Showing posts with label split tax. Show all posts
Showing posts with label split tax. Show all posts

Tuesday, November 30, 2021

20 Reasons to Not Implement a Dual Tax Rate

20 Reasons to Not Implement a Dual Tax Rate

The issue of whether or not to have a dual tax rate is extremely complex, and can be deceptive. Unfortunately, the way a business is taxed is integrally different from the way a resident is taxed, which results, in itself, in a great deal of confusion. Many proponents do not have all the data needed to be fully informed concerning the long term (and often negative) effects a dual tax rate could consequently have on our local economy and home real estate values. The perception of immediate tax relief to homeowners often overshadows the true downwardly spiraling “ripple effect” such a move typically has on the local economy over time.

The United Regional Chamber of Commerce ask that you help us in our efforts to educate residents and businesses alike concerning the impact of a dual tax rate by reading the attached, which is a partial listing of the some of the many reasons why a dual tax rate would be a very bad idea in Franklin.

  1. A dual tax rate raises no additional money for essential Town services. NONE WHATSOEVER. The total tax levy in any city or town in Massachusetts is set by “Proposition 2 ½” regulations and the level of new growth in a town. Again, the total amount of overall tax dollars raised does not change in any way under a dual tax rate system.

  2. When property valuations increase overall, the dollar tax rate is lowered. Noting an often increasing valuation every three years, residents can become fearful that their overall tax bills will increase dramatically and in proportion to the amount their assessed value has been raised. However, this is not the case. The tax rate is, of necessity, lowered when this happens, as a direct result of the higher valuations, due to a fixed set total tax levy end amount. Indeed, in the last fifteen years in Franklin, the real value of the average single-family home in Town has more than doubled (from $175,000 to 385,000, or about 200%). Yet the tax bill of the average single-family homeowner has only increased by about 50% (from $2,406 to $3,530).

  3. Of 351 cities and towns in Massachusetts, only about 100 or so, at any given time, have a dual tax rate in effect. There are many reasons why less than 30% of towns and cities in the state opt for a dual tax rate, some of which are detailed here.

  1. There is a known statistical ratio of number of for profit businesses to number of taxable residential units that should trigger a close look at whether a dual tax rate starts to make sense or not for a certain community, which is 30% business to 70% residential. Only if a town has reached the well-documented 30% level, and has among its major business taxpayers businesses that are difficult to move - such as power plants, or vast shopping malls - only then does it make sense to consider a dual tax rate. Franklin meets neither of these criteria.

  2. The current tax system is already neither fair nor equitable for businesses, for businesses pay toward such items as the Town’s school system and trash pick-up services, which they do not use. Residents have always received a greater value, dollar for dollar, from their tax payments, and still do so even now. Going to a dual tax classification system would further increase the inequity, would be a great injustice, and additionally continue to skew the ratio of payments made to services and benefits received.

  3. Under a dual tax rate system, because there is a ratio of approximately 80 homeowners per every 20 businesses in Franklin, homeowners would only see a small decrease in their taxes, whereas businesses would see a raise of some four times that, due to the 4 to 1 ratio.

  4. Over time, a dual tax rate may well decrease the amount of money available to the municipality for essential Town services, because it is a strong disincentive to local economic development, which is the real backbone of the overall tax base.

  5. Almost all local professionals and businesses have already suffered greatly from the poor economy nation-wide.

  6. Businesses and professionals have many costs of doing business that are invisible to the consumers, such as ever-increasing insurances costs (for property, errors and emissions, and health insurance coverage); licensing fees; innumerable additional taxes and fees; etc., on all levels, town, state and federal.

  7. In fact, Massachusetts is now known as one of the worst states, and many say the worst state, to do business in within the nation.

  8. If you look around Town, you will see many underutilized buildings and vacancies in our office parks and our Downtown; vacancies that are often of a long-term nature. You do not, however, see many houses vacant for long; houses turn over relatively quickly in Franklin, despite higher home values.

  9. A split tax rate is a significant sign to new and existing businesses that a Town is not “business-friendly”. It is often one of the first, if not the first, question that new businesses ask when looking to locate in a particular town.

  10. Conversely, a split tax rate is also an incentive to build more residential homes in a Town, which further increases the demands and burdens on a Town’s resources, such as the schools; whereas business growth adds to the tax base without utilizing a lot of these already limited resources. Overcrowding of schools is only one impact, although one of the most visible, of adding more homes in a town.

  1. Franklin does not face competition solely from other in-state communities to attract and retain necessary professionals, businesses and retail operations. In fact, many states in the country “court” our existing businesses and offer special incentives for them to relocate there. Furthermore, many businesses are moving entirely to other countries, whose governments are also courting them, such as Mexico, India or many of the Asian nations, where the cost of labor and other normal costs of doing business are so much lower. It is a fallacy to think that companies cannot or will not “jump ship”. They have and will.

  2. Some 80% of U.S. businesses are considered “small” businesses. Over 85% of United Chamber of Commerce members have five employees or fewer; and many are family run. Yet, because of triple-net leasing, unless a business or professional owns their own building (and most do not) they would most likely not be exempted from paying the burden of an increased dual tax rate under a split tax system. Also, even If they do own their own building, but do not solely occupy it, or do not meet other strict requirements, they might well have to pay the higher tax rate. The often cited “exemption for small business” - sometimes mentioned by proponents of a dual tax structure as a panacea for smaller businesses - goes only to those who meet certain low numbers of employees or low business values.

  3. Going to a dual tax rate can initiate a viscous cycle. Because business taxes are based differently from residential taxes (which are based on real estate property values), when the value of a business goes down – which it often does because of a higher tax rate – the commercial/industrial property tax base itself erodes, resulting in less and less tax dollars emanating from businesses. It is important to note that due to the nature of the commercial tax structure - which is mandated by law - the real value of the very entity that the commercial taxes are determined by often then decreases, and can continue to decreaseeach year under a split tax rate system. As the overall commercial tax base erodes, it is entirely possible that the entire tax base could slowly erode with it, yet the need for critical municipal services, including police, fire and school departments, is still strong. Ultimately, home values can suffer over the long term, as a town becomes known as a less desirable place to live. While a dual tax format may seem as though it is a good way to temporarily “spread the pain” or “soften the blow” of increasing residential taxes, in the long term, it generally is not.

  4. Families in Franklin utilize local stores, businesses or professionals, who could then be forced to increase their pricing of goods and services to help combat their payment of any extra taxes. Town residents, in turn, would then pay more for these items. Ironically, the cost of these goods or services often has no tax deductibility, whereas property taxes do.

  5. Many area families are employed by local businesses, and employees suffer when their employer suffers, usually through loss of income and/or benefits.

  6. The vast number of local companies contribute greatly to our local youth and civic programs currently. Yet, when they are struggling to exist, they often cannot afford to give generously; and, if they are out of business, or have moved out of town, they will not be here to give anything at all.

  1. Assessed real estate values have escalated only because the true worth of residential property values in Town have escalated sharply. Home equity is a real and viable asset to homeowners, and companies doing business in our Town should not be penalized because of this; the values of their businesses have traditionally not gone up in times of a sluggish national marketplace, but rather down.
Thanks to Jack Lank, President of the United Regional Chamber of Commerce for confirming that while the numbers referenced may have changed since this was first shared here (2007), the arguments are still what he uses in conversation on this topic today. 

United Regional web page -> https://unitedregionalchamber.org/



The Franklin Matters view on the tax rate data ->


20 Reasons to Not Implement a Dual Tax Rate


Sunday, November 28, 2021

Franklin, MA: Town Council - Agenda - Dec 1, 2021

Franklin Town Council
Agenda & Meeting Packet
December 1, 2021 - 7:00 PM 
 
Meeting will be held at the Municipal Building
2nd floor, Council Chambers 

1. ANNOUNCEMENTS FROM THE CHAIR
a. This meeting is being recorded by Franklin TV and shown on Comcast channel 11 and Verizon Channel 29. This meeting may be recorded by others.
2. CITIZEN COMMENTS
a. Citizens are welcome to express their views for up to five minutes on a matter that is not on the agenda. The Council will not engage in a dialogue or comment on a matter raised during Citizen Comments. The Town Council will give remarks appropriate consideration and may ask the Town Administrator to review the matter.
3. APPROVAL OF MINUTES - None Scheduled
4. PROCLAMATIONS/RECOGNITIONS - None Scheduled
5. APPOINTMENTS - None Scheduled

6. HEARINGS - 7:10pm
a. Franklin Tax Classification Hearing
i. Legislation for Action Items: 10a., 10b., 10c., 10d., 10e. 

7. LICENSE TRANSACTIONS - None Scheduled

8. PRESENTATIONS/DISCUSSIONS
a. Snow Removal: Robert “Brutus” Cantoreggi, Director of Public Works

9. SUBCOMMITTEE REPORTS
a. Capital Budget Subcommittee
b. Budget Subcommittee
c. Economic Development Subcommittee 
 
10. LEGISLATION FOR ACTION
a. Resolution 21-74: Tax Classification Residential Factor
(Motion to Approve Resolution 21-74 - Majority Vote)
b. Resolution 21-75: Tax Classification Open Space Exemption
(Motion to Approve Resolution 21-75 - Majority Vote)
c. Resolution 21-76: Tax Classification Small Business Exemption
(Motion to Approve Resolution 21-76 - Majority Vote)
d. Resolution 21-77: Tax Classification Residential Property Exemption
(Motion to Approve Resolution 21-77 - Majority Vote)
e. Resolution 21-78: Tax Classification Senior Means Tested Exemption
(Motion to Approve Resolution 21-78 - Majority Vote)
f. Resolution 21-79: Town Council 2022 Meeting Calendar
(Motion to Approve Resolution 21-79 - Majority Vote)
g. Resolution 21-80: Cable Funds in Support of PEG Service and Programming per MGL Ch. 44, §53F3/4 (Motion to Approve Resolution 21-80 - Majority Vote)
h. Resolution 21-81: Gift Acceptances - Veterans’ Services Department ($1,215) and Agricultural Commission ($200) (Motion to Approve Resolution 21-81 - Majority Vote)

11. TOWN ADMINISTRATOR’S REPORT

12. FUTURE AGENDA ITEMS

13. COUNCIL COMMENTS

14. EXECUTIVE SESSION
a. Considering the purchase, exchange, lease or value of real property, because an open meeting may have a detrimental effect on the negotiating position of the Public Body.

15. ADJOURN

Note:
Two-Thirds Vote: requires 6 votes
Majority Vote: requires majority of members present and voting 5 


Full agenda doc and items released for this agenda including connection info

The average tax bill over the years 1988 to 2022 shows the rate rate can go up or down, but the average tab bill goes only in one direction
The average tax bill over the years 1988 to 2022 shows the rate rate can go up or down, but the average tab bill goes only in one direction

Wednesday, November 24, 2021

Talk Franklin - Thanksgiving and that extra piece of pie (audio)

FM #665 = This is the Franklin Matters radio show, number 665 in the series. 

This session of the radio show shares my "Talk Franklin" conversation with Town Administrator Jamie Hellen and Marketing Communication Specialist Lily Rivera. We had our conversation in person in Jamie’s office in the Franklin Municipal Building.


We talk about: 

  • Thanksgiving, time for recap, time for thanks

  • Council recap

  • Council look ahead – tax rate hearing


Links to the key references are included in the show notes. The recording runs about 37 minutes, so let’s listen to my conversation with Jamie and Lily.

*** Audio file -> https://player.captivate.fm/episode/68a3f469-8ed6-4806-a87d-8b4f679698b8


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Town Council Agenda 11/17/21 document ->  

https://franklinma.gov/sites/g/files/vyhlif6896/f/agendas/town_council_meeting_agenda_nov_17_2021.pdf

 

My notes from the meeting 11/17/21 -> 

https://www.franklinmatters.org/2021/11/recap-town-council-hears-about-waiting.html

Agenda for the Dec 1, 2021 Town Council meeting is not yet available. It will be shared as soon as it is.


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We are now producing this in collaboration with Franklin.TV and Franklin Public Radio (wfpr.fm) or 102.9 on the Franklin area radio dial.  


This podcast is my public service effort for Franklin but we can't do it alone. We can always use your help.

 

How can you help?

  • If you can use the information that you find here, please tell your friends and neighbors

  • If you don't like something here, please let me know


Through this feedback loop we can continue to make improvements. I thank you for listening.


For additional information, please visit Franklinmatters.org/ or www.franklin.news/


If you have questions or comments you can reach me directly at shersteve @ gmail dot com


The music for the intro and exit was provided by Michael Clark and the group "East of Shirley". The piece is titled "Ernesto, manana"  c. Michael Clark & Tintype Tunes, 2008 and used with their permission.


I hope you enjoy!

------------------


You can also subscribe and listen to Franklin Matters audio on iTunes or your favorite podcast app; search in "podcasts" for "Franklin Matters"


Talk Franklin - Thanksgiving and that extra piece of pie (audio)
Talk Franklin - Thanksgiving and that extra piece of pie (audio)


Monday, November 26, 2018

Franklin, MA: Town Council - Meeting - Nov 28, 2018

The published agenda and documents for the Franklin Town Council meeting scheduled for Wednesday, November 28, 2018. This meeting sets the tax rate for the fiscal year 2019, effectively completing the budget cycle that started a year ago and officially funds the Town's operation for July 1, 2018 through June 30, 2019. 

(Note: where there are active links in the agenda item, it will take you to the associated document)

You can also find the full set of documents in one PDF
http://www.franklinma.gov/sites/franklinma/files/agendas/town_council_meeting_agenda_for_november_28_2018.pdf

Agenda ItemSummary
Town Council Meeting Agenda
Meeting of November 28, 2018 - 7:00PM
1. ANNOUNCEMENTS
a. This meeting is being recorded by Franklin TV and shown on Comcast Channel 11 and Verizon Channel 29. This meeting may be recorded by others.
2. CITIZENS COMMENTS
a. Citizens are welcome to express their views for up to five minutes on a matter that is not on the agenda.  The Council will not engage in a dialogue or comment on a matter raised during Citizen Comments.  The Town Council will give remarks appropriate consideration and may ask the Town Administrator to review the matter.
3. APPROVAL OF MINUTES
None
4. PROCLAMATIONS/RECOGNITIONS
a. Swearing in of Firefighters
5. APPOINTMENTS
None
6. HEARINGS
6a. HEARINGS
Tax Classification Hearing
6b. HEARINGS
Zoning Bylaw Amendment 18-821: Zoning Map Changes On Or Near Plain Street, Pond Street, and Palomino Drive
7. LICENSE TRANSACTIONS
None
8. PRESENTATIONS/DISCUSSIONS
a. Snow Update
9. SUBCOMMITTEE REPORTS
a. Capital Budget Subcommittee
b. Budget Subcommittee
c. Economic Development Subcommittee
d. Town Administrator Search Committee
10. LEGISLATION FOR ACTION
10a. LEGISLATION FOR ACTION
Resolution 18-65: Conditional Offer of Town Administartor Position to Current Deputy Town Administartor (Motion to Approve Resolution 18-65- Majority Vote (5))
10b. LEGISLATION FOR ACTION
Resolution 18-66: Classification Tax Allocation - Residential Factor (Motion to Approve Resolution 18-66 - Majority Vote (5))
10c. LEGISLATION FOR ACTION
Resolution 18-67: Classification Tax Allocation- Open Space Exemption (Motion To Approve Resolution 18-67- Majority Vote (5))
10d. LEGISLATION FOR ACTION
Resolution 18-68: Classification Tax Allocation- Small Business Exemption (Motion to Approve Resolution 18-68 - Majority Vote (5))
10e. LEGISLATION FOR ACTION
Resolution 18-69: Classification Tax Allocation- Residential Property Exemption (Motion to Approve Resolution 18-69 - Majority Vote (5))
10f. LEGISLATION FOR ACTION
Zoning Bylaw Amendment 18-821: Zoning Map Changes On Or Near Plain Street, Pond Street, and Palomino Drive - 1st Reading (Motion to Move Zoning Bylaw Amendment 18-821 to a 2nd Reading-Majority Vote (5))
10g. LEGISLATION FOR ACTION
Zoning Bylaw Amendment 18-822: Changes to §185-20. Signs - Referral to the Planning Board (Motion to Refer Zoning Bylaw Amendment 18-822 to the Planning Board - Majority Vote (5))
10h. LEGISLATION FOR ACTION
Zoning Bylaw Amendment 18-823: Changes To Sign District Regulations - Referral to the Planning Board (Motion to Refer Zoning Bylaw Amendment 18-823 to the Planning Board- Majority Vote (5))
10i. LEGISLATION FOR ACTION
Zoning Bylaw Amendment 18-824: Changes to Sign District Overlay Map- Referral to the Planning Board (Motion to Refer Zoning Bylaw Amendment 18-824 to the Planning Board- Majority Vote (5))

10j. LEGISLATION FOR ACTION
Bylaw Amendment 18-825: Chapter 47, Alcoholic Beveralges- 1st Reading (Motion to Move Bylaw Amendment 18-825 to a 2nd Reading - Majority Vote (5))
10k. LEGISLATION FOR ACTION
Bylaw Amendment 18-828: Fees Bylaw Changes- 1st Reading (Motion to Move Bylaw Amendment 18-828 to a 2nd Reading- Majority Vote (5))
11. TOWN ADMINISTRATORS REPORT
12. FUTURE AGENDA ITEMS
13. COUNCIL COMMENTS
14. EXECUTIVE SESSION
None Scheduled
15. ADJOURN

Municipal Building, 355 East Central St, Franklin, MA
Municipal Building, 355 East Central St, Franklin, MA


Wednesday, November 22, 2017

In the News: Bellingham to set split tax rates

From the Milford Daily News, articles of interest for Franklin:
"This year’s tax rate is expected to hew closely to last year’s, town officials announced this week. 
Selectmen held a tax classification hearing on Monday, with the board opting to retain its current split between residential and commercial tax rates. The hearing was continued to Nov. 29, as issues related to power-plant payments in lieu of taxes must be settled. 
Town Chief Financial Officer Chris Laviolette said the proposed tax rate for a residential property would be $14.34 per thousand dollars of assessed value - the same amount as last year’s actual tax rate. He noted, though, that the number could be affected by a number of things, including abatements and exemptions for taxpayers who meet certain criteria (those who are veterans, blind or elderly, for example)."

Continue reading the article online (subscription may be required)
http://www.milforddailynews.com/news/20171121/bellingham-retains-tax-shift

At the tax rate hearing scheduled for Wednesday, Nov 29, the Town Council will make a couple of decisions. The two significant decisions would be (1) single rate vs. split tax rate and (2) agreeing with the Board of Assessors math to set the Franklin FY 2018 tax rate.

Franklin has historically had a single tax rate. To move to a split rate would mean that lowering the residential rate by $1 would raise the business/commercial rate by $4. The amount of commercial industrial property in Franklin is not sufficient to justify a split tax rate.

In advance of the actual calculations for this year, you can find the prior year numbers in the archives:

FY 2017
http://www.franklinmatters.org/2016/12/2-police-officers-sworn-in-tax-rate-set.html

FY 2015
http://www.franklinmatters.org/2014/11/the-town-council-reorganizes-sort-of.html

What does the Board of Assessors do?
http://www.franklinmatters.org/2017/08/election-prep-what-does-board-of.html


MA DLS has a nice Prop 2 1/2 explanation that can be found here
http://www.mass.gov/dor/docs/dls/publ/misc/levylimits.pdf

Monday, November 28, 2011

FM #101 - Tax Rate Info


This is #101 in the series for Franklin Matters. This covers tax rate information to prepare for the hearing set for the Town Council meeting on Weds Nov 30, 2011.

Time: 11 minutes, 15 seconds

Audio file -> https://player.captivate.fm/episode/0b02d48e-eb09-4412-8eb1-f82cc308a8da



The presentation to view along with the audio:



Show Notes:

This internet radio show or podcast is number 101 in the series for Franklin Matters.

In this session, you give me about ten minutes and I'll fill you in on what matters in Franklin.

In particular, we'll prepare for the Town Council meeting Wednesday, Nov 30th, where the big item on the agenda will be the annual tax classification hearing beginning at 7:10 PM.

This is the time and place where the Town Council determines (1) to keep a single tax rate or decides to implement a split tax rate and (2) sets the actual rate.

I have reviewed the data provided by the Board of Assessors for this hearing. I have also spent some time on the Dept of Revenue website updating my files with historical data on Franklin's budget, tax rate, etc.

I have updated the slides to share information that I think will help us all understand the overall situation.

Page 2 shows how the tax rate is calculated. Starting with the levy limit from 2011, 2.5% is added. Based upon Prop 2.5%, up to this amount can be added without a special override vote. The growth from last year is added. This provides a subtotal. Any prior debt exclusions are added and this provides the maximum levy limit. We can technically achieve this due to rounding factors on the rates. So we have what they call an “excess levy capacity” of $9,341. This leaves us with the tax levy, the amount that Franklin is authorized to raise this year. The amount is divided by the total assessed values of all the residential, commercial, industrial and personal property.

The tax assessors package for the Town Council meeting has a number of pages devoted to the property analysis of the residential, commercial/industrial (CIP) to get to this value. The major factor to remember is that due to the overall economic conditions, property values are declining. Divide any number by a declining number and the percent will increase.

Page 3 shows the tax rate as it has varied throughout the years from 1988 to 2012. I really shouldn't use a line to depict the point in time number for each year, but it is much easier to view the data this way. The tax rate high point was in 1997 when it was 14.21% and the low point (in the period shown) was 8.86% in 2007. I find it interesting that the tax rate dropped for ten years in a row (from its peak in 1997), has gone up for the past 5 years, and yet all you hear about is our tax problem?

There are many reasons for the increases shown. I don't have all the information to explain nor do I have the time this week to do so. What I can show on Page 4 is how the assessed value effects the tax rate. The blue bars in this case depict the NET change in assessed total value of all the properties in Franklin. From 1997, the peak tax rate, the overall assessed values rose and the tax rate dropped each year until the values peaked in 2007 (when the tax rate hit its low point). Since 2007, the assessed values have dropped and the rate has risen. With less of a tax base upon which to levy the expected tax revenue, guess what, the tax rate will increase. Simple math.

Well, Page 5 more clearly shows what our 'tax problem” is. The numbers on this chart depict the average tax bill for the period 1988 through 2012. As you can see from the red bars, in no year did the average tax bill decrease. The tax rate line from Page 4 is also shown here. Clearly, the tax rate whether it goes up or down seems to have little effect on the tax bill. It is always going up.

One alternative to increasing the single tax rate is to consider a split tax rate. On Page 6 - the table depicts the residential vs. commercial/industrial property mix since 1999. It has varied a little each year but generally around 80% residential and 20% commercial/industrial. The high point for residential was 82.12 in 1988 and the low point was 77.04 in 1993.

Page 7 shows the same numbers in a chart format. As there is so little variance, I think this more clearly depicts the small range that the commercial/industrial and residential split has had over the years.

Why did I spend time on the CI vs Residential split? I can hear some folks now saying “let's go with a split tax rate”. With kind of property mix we have, a split tax does not solve our problem. See, the split tax does not increase overall tax revenues, it only shifts the proportion of the pie that each party pays as shown on Page 8. For a single dollar decrease in residential property tax, the CI increase would need to be $4. I have said it before and it bears repeating again: We don't need to shift the tax burden from one class to another. We need to grow the overall tax base. We need a bigger pie.

The best opportunities for grow come from the underutilized CI space we have. You should be aware of the efforts of Bryan Taberner and others in the Department of Planning and Community Development. There are scheduled additional bylaw proposals to increase the zoning for biotechnology. This would be one potential area for good growth. We don't need additional residential properties which would further burden the school system. In particular, the residential growth we have seen recently has been mostly in the rental unit arena and that is even worse for Franklin than a single family home. We need healthy growth in CI properties to provide tax revenues and provide some jobs for local residents.

Page 9 provides information on the sources of the data that I used to prepare this.

Page 10 provides my contact information if you have any questions or would like to review this further.


---- ---- ----

This podcast is my public service effort for Franklin but I can't do it alone. I can use your help.

How can you help?

If you like this, please tell a neighbor.
If you don't like this, please let me know.

Thank you for listening.


For additional information, please visit Franklinmatters.org/
If you have questions or comments you can reach me directly at shersteve @ gmail dot com

The music for the intro and exit was provided by Michael Clark and the group "East of Shirley". The piece is titled "Ernesto, manana"  c. Michael Clark &Tintype Tunes, 2008 and used with their permission

I hope you enjoy!