Graduated property tax concept grilled at public hearing; Finance Committee votes to retain flat rate
Great Barrington — After the Finance Committee’s public hearing at the fire station Thursday (August 20), in which one speaker after another stood before an overflowing meeting room to decry and, at times, ridicule the idea of a residential property tax exemption and split tax rate, the committee voted 3-2 to keep a single rate for the fiscal year following this one.
The hearing was intended, in part, to receive public comment on Finance Committee Chairman Michael Wise’s concept of a way to make property taxes more equitable by instituting a graduated rate, similar to the income tax, whereby more valuable real estate would be taxed at a higher rate. Wise has estimated that under this system 80 percent of taxpayers might possibly experience a decrease in annual property taxes.
It was a New England-style display of oratorical flair among a mostly older, polo shirt-clad, humorous, and articulate bunch. That they were preaching their objections — and often repeating them — to what was mostly the familiar choir, did not stop anyone from busting out their best moves to flatten the prospect of a “progressive” or graduated tax on homes –– up or down — depending on their value.
“It’s like using a machete to perform brain surgery,” declared Alford Road resident Chip Elitzer, to raucous laughter and applause. “There’s no chance of meeting your objective, and it’s likely you’ll kill the patient.”
One reason for this, he said, is partly that renters, those who, in his opinion, most need financial help, could be victimized, as landlords — ineligible for the exemption unless they live in the building — pass tax hikes onto their tenants. Wise has always acknowledged this possibility. Housatonic, which he says would get the highest and most widespread savings with the exemption, has a good number of renters.
Elitzer got hold of this figure from the town’s Master Plan data: 43 percent of homes in Housatonic are “non-owner occupied.”
“Yes, we will pass along any real estate tax increase,” said rental unit developer and landlord Ron Blumenthal. “It’s a formula. It has to flow.”
Vivian Orlowski said that 61 percent of renters in Great Barrington are already paying more than 30 percent of their income for total housing costs. It’s not so easy for homeowners, either, she said. Between 2003 and 2013 the town’s home assessments have risen almost 50 percent.
George Klemp is selling his Hurlburt Road home so he can build a new one, he said. But he has lowered the sale price three times. “The realtor said, ‘it’s the taxes’. ”
If you don’t own your house and live in it year-round, you are not eligible for the exemption. Klemp said that raising property taxes on second homeowners, which he once was here, may drive that group to buy in outlying towns with lower taxes.
“There’s an even greater attraction to being near Great Barrington,” he said, adding that his own analysis of the exemption shows that while most homeowners in town will benefit, as Wise suggests, their savings would amount to somewhere between $150 and $475.
During a brief presentation by Wise at the start of the hearing, he said his updated analysis shows 83 percent of homeowners in town would be unaffected or see an 11 to 20 percent cut on their tax bill. The intent behind Wise’s proposal, which Elitzer said had “a good objective,” is that town has low median incomes compared to home values, making taxes “feel” high. Wise has searched for a way to manage this disparity, but last night’s hearing showed that the idea didn’t go over so well, at least with those who are informed and would see an increase in their taxes. They agree that taxes are a problem here, but want to use other approaches.
Blumenthal said he was willing to pay more taxes “for a good reason, not just to keep the thing going the way it’s been going.”
That “thing” is what some speakers hinted at was a bloated town budget due to inefficiencies, and more importantly, said other speakers, the fact that Great Barrington pays disproportionately more for its school system, as one of three towns in the Berkshire Hills Regional School District.
“Your job is to work with the school board,” Blumenthal added, speaking directly to Wise and the committee.
Former Finance Committee Chair Sharon Gregory made a presentation with charts and graphs to illustrate that “we need to distribute the school assessment differently. That would make it more affordable.”
Orlowski said that the town should not make “the same mistake” as those who years ago signed the school district’s regional agreement that determined that the pie would be divided based on the number of students from each town.
“Why would someone buy a house in Great Barrington, when the school tax level is three times more than in Stockbridge and other towns,” said Nick Stanton. Almost $30 million, he added, has been “unfairly charged to our account…We pay 70 percent of the school bill. We should only be paying 50 percent…the residential exemption does not fix that at all.”
Other issues were raised. Seekonk Road resident Steve Picheny spoke of the detriment this policy might have on economic development in general, specifically in trying to pull young people into the Berkshires to live and start businesses. Gregory noted that taxes would eventually rise again without an increase to the tax base that such development would provide. There were concerns — which Wise has himself acknowledged — about seniors on fixed incomes trying to stay in high value homes. Dana Dapolito said the exemption would kill the incentive to renovate an old house like the one she fixed up in the The Castle Hill neighborhood where she lives.
And Michelle Loubert researched seven towns that had considered a residential exemption and decided against it. The town of Lexington, she said, rejected it “to avoid up-taxing” properties like rental buildings that are not “owner-occupied.”
“Be careful,” the Lexington assessor’s office wrote to Loubert, about disproportionally taxing “out-of-towners,” and possibly “discouraging future taxable development in Great Barrington.”
Anthony Dapolito ticked off a list of ways he thinks the town could ease the tax burden by cutting its own expenses, including time-clocking employees paid by the hour, incentives for early retirement, and fast checking deposits to increase interest.
The other part of Wise’s proposal, a split tax rate, one that would tax commercial, industrial and personal property (CIP) at what Wise suggested might be a 5 percent increase, was not a popular one with this crowd, either. Ron Banks, Tony Blair, Ray Almori and Richard Stanley of Egremont spoke to what they said are the dangers of hitting up owners of such property.
“I don’t even have to ask my tenant to pay it, it’s already in his lease,” said Stanley, who owns a considerable number of commercial and residential properties in town. “Do you really think that I’m going to sit still and absorb those increases? I need a return.”
Almori, owner of Plaza Package Store, spoke of his tight profit margin. Banks said that having a “dirt Main Street” during this summer’s construction was hard enough on businesses, which form an important “commercial hub” in South County. Blair spoke to the vibrancy of downtown compared to other nearby towns.
“It’s our golden goose,” Blair said. “Let’s not kill it.”
With New England-style debate comes the occasional jab, and Wise met with the business end of Stanley’s knife when he accused Wise of presenting the proposal to the Selectboard–which alone makes the tax decision–before presenting it to his own committee.
Wise “for the record,” said that his committee had, indeed, been presented with these tax options for consideration, and that it had been brought to the Selectboard “to remind them that this [hearing] was coming up.”
Wise had first brought the idea to the committee last October, and again in June. Yet Wise does not appear to be wedded to it. “If the costs exceed the benefits then the town shouldn’t do it,” he said.
Wise took the two and a half hours of criticism –– a marathon of 17 speakers –– with New England-style forbearance, and in the end, committee member Walter “Buddy” Atwood made the motion to keep a single tax rate for the following fiscal year (FY17). Committee member Leigh Davis said she had been swayed by what she had just heard. Thomas Blauvelt also said yes to a single rate. Will Curletti and Wise voted no, both saying they wanted to give the exemption more consideration.
And where were the supporters of this proposed tax reform? Elitzer had earlier asked for a show of hands, revealing three.
Wise was one of them, and only he had dared to speak.
To read Wise’s proposal, click here.
To watch the hearing on CTSB-TV, click here.