Editor’s note: This article has been updated with extra information from the Great Barrington assessor’s office.
Great Barrington — As the artillery on each side of the town’s property tax reform battlefield focuses on its respective targets and adjusts its aim, Town Manager Jennifer Tabakin and Town Assessor Chris Lamarre stood in the center of the field with peace flags raised, explaining the “basics” of property tax revenue, and possible options for shifting around how it is collected, though not endorsing any of them.
This is a “mini-class…the beginning of a conversation,” Tabakin said of her Tax Classification Workshop Tuesday (August 11), scheduled ahead of two upcoming August hearings: the Finance Committee’s public hearing on tax policy options (August 20) and the Selectboard’s annual tax classification hearing (August 24).
Tabakin said she wanted to give people facts to help them understand “dialogue that has been very advanced so far,” about the possibility of a residential exemption and split tax rate that would shift costs over to more expensive homes and commercial property.
The proposal was presented last spring by Finance Committee Chairman Michael Wise as a way to make the town “more affordable…a place where our volunteer firemen can afford to own a house.”
“We don’t have the highest taxes in Berkshire county; we come in second, behind Williamstown,” Wise wrote. “But we do have the highest taxes as a share of the incomes of people who live here — which are not necessarily the same as the incomes of people who own houses here.”
Indeed, the dialogue, backed by Excel spreadsheets, has ping-ponged between a handful of concerned residents and town officials. Now the topic is beginning to gain attention as the threat of a higher tax rate looms for the town’s wealthier citizens, commercial property owners, and many second homeowners.
On the other hand, the residential exemption tax reform package also means a lower tax bill for most of the town’s households, according to Wise. Using a “work in progress” spreadsheet presented by Lamarre and Tabakin, Wise later said that he calculated that “83 percent of all parcels would benefit or be neutral. If you include second homes, that changes to 74 percent.”
Wise’s own calculations show a residential exemption saving homeowners 11 to 20 percent on homes assessed at or below $470,000, with the savings progressing up or down depending on the value. Homes above that break-even point will see a progressively higher tax per home value.
Tax bills of median-value assessments of $294,400, would be cut by 11 percent, for example. Homes near the break-even point 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 or more,” Wise wrote in his analysis.
Under Wise’s plan commercial and industrial property would be taxed a bit more, too, with a higher rate than that for residential property. Two different rates are known as a split tax rate, and Wise would combine that with the residential exemption.
Wise suggested, as part of the plan, the more aggressive use of various state tax programs for people who need help, like seniors who live in a home with a high value, but are on fixed incomes.
But Tuesday night was not, Tabakin insisted, the time for opening salvos on policy, though it took restraint after an unsigned document entitled “Tax Tsunami in Great Barrington?” had just been air-dropped onto the community. According to Housatonic resident Michelle Loubert, the group that wrote it includes Former Finance Committee Chair Sharon Gregory, residents Vivian Orlowski and Chip Elitzer, who has been a vocal critic of the proposal.
“Chris and I are not the policy makers,” Tabakin told about 30 workshop attendees “We’re not the audience to hear your testimony on various things.”
That would be the Finance Committee and the Selectboard, she added, neither of which have made a “solid proposal.”
There is predictable discomfort among those who own more expensive homes or commercial property, or are second-home owners. The assessor’s office estimates that second homes made up 15 percent (382) of all properties in 2015, for a total of $221,785,200 million in value. Second homeowners (“non-domicile”) paid a total of $3,042,892 in property taxes, which when added to their $191,899 in personal property taxes, came to a total second home revenue of $3,234,791. That is 17 percent of the total amount the town collects, or the “levy.” In 2015 the levy was $18,803,248.
Lamarre explained that only full-time property owners will get the residential exemption, should the Selectboard decide to create one, and there was some discussion about the challenge of determining the exact number of those residents. “It’s kind of a cat and mouse game,” he said, adding that a resident, for instance, might switch residency to Florida and not tell him.
Lamarre further noted that out of all 352 communities in the state, 13 use a residential exemption, and most of those are “in Boston or adjoining communities,” and also combine it with a split tax. The exemption is available for only one property per person.
A split tax rate is used in 110 state communities.
Wise has conceded that it isn’t a perfect plan, and opponents of the proposal agree. Both point out the risk of raising rates on those with fixed incomes living in high-value homes; there is what Wise estimates as a 2 to 3 percent hike for renters as landlords pass costs along. The “Tax Tsunami” group says all of it will create a “disincentive to make improvements for homes and business or to invest in GB properties.”
“It will likely diminish Great Barrington’s tax base, leading to higher taxes for all and serious repercussions for our town’s economic development,” the group wrote.
One big reason why the group thinks the tax shift wouldn’t work here is that the percentage of second homeowners is so small that the bulk of the shift falls to full-time residents.
Using 2015 data, the assessor’s office estimates that under a residential exemption, 41 percent (864 parcels) of full-time homeowners in town will pay some level more, and 59 percent of the bill to subsidize those who pay less will be footed by second homeowners, or those who don’t qualify for other reasons.
Wise has pointed out that second home values “tend to be much higher than those of the homes occupied by permanent residents.”
The “Tax Tsunami” group, as well as Wise and Lamarre, say that it will cost money initially to implement these changes, as Lamarre will need staffing help to review applications and set the new structure into motion, which will take a good year.
And even so, Lamarre said, he can’t predict everything.
Former Finance Committee Chair Sharon Gregory agreed. “There’s a lot we won’t know until we adopt it…what we don’t know are number of people who would qualify. It’s pretty complicated. So we have to do the best we can to analyze.”
Tabakin and Lamarre created a working spreadsheet for policy-making purposes — it showed, for instance, a higher break-even point than Wise’s analysis. But Wise later told The Edge that that number will fall somewhere between $450,000 and $500,000.
Only one shot was fired at the workshop; a gentleman wondered about imposing a higher tax rate on commercial property when businesses have suffered so much during the Main Street construction project.
Tabakin stepped back into the field. “This is about the common needs of a whole group. It’s not about one group or another.” She said the conversation should be about “how are we going to pay for things we want here in the future?”
“Why are we looking at this?” wondered Nick Stanton. “Taking money away from one group — many don’t have a say in whether they will pay more.”
Indeed, the Selectboard alone makes this decision.
“It seems like a complicated solution to a problem we don’t actually have,” Stanton added.
“The question is, what are we trying to solve?” Lamarre said.
Wise said that the answers will come at the August 20 Finance Committee hearing on the issue.
“What’s the best way to divide the pie?” Tabakin said. “There’s never a good answer. Someone will always think it’s unfair.”
To see the Town Manager’s presentation power point, click here.
Thursday, August 20, 6:30 p.m. Finance Committee: Public Hearing on Property Tax Policy Options, Fire Station, 37 State Road. Presentations and open discussion.
Monday, August 24, 7 p.m. Great Barrington Selectboard, Tax Classification Hearing, Town Hall Meeting Room.
