis to The Edge and other newspapers.
It may be good timing, since these are tools that can be used relatively soon, given that increasing the tax base through economic development, for instance, takes time, as will changes to the operation of the school district and its regional agreement between Great Barrington, Stockbridge and West Stockbridge.
“It’s about time we talked about ways we can reform our taxes,” said Selectboard member Stephen Bannon, “even if we come to conclusion that what we’re doing now is the best we can do, as opposed to just complaining that it’s just the way it is.” He added that reforms should be done in a “slow, well-thought out fashion.”
Selectboard member Ed Abrahams said that “the only thing that makes me a little uncomfortable is that the Selectboard can make this decision alone. I would be so much more comfortable if more voters weighed in on this with a referendum.” He said he also had an “ethical problem” with the fact that second homeowners who would see a tax increase cannot vote in town.
The Selectboard, Wise says, can “fine tune the methods” used to set the tax rate “all within the boundaries of state law.” The tax rate is set in August.
“Income taxes are progressive,” Abrahams added. “The property tax is not. What Mike is trying to do is play around with the property taxes with tools that are legal, and shift around who pays.” He noted that it’s hard to find other ways of reducing property taxes, like cutting costs without a loss of services. “Should we have the police answer every other phone call?”
Town Manager Jennifer Tabakin wanted to know “what it would take to actually implement” the two rates along with the other tax relief programs, and asked Wise if he thought these could be implemented separately or had to be done all at once.
“They are not interdependent practically — they can all be done separately,” Wise said, adding that that the “practical implications are different than the political ones.”
“Change is unsettling,” he wrote in his analysis.
The town, he told the board, will have to “get the word out for people to apply for this.”
Selectboard member Dan Bailly agreed, and said he was looking forward to studying the proposal. “If we’re going to adopt this, we need get ahead of it to publicize it.”
Some people are already saying they don’t like the idea: At Tuesday’s (April 28) candidates forum, Finance Committee candidate Patrick Fennell said the reforms were a way of “shaking down rich people,” and that the problem is the town’s budget. Selectboard candidate Karen Christensen likened the proposal to “rearranging chairs on the Titanic,” but said the idea should still be “on the table.”
Selectboard candidate Bill Cooke said that as “an old-line Democrat,” he believed that those who are able should try to help those who are struggling. Selectboard incumbent Sean Stanton said that the ideas are not “set in stone,” nor are they “perfect,” but several times expressed gratitude that Wise has, on his own unpaid time, “taken great pains” to bring relief to those who need it.
While Wise may have disappeared down the rabbit hole of tax research and Excel charts this last winter, he’s popped back out this spring, telling the board that he isn’t going to stop trying to find a way make this place more affordable.
“I’m not going to go away about this,” he said.
To read Wise’s analysis and proposal, click here.
