Great Barrington — It began last fall as a collective crisis over the promise of higher property tax bills should 50-year-old Monument Mountain Regional High School be renovated, with many residents saying taxes were already too high and they simply couldn’t afford another hike.
Michael Wise was listening. In his first term on the Finance Committee, the now-chairman spent the winter gathering data and started plugging it into Excel, popping out of his number crunching hole last spring with something he thinks might make the town “more affordable,” given its challenging lower income, high property tax ratio.
Wise tweaked his analysis of property tax reform options after last week’s town-hosted tax workshop for residents, an information session, and ahead of this Thursday’s (August 20) public hearing about the town’s possible adoption of a residential exemption and split tax rate, neither of which would go into effect until at least next year. To read Wise’s revised and updated analysis, with data supporting his conclusions, click here: Revenue options 08-14-15
Opponents to the proposed tax options are already lining up over a number of issues that even Wise concedes makes the plan imperfect.
But on the whole, he thinks it’s worth it, because he is staring at spreadsheets that show as many as 80 percent of homeowners seeing their tax bills slashed.
A residential exemption would tax people progressively more or less based on the assessed value of their home. The more your home is valued, the more you pay, just like the income tax. Wise’s most current analysis shows a break-even point—homes that will see little or no change––of somewhere between $463,000 to $583,000. The tax rate rises or falls from there. This newly-generated break even point depends on the number of “owner occupied” rental units in town. Only owners who live in one of their units are eligible for the exemption.
Adding a moderately higher tax rate on commercial/industrial/personal property (CIP) to the exemption, would help make up some of the revenue difference. A system of different tax rates for residential and CIP property is known as a split tax.
Wise himself writes that imposing a split tax is tricky work. “Trying to shift too much of the burden onto CIP property could backfire, though. Charging a higher rate makes the town appear unfriendly to business. Setting it too high could drive out jobs and even reduce tax revenue, if it became too expensive for businesses to stay in Great Barrington.”
Some of the proposal’s assumptions are worrisome to some residents for other reasons. “There is no means testing, income test or threshold,” wrote Naomi and Ron Blumenthal, whose larger explanation can be found in the comments, here. “Just an assumption that a large house equals a large income (for example older residents whose houses have increased in value while their income is fixed?) What about people who are house-rich and live in smaller homes and should not qualify for a tax rebate but who will most certainly not turn it down, thank you very much?”
Wise agrees that seniors are at risk here, and offers the aggressive use of the state’s tax programs as a solution. But he said he’s studied the link between home values and income and finds a “pretty good correlation,” using borrowing to buy a house as an example.
“They look at income for this,” Wise said. “[Banks] won’t give you money to buy an expensive house.”
The tax reform hearing comes a week before the Selectboard’s annual tax classification hearing, held this year on August 24, in which the Board formally sets the tax rate based on how much the town needs to support the fiscal 2016 budget voted on at annual Town Meeting last May.
But according to the assessor’s office, the classification hearing on the 24th has nothing to do with fiscal policy for the following year.
Wise said the timing of Thursday’s Finance Committee hearing is simply to give people an opportunity to discuss the matter so that the committee can begin to consider a recommendation to the Selectboard, which alone makes the decision on how to raise revenue. He said he hoped this would be the setting for a discussion, since the classification hearing won’t be the place for it.
Wise said there was likely to be yet “another round” of discussions after Thursday’s hearing. It will also get the ideas moving, since Wise, the assessor’s office, and other town officials have said that implementing a residential exemption would take a solid year of lead time, and initially more staff to deal with more than 2000 exemption applications.
“Nobody has talked about doing anything different this year,” said Selectboard member Ed Abrahams.
While opponents of the proposal have been vocal and organized, Wise says there are supporters out there, too.
“The reason to consider this seriously is that implementing it will reduce tax bills for most people in town,” he said.
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.
