Acton Forum to launch debate on property taxes

Now that our Town Meeting is behind us, we are going to focus on everyone's favorite topic, Acton's property taxes.

I've prepared the attached chart to show the last 10 years and the next three projected years of our average single-family property tax bill. The chart is to the right (you may need to scroll over).

The red bars represent the average home's value which runs between $400,000 and a bit over $500,000 (left-hand scale). The blue line at top is for the average single-family property tax bill, which ranges from about $6,000 per year in 2003 to over $10,000 per year in 2017 (see the scale on the right). On the bottom are the fiscal years 2003-2017. Data from 2003-2014 is from the Department of Revenue; 2015-2017 is from our recent Town Meeting warrant.

From 2003-2007, when the economy was doing well, both Acton's average home value and average property tax bill increased at about the same pace. But when our recession hit, property values declined or stagnated, but our property tax bills continued to rise.

There aren't many areas of public taxation where this phenomenon happens. Many town and state leaders decry the effects of Proposition 2 1/2 because it limits local government's ability to raise taxes more than 2.5% per year; what these leaders don't acknowledge is that, when times are tough, this also effectively guarantees them those increases when one might expect taxes to remain flat when home values do not rise (or even fall.)

Most other taxes are related to one's ability to pay or to the value of the item being taxed. The sales tax, for example, remains flat unless it is increased by the legislature and the increase is signed by the Governor. This happened a couple of years ago when Massachusetts went from a 5% sales tax on certain goods to 6.25%, with a local option for another 0.75%. The more you spend on a taxable good, the higher the tax.

The automobile excise tax is capped at 2.5% of the value of the vehicle. If the value declines, the tax declines.

The federal income tax is pegged so that higher earners pay a higher percentage. If your income goes down from one year to the next, you pay less.

But the local property tax is somewhat independent of a home's value or one's personal income. It just keeps going up no matter what (at least in Acton.)

So take a look at the attached chart, or you can view the spreadsheet and source information here: http://actonforum.com/sites/default/files/SF_values_and_taxes_2014.xls

The last spreadsheet column shows our tax as a percent of home value, which has risen from 1.36% in 2003 to 1.95% this year, and is expected to go to 2.04% in 2017. If the tax bill was related to the home's value and was set at 2003's 1.36%, then the average tax bill this year would be $6,849, a savings of almost $3,000 a year for the average Acton taxpayer.

NEW ARTICLE SERIES

There were some very interesting comments made at some recent town meetings about Acton's property taxes. Some town leaders simply do not buy the idea that our property taxes are too high.

I guess this is debatable, so Acton Forum is going to have this debate. We are going to ask current and former town leaders to explain why our property taxes are so high. I expect several to argue that they are not. Let's see what our town leaders think about this issue.

(If you have other questions you'd like us to pose, send them along or make a comment below...)

Our property taxes are not going up by chance or by Proposition 2 1/2. Each year, our town boards decide on spending levels, agree to union and other staff contracts, purchase new capital items, and set the tax rates. Our property taxes are decided by our leaders, and then confirmed by our town elections and Town Meeting. All of us are responsible for our tax rates.

The Town of Boxborough, our partner in schooling our children, has had flat property taxes for the last few years, and we think they will remain so for the next few years, give or take. So it isn't a given that taxes need to go up every year, at least not in other towns. (See "A Tale of Two Towns" at http://www.actonforum.com/blogs/allenn/tale-two-towns).

WHY WOULD IT BE FAIR TO PEG PROPERTY TAXES TO HOME VALUES?

Local government spending is out of control. It keeps going up by "COLAs" and new union contracts and new staff based on the ever-increasing bureaucracy. Few things are ever cut and budgets rarely if ever go down. If spending is going up every year, taxes must surely follow.

But most people's ability to pay do not similarly increase. So the tough choices that homeowners need to make to stay in Acton and pay rising bills are not forced on local town government. Local government spending goes up every year, driven by employee costs that increase like clockwork.

There aren't too many members of society who get what amounts to guaranteed raises in salaries and benefits each year, other than public employees. The only group that can continue to pay these rising property tax bills are these town and school employees because they get raises each year that more than cover them. Perhaps that is why so many of these employees show up to vote to approve higher spending at our annual Town Meeting. (See "Acton Town Meeting tainted by special interests," at http://www.actonforum.com/blogs/allenn/acton-town-meeting-tainted-specia...).

If local property taxes had to track home values, there would be less money available during lean times to grant the automatic pay increases, overtime pay, generous benefits, and increased staff that are the root cause of our spending increases. The simple fact is that in Acton, we budget to spend all available revenue. The more money that is available, the more we spend.

This series continues!

Part Two (Clint Seward): http://www.actonforum.com/story/why-are-actons-property-taxes-so-high-pa...

Part Three (Janet Adachi): http://www.actonforum.com/story/why-are-actons-property-taxes-so-high-pa...

Part Four (Peter Ashton): http://www.actonforum.com/story/why-are-actons-property-taxes-so-high-pa...

Part Five (Charlie Kadlec): http://www.actonforum.com/story/why-are-actons-property-taxes-so-high-pa...

Part Six - Conclusion (Allen Nitschelm): http://www.actonforum.com/story/why-are-actons-property-taxes-so-high-pa...

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Comments

A reader comments

[The reader asked to remain anonymous...]
Thanks for the latest Forum article. It has to be a concern that we seniors are paying a lot for something we never use...the school system. In a way, this is a tyranny of the majority. They pack the Town Meetings and vote more and more for the schools. And if we object, we are invited to get the hell out of town. Why should we? This is our home, and has been for nearly 40 years. We paid those taxes ourselves for many years and were part of a very expensive building program in Acton. The newcomers are benefitting from all the years we paid those taxes, and after 40 years, we deserve a break.

Allen Nitschelm has lived in Acton since 1998 and writes about fiscal issues at the
local and state level. He is a former member of the town's Finance Committee
and publisher of the Acton Forum.

Example of Another Towns Tax Rate

We have an RV lot in The Great Outdoors in Titusville Florida. Since the downturn in the economy the values of the homes and land have been decreasing. Much to our delight, the taxes have done the same. The level of services have not decreased, nor have any schools been closed.
I was born in Concord and raised in Acton until I left for college in 1956. The house I now live in in South Acton was built by my dad (with a little help from me) for less that the taxes we now pay. I returned several years ago. Paying the taxes were not an issue as long as I was working. Soon I will be forced to leave because of the taxes primarily. I'll be 80 next year, and it's time to stop working full time and enjoy!!! I work with water gardens, which can be hard on the body. I love the town and the folks who live here, as well as the town employees that I've met since returning.

David V. Sibel Sr.