A Taxing Monday

Taxing

I have been asked quite a few times lately about the loss of tax revenue in town if an abatement is given.

Some of the questions relate directly to the turbine issue, others have come from the problems stemming from the business operations in the center by the water front, and a couple have been simply related to the amount of taxes people have to pay (actually get these questions every year around this time).

How much money does the town lose when a tax abatement is handed out?

Well in the year the abatement is given, the loss is whatever the amount of the abatement, and even then the amount lost is technically $0.  

This is the purpose of the overlay account.  You may have read about it.  If a property owner can establish to the Board of Assessors that the assessed value of the property is too high for whatever valid reason, the taxes are abated.  The amount of tax paid is rebated.  The money comes from the overlay.  

Technically, the town only loses the potential future use of overlay money. The amount of the overlay is in fact raised on the tax levy each year.  You have all ready raised the "refund".  

Going forward however, the town does not lose any taxes.  The reduced tax lost from one taxpayer is simply shifted among the remaining tax base.   Each year under Prop. 2 1/2 the town is allowed to collect a certain amount in taxes.  The amount any individual taxpayer pays is based on the value of the individual's property.  The total amount levied on a town wide basis however remains the same.

The burden is shifted, the amount that can be collected is not diminished.  

Value of property simply determines what you pay, not the amount collected.  

That's why every year I get a kick out of the emphasis placed on the "tax rate".  Communities with very low tax rates usually have very high property values and vice versa.  There are a few wrinkles that can be added to that statement but for the most part, as a general rule, it holds true.

If a town under Prop 2 1/2 can raise $2,000,000.00 and there are 2,000 property owners in the town with each parcel of equal value, at a single rate, each will pay the same amount, $1,000 apiece.  If every property is worth $100,000, the tax rate will be $10 per thousand of valuation.  The concept revolves around total combined value of all the property in town.

If that same town under Prop 2 1/2 can raise the same $2,000,000.00 and there are the same 2,000 property owners in the town, with each parcel of equal value, at a single rate, each will still pay the same amount, $1,000 apiece.  If every property is worth $200,000 however the tax rate will only be $5 per thousand of valuation.

The amount to be paid doesn't change, just the "cost per unit".  A bit simplified but will do.

A lower tax rate does not equate to lower taxes collected by the town.

If your neighbor's property decreases in value, but yours does not, your neighbor will pay less and yes, you will pay more.  The town however, still has the ability to collect the same amount.

Monday


Another Monday morning and another work week beginning.  Tough start this morning.  It is one of those days where you actually need to wake up enough to be able to make that coffee to help you wake up.

there was a good meeting this weekend for the Charter Commission Petition Drive.  I really hope everyone can see the potential in a Charter Commission.  I have had conversations with some who see danger lurking behind every corner on the concept.

I just don't see it.  Yes its success depends on who runs for the Commission and gets elected.  Yes there are a whole lot of pitfalls that the Commission could step into.  Yes it could be the Charter will not get passed by the voters when submitted.

For the most part, the talk has been very positive.  The negative bits have usually revolved around specific "potential" changes.  More specifically, people concerned about their very specific concerns.

Some want guarantees that this or that will or will not happen.  There are no guarantees.  A Commission, if it does its job, is going to look into every single aspect of town government.  Not everything will change, but neither will everything remain the same.

There most definitely will be proposals for change.  How do I know that?  It has been a quarter of century since the last significant review and limited changes to a system originally implemented approximately 80 years ago.

What will change.  I do not know.

The one thing I am certain of at this point, is this does need to be done.  Get the matter to the voters.

The issue needs to be put to the ballot to see what the people of our town think.  Do we want a charter commission?  Do we need to look at our town government, study it; and, where needed change it?

The only way to do that is collect the signatures to get it on the ballot.