This internet radio show or podcast is number 79 in the series for Franklin Matters.
In this session, you give me about ten minutes (actually 13 in this case) and I'll fill you in on what matters in Franklin.
Show notes:
In particular, we'll prepare for the Town Council meeting Wednesday, Dec 8th, 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 updates last year's 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 2010, 2.5% is added. Based upon Prop 2.5%, up to this amount can be added without a special override election. 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 $35, 647. 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 package has a number of pages devoted to the property analysis of the residential, 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 2011. 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 4 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 reddish bars in this case depict the NET change in assessed total value of all the properties in Franklin. Since 2006 the commercial industrial 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, 2010 and for FY 2011, 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 4.1 billion for FY 2011. With less of a 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, 2010 and will do so again in 2011.
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 2010. 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.
Page 6 - 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 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. 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. The Economic Summit held at the former Putnam facility on Washington is a key example of this effort. 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. 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.
One page in the appendix that charts the “free cash” to “free cash as a percent of the overall Town budget. 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.
For the week ahead:
Town Council meeting Wednesday
Cyberbullying event at Dean College on Thursday. Perry Aftab and the teenangels from the Franklin School District will be presenting an information for parents on bullying.
I would encourage you to participate in these events.
Thank you for listening!
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 and Tintype Tunes, 2008 and used with their permission
I hope you enjoy!
Note: email subscribers will need to click through to Franklin Matters to view this slidecast.
Franklin, MA
Tuesday, December 7, 2010
"one of the issues is no one can tell us what the ballpark is"
Jessica Strunkin, manager of public policy and public affairs for the 495 MetroWest Partnership, said she would like to see businesses and government work together to solve the problem.
"I think some type of collaborative approach would be more efficient," Strunkin said after the meeting. "Everyone can pool their resources and it might cost less."
Jack Lank, president of the United Regional Chamber of Commerce, said public outreach will be key to coming up with a manageable funding plan.
"I think (a stormwater utility) is almost inevitable," he said after the meeting. "No matter how we look at it, this is an unfunded mandate and we're going to be footing the bill."Read the full article in the Milford Daily News
Prior posts on the proposed EPA regulations about storm water
http://franklinmatters.blogspot.com/2010/08/epa-storm-water-proposal-information.html
http://franklinmatters.blogspot.com/2010/06/epa-storm-water-proposal-information.html
http://franklinmatters.blogspot.com/2010/05/epa-storm-water-proposal-information.html
Franklin, MA
"Official statistics underestimate obesity"
From Business Insider we find these 15 shocking facts about obesity:
Franklin, MA
Obesity is reaching epidemic proportions. It’s the plague of the 21st century.
Meanwhile, America’s become so politically correct that it’s almost impossible to discuss the ”sensitive” issue in depth. Official statistics underestimate obesity, and interest groups are content this issue isn’t addressed properly.
Insider Monkey, your source for free insider trading data, compiled 15 shocking facts that you didn’t know about obesity.
Click here to see the facts >
Franklin, MA
Monday, December 6, 2010
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:
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:
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
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
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
Franklin, MA: Town Council - Agenda - 12/8/10
A. APPROVAL OF MINUTES – November 17, 2010
B. ANNOUNCEMENTS
C. PROCLAMATIONS/RECOGNITIONS
D. CITIZEN COMMENTS
E. APPOINTMENTS
F. HEARINGS - Annual Tax Classification Hearing – 7:10 PM
G. LICENSE TRANSACTIONS
H. PRESENTATIONS/DISCUSSIONS
I. SUBCOMMITTEE REPORTS
J. LEGISLATION FOR ACTION
1. Resolution 10-70:Classification Tax Allocation– Residential Factor
2. Resolution 10-71:Classification Tax Allocation – Open Space Exemption
3. Resolution 10-72:Classification Tax Allocation – Small Businesses Exemption
4. Resolution 10-73: Classification Tax Allocation – Residential Property Exemption
5. Resolution 10-74: Appropriation – Capital 2011
6. Resolution 10-75: Appropriation – Fire Truck
7. Resolution 10-76: Authorization to Borrow – Repairs & Remodeling to Various School Buildings
8. Resolution 10-77: Appropriation – Demolition of House on DelCarte Property
K. TOWN ADMINISTRATOR’S REPORT
L. OLD BUSINESS
M. NEW BUSINESS
N. COUNCIL COMMENTS
O. EXECUTIVE SESSION – Negotiations, Litigation, Real Property, as May Be Required
P. ADJOURN
Franklin, MA
B. ANNOUNCEMENTS
C. PROCLAMATIONS/RECOGNITIONS
D. CITIZEN COMMENTS
E. APPOINTMENTS
F. HEARINGS - Annual Tax Classification Hearing – 7:10 PM
G. LICENSE TRANSACTIONS
H. PRESENTATIONS/DISCUSSIONS
I. SUBCOMMITTEE REPORTS
J. LEGISLATION FOR ACTION
1. Resolution 10-70:Classification Tax Allocation– Residential Factor
2. Resolution 10-71:Classification Tax Allocation – Open Space Exemption
3. Resolution 10-72:Classification Tax Allocation – Small Businesses Exemption
4. Resolution 10-73: Classification Tax Allocation – Residential Property Exemption
5. Resolution 10-74: Appropriation – Capital 2011
6. Resolution 10-75: Appropriation – Fire Truck
7. Resolution 10-76: Authorization to Borrow – Repairs & Remodeling to Various School Buildings
8. Resolution 10-77: Appropriation – Demolition of House on DelCarte Property
K. TOWN ADMINISTRATOR’S REPORT
L. OLD BUSINESS
M. NEW BUSINESS
N. COUNCIL COMMENTS
O. EXECUTIVE SESSION – Negotiations, Litigation, Real Property, as May Be Required
P. ADJOURN
Franklin, MA
"new systems to control the runoff"
"This (meeting) is to keep the information flowing," Bellingham Town Administrator Denis Fraine said. "The proposed regulations are going to be costly, and the more we understand what our limitations are, the better it will be in the long run from a financial perspective."
Milford Selectman Brian Murray said the presentation is important for town officials and business owners, but efforts to fight the regulations need to continue.
"This is almost like the tail wagging the dog," Murray said. "It means we buy into these regulations, and I refuse to buy into the science of it and the unfairness of targeting three towns."
Read the full article in the Milford Daily News:
Three meetings set to review stormwater mandate for Bellingham, Milford, Franklin
Prior posts on the proposed EPA regulations about storm water
http://franklinmatters.blogspot.com/2010/08/epa-storm-water-proposal-information.html
http://franklinmatters.blogspot.com/2010/06/epa-storm-water-proposal-information.html
http://franklinmatters.blogspot.com/2010/05/epa-storm-water-proposal-information.html
Franklin, MA
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