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

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!

Sunday, December 5, 2010

Split tax vs. single tax rate

At the tax hearing set of the Dec 8th Town Council meeting, the annual discussion on a single vs split tax rate will come up again. Some information to help you determine which you would prefer can be found here:

1 - From a report done on a recent proposal for California:

To determine the economic impact of adopting a split-roll property tax, one must explicitly take account of how the split roll would affect the behavior of individuals and businesses who own commercial property. A wealth of economics research has demonstrated that, when confronted with an increase in state taxes, businesses seek to avoid their exposure to the higher tax. Taken together, these studies indicate that a 1 percent increase in state taxes will lead to a 0.25-0.31 percent reduction in the level of economic activity. If the reduction leads to corresponding decrease in employment opportunities for Californians, a 1 percent increase in taxes would result in the loss of about 43,000 jobs.
The economic impact of an increase in the taxation of business property depends on the extent to which affected businesses can pass-on the tax to their customers (through higher prices), renters (through higher rents), their employees (through lower wages), or their suppliers. If a firm cannot pass-on the tax to others, it may change its mode of operations to use less taxable property (capital goods, for example) or relocate its operations to other states. Either way, much (but not all) of the burden of higher taxes will be borne by others. Generally speaking, owners of capital are more likely than landowners to avoid the increased tax burden by shifting their investments elsewhere. Capital is highly mobile; land is very immobile, and cannot be relocated to locations with a more benign tax system.
The full report can be found here (PDF)

The article discussing this report can be found here

2 - Pennsylvania is making progress on a different kind of split tax rate. Their method is described as follows:

    The property tax is actually two types of taxes - one upon building values, and the other upon land values. This distinction is an important one, as these two types of taxes have significantly different impacts on incentive motives and development results.
    Pennsylvania's pioneering approach to property tax reform recognizes this important distinction between land and building values through what is now known as the split-rate or two-tier property tax. The tax is decreased on buildings, thereby giving property owners the incentive to build and to maintain and improve their properties, and the levy on land values is increased, thus discouraging land speculation and encouraging infill development. This shifting of the tax burden promotes a more efficient use of urban infrastructure (such as roads and sewers), decreases the pressure towards urban sprawl, and assures a broader spread of the benefits of development to the community as a whole.


You can read the full article here
Another summary of this new split rate process can be found here

3 - To come a little closer to home, the Boston Globe covers the issue with this article from Jan 2009

Among 37 area communities between Newton and Shrewsbury, 13 tax commercial properties at a different, higher rate than homes. Having a split tax rate provides flexibility in raising revenue amid fluctuating real estate values, officials say, and eases the tax burden on residents. But for small businesses struggling in a sour economy, it can feel like a double whammy.
"It's a really delicate balance between taxation of residents and businesses," said Peter Bulian, a selectman in Needham, where the commercial tax rate rose 3.4 percent, from $18.92 to $19.56 per $1,000 in assessed value, for this fiscal year, while the residential rate went up 2.6 percent, from $9.70 to $9.96.
"Last year, we had a business district with 40 percent vacancies," he said, referring to the New England Business Center on Highland Avenue. "They were hurting, and landlords pass along tax increases to their tenants."


4 - The United Regional Chamber of Commerce has also weighed in with 20 Reasons Not to Implement a Dual Tax Rate

Finally, I have the numbers to update my summary of the tax rate process posted last year. Last year's version can be found here. The slide cast combines a slide show presenting the data and charts with a recording of my explanation of what each slide depicts. I hope to have that update ready for Tuesday.

You can view the full set of documents for the Town Council agenda here (PDF)




Franklin, MA

Sunday, June 13, 2010

Refreshed: tax rate and split tax

This post has been refreshed. It was initially published on November 29,2009 in preparation for the Town Council meeting where the annual tax classification hearing would be held. As the tax rate and split tax is continuing to be an ongoing discussion, I want to bring this forward for the new readers and those who may have missed it the first time around.

The reporting from the Town Council meeting Wednesday Dec 9, 2009 can be found here:
http://franklinmatters.blogspot.com/2009/12/town-council-mtg-smry-120209.html

This internet radio show or podcast is number 50 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 (Dec 9, 2009) where the big item on the agenda will be the annual tax classification hearing

Time: 10 minutes, 47 seconds



Audio file -> https://player.captivate.fm/episode/970b581a-5a5f-44b4-ada9-ee33bdf12c8d

Session Notes:

This internet radio show or podcast is number 50 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 this Wednesday 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 to keep a single tax rate or decides to implement a split tax 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 obtaining some historical data on Franklin's budget, tax rate, etc.

I have prepared a few slides to share some information that I think can help understand the overall situation to get ready for the meeting Wednesday.

Page 2 shows a table showing 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 3 shows the same numbers in a chart format. As there is so little variance, I think this is more clear and understandable than the table of numbers.

Page 4 shows the tax rate as it has varied throughout the years from 1988 to 2009. 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 has dropped for nine of the last twelve years and yet all you hear about is our tax problem?

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 2009. As you can see from the reddish 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.

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 6 is how the assessed value effects the tax rate. The reddish bars in this case depict the NET change in assessed total value of all the properties in Franklin. Since 2006 the commercial industrial (CI) assessed values have been in a decline. In 2006 and 2007, the new grown for CI covered the decline in valuation so there was a net grown for CI. But for 2008, 2009 and for FY 2010, the new growth has not been able to cover the decline in valuation. More importantly, on the residential side, the decline in valuation has far exceeded the new growth. Hence the overall decline in total assessed values has dropped from 4.9 billion in 2007 to 4.3 billion for FY 2010. With less tax base upon which to levy the same amount of tax revenue, guess what, the tax rate will increase. The decline in overall assessed values has driven the increase for 2008, 2009 and will do so again in 2010.

Yes, 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 7. For a single dollar decrease in residential property tax, the CI increase would need to be $4. We don't need to shift the tax burden from one 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. They are busy working to market the attractiveness of Franklin for CI uses. This is where we need to develop. We don't need additional residential properties which would further burden the school system. We need healthy growth in CI properties to provide tax revenues and maybe even provide some jobs for local residents.

Page 8 and 9 provide information on the sources of the data that I used to prepare this. As well as contact information if you have any questions or would like to review this further.

One page in the appendix that charts the “free cash” to “free cash as a percent of the overall Town budget. At the end of the last council meeting, Judy Pfeffer asked Jeff Nutting for some information on the history behind “free cash”. I expect Jeff to come back with his answer but while I was putting together my analysis, I found these numbers at the MA DOR website that may help answer part of Judy's question. I think the current administration has done very well in reducing the fluctuations that can be seen over the years. The big spike in FY 2001 I believe is likely related to the settlement that the Town won. It ended up in “free cash” before the Town Council moved it to the Stabilization Fund. (Note: It is my mistake that this paragraph of text did not get recorded. It does go along with the one page that did make it to the appendix.)

For the week ahead:
  • Finance Committee meeting on Tuesday
  • Town Council meeting Wednesday
  • Holiday Stroll on Thursday sponsored by the Downtown Partnership

I would encourage you to participate in these events.

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

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 tell me.
Thank you for listening.

For additional information, please visit Franklinmatters.blogspot.com/

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 East of Shirley. The piece is titled "Ernesto, manana" c. Michael Clark & Tintype Tunes, 2008 and used with permission.


Tuesday, December 8, 2009

In the News - Bellingham split tax

 Note that the split tax rate in Bellingham was changed to increase the residential rate and help businesses. Franklin doesn't need to do this, everyone already pays the same tax rate.
Selectmen voted unanimously last night to give businesses a slight break on property taxes.

The board raised the tax burden on homeowners from 89 percent to 90 percent as it tries to find a balance between the homeowners and businesses.

With the shift, taxes for homeowners will be set at $11.92 per $1,000 assessed value, up from last year's $10.44. For the "average" Bellingham homeowner, with a home valued at $275,984, this will yield a $105 yearly tax increase, selectmen said.
Read the full article in the Milford Daily News here


Tuesday, December 1, 2009

In the News - split tax vs. single tax rate

"Changing to a split rate does not in and of itself raise a penny of additional tax revenue to the town," council Vice Chairman Stephen Whalen said. "Rather it just shifts the overall tax burden, such that businesses pay more of the overall tax levy."
He compared Franklin to Milford and Bellingham, towns with split tax rates, and said that Milford businesses are taxed 73 percent more than residents, and Bellingham's commercial properties are taxed 46 percent more than its residential properties.
"A single tax is more business friendly because it results in a lower property tax rate paid by businesses in towns with a single rate," he said.

Franklin to vote on split vs. single tax rate

from The Milford Daily News Homepage RSS


For my analysis on the tax rate you can view my slidecast here



Sunday, November 29, 2009

FM #50 - What Matters in Franklin, MA

This segment was joined with a slideshow to create a slidecast. The full production can be found here:
http://franklinmatters.blogspot.com/2009/11/fm-50-slidecast.html


This internet radio show or podcast is number 50 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 this Wednesday where the big item on the agenda will be the annual tax classification hearing


Time: 10 minutes, 47 seconds



MP3 File

Session Notes:

Music intro
My intro
FM #50



This internet radio show or podcast is number 50 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 this Wednesday 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 to keep a single tax rate or decides to implement a split tax 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 obtaining some historical data on Franklin's budget, tax rate, etc.


I have prepared a few slides to share some information that I think can help understand the overall situation to get ready for the meeting Wednesday.


Page 2 shows a table showing 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 3 shows the same numbers in a chart format. As there is so little variance, I think this is more clear and understandable than the table of numbers.


Page 4 shows the tax rate as it has varied throughout the years from 1988 to 2009. 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 has dropped for nine of the last twelve years and yet all you hear about is our tax problem?


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 2009. As you can see from the reddish 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.


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 6 is how the assessed value effects the tax rate. The reddish bars in this case depict the NET change in assessed total value of all the properties in Franklin. Since 2006 the commercial industrial (CI) assessed values have been in a decline. In 2006 and 2007, the new grown for CI covered the decline in valuation so there was a net grown for CI. But for 2008, 2009 and for FY 2010, the new growth has not been able to cover the decline in valuation. More importantly, on the residential side, the decline in valuation has far exceeded the new growth. Hence the overall decline in total assessed values has dropped from 4.9 billion in 2007 to 4.3 billion for FY 2010. With less tax base upon which to levy the same amount of tax revenue, guess what, the tax rate will increase. The decline in overall assessed values has driven the increase for 2008, 2009 and will do so again in 2010.


Yes, 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 7. For a single dollar decrease in residential property tax, the CI increase would need to be $4. We don't need to shift the tax burden from one 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. They are busy working to market the attractiveness of Franklin for CI uses. This is where we need to develop. We don't need additional residential properties which would further burden the school system. We need healthy growth in CI properties to provide tax revenues and maybe even provide some jobs for local residents.

  
Page 8 and 9 provide information on the sources of the data that I used to prepare this. As well as contact information if you have any questions or would like to review this further.


One page in the appendix that charts the “free cash” to “free cash as a percent of the overall Town budget. At the end of the last council meeting, Judy Pfeffer asked Jeff Nutting for some information on the history behind “free cash”. I expect Jeff to come back with his answer but while I was putting together my analysis, I found these numbers at the MA DOR website that may help answer part of Judy's question. I think the current administration has done very well in reducing the fluctuations that can be seen over the years. The big spike in FY 2001 I believe is likely related to the settlement that the Town won. It ended up in “free cash” before the Town Council moved it to the Stabilization Fund. (Note: It is my mistake that this paragraph of text did not get recorded. It does go along with the one page that did make it to the appendix.)



For the week ahead:
  • Finance Committee meeting on Tuesday
  • Town Council meeting Wednesday
  • Holiday Stroll on Thursday sponsored by the Downtown Partnership

I would encourage you to participate in these events.

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

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 tell me.
Thank you for listening.


For additional information, please visit Franklinmatters.blogspot.com/


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 East of Shirley. The piece is titled "Ernesto, manana" c. Michael Clark & Tintype Tunes, 2008 and used with permission.

Thursday, November 20, 2008

"they would favor a single tax rate"

GHS
Posted Nov 19, 2008 @ 11:59 PM

FRANKLIN —

Town Council last night unanimously voted to put $600,000 of the town's $2.3 million recently certified free cash into reserves.

Before approving the appropriation, Councilor Tom Doak observed that the move seemed to be "rushing to take the money off the table."

"I'm just trying to be conservative given what I see coming down the road," said Town Administrator Jeffrey D. Nutting, who proposed the move.

The council's policy is to keep at least $5 million in the town's stabilization account, which had $4.1 million in it prior to last night's appropriations, Nutting said.

The council also transferred $300,000 from hotel tax revenue into the stabilization, putting the total back at $5 million.

The $300,000 can be used in the case of a mid-year reduction in fiscal 2009 local aid, to pay for unemployment costs, or to pay off the library repairs, for instance, Nutting said.

Read the full article in the Milford Daily News here


Wednesday, November 19, 2008

live reporting - tax rate

Part one of the two part hearing process to set the rate

Franklin around an 80/20 split between residential/commercial

Need to get the valuation to combine with the rate to determine the tax bill

Likely that the assessed valuations will decline, so a rate increase may not equate to an increased tax bill.

Q - would like to highlight that with a rate increase the valuations may be going down so there really wouldn't be an increase in the actual bill.
A - over 10 years the average bill has increased $134/135 dollars and that includes the debt exclusions for the three schools that are rolled into that amount.

Q - how much we can spend is capped by the commonwealth
A - yes, that is correct

Board of Assessors: Kevin Doyle, Vincent Debaggis, Bob Avakian, Ken Norman

Decided to offer a workshop to the board to help provide information on the process as to how the numbers are calculated. Offer still out there.

Evaluation done in accordance with MA Dept of Revenue

Market data generally available for residential properties (single family and condominiums). Commercial and industrial properties are also based upon market value but with less volume other considerations come into the calculations.

Values as of January 2007.

Discussion over the next several weeks will be on a single versus split tax rate
50% of the commercial/industrial base is comprised of the mall and the two industrial parks.
Doesn't necessarily mean that mom/pop shops account for the other 50% as East Central, Grove St and other sections of town do contain other commercial/industrial properties.

Estimate on Commercial/Industrial assessed value change has already changed from the printed copy. Updated numbers will be available for the next meeting.

Doak - So the amount of new revenue which is the only way we can increase revenue without going over the 2 1/2 % is going down.
Nutting - yes, that is correct.

Bartlett - do you have a sense for the vacancies?
Doyle - The survey data is collected early in the year and available by the summer. We do receive foreclosure deeds when they are recorded.

Doyle - getting about 66% return on the survey, up over the last 5 years from about 50%. The owners have an incentive to provide the data otherwise they loose standing if they attempt a challenge. The form is easier to read.

Doyle - about 500 commercial/industrial entities, about 11,000 single family residences

Whalen - how strong is the correlation between delinquencies and vacancies?
Norman - that is really a tax collector question
Nutting - I think they are sending out less delinquency notices. We are making 12-14% interest and at the end of the day, we collect 100% of our taxes. Eventually we get it all as we are first in line.
Cerel - Even if you have vacancies, you need to be paid full and current in taxes to challenge, you also have to have provided the input required in order to have standing to challenge it.

Feeley - Why are you not providing a position as a board on the split vs. single tax rate?
Norman - we as a Board decided not to make a formal recommendation starting this year

McGann - why the change this year?
Avakian - A prior concilor challenged the board recommendation, since there no clear direction on whether the Tax Assessors should really make a recommendation. It is clear that the Town Council has the final decision. If you ask us, we will provide our personal recommendations but we will not make a recomendation as a Board.

McGann - what is your recommendation?
Avakian - I would go single
Debaggis - I would go single
Norman - If I were in your shoes, I would go single
Doyle - I would go single

Thursday, December 27, 2007

20 Reasons to Not Implement a Dual Tax Rate

Thanks to the President of the United Chamber of Commerce, for providing this information:

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 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 decrease, each 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.
_____________________________________________________________________________
United Chamber of Commerce / 620 Old West Central Street / Suite 202 / Franklin, MA 02038
Ph: (508) 528-2800 / Fax: (508) 520-7864 / Web: www.unitedchamber.org/