Due to recent articles in The Westfield News, online Facebook posts, and the large turnout at the FY18 Budget Public Hearing, I have received several questions from residents about Property Taxes, and I’ve heard feedback from some friends and neighbors saying Councilor so-and-so says “Flaherty’s full of malarkey”. Some councilors who are seemingly worried about their recent vote to approve a budget with an almost 6% tax increase, want to take credit for last year’s tax break by claiming the “tax shift” voted by the City Council in December played a major role. This just isn’t so, and anyone that knows how to do the math can figure that out. These same councilors and administrators are telling some taxpayers “don’t worry about it, we’ll take care of you like we did last year”. This is certainly possibly, but highly unlikely given that it would take about $4 million out of our limited savings accounts.
Last July, I wrote an article for The Westfield New entitled “Largest Tax Increase in Recent History” – you can still find this in the online edition of The Westfield News. In that article I discussed the budget and taxes for FY17. At that time, I noted we were looking at a 3.47% tax increase worth $2.372 million, plus new hotel and meals taxes, plus the use of Free Cash, and that we were still short and would have to make it up with savings or increases in local revenues (fees, excise taxes, etc…).
That’s exactly what we did later in the year. In December, at tax setting time, the city finance team adjusted some local revenues a bit, and I made a motion for a resolution to the Mayor requesting a Free Cash allocation of $2.372 million to reduce property taxes. That resolution was broadly supported by the City Council, and after negotiations with Chair of Finance Councilor Paul, and President Bean, the Mayor subsequently sent a request to the City Council to do just that. That led directly to the ZERO TAX INCREASE. No magic, no hidden mirrors, a $2.372 million draw from savings to offset the tax increase discussed back in my “Largest Tax Increase in Recent History” article.
The Tax Shift plays no part at all in the overall Property Tax collected – all it does is move the burden from Commercial taxpayers to Residential taxpayers or vise versa – hence the name “Shift”. Last year, the City Council voted to move the Shift Factor from 1.65 to 1.66 as proposed by Councilor Harris. This put more burden on businesses and gave the homeowners a small break. For the average homeowner, this shift was worth $11.35 for the entire year – less than $1 per month. Again, this didn’t change the total tax collected, it only shifted who paid it.
In reality, what made all the difference, and what led directly to the ZERO TAX INCREASE was the use of $2.372 million from savings.
This year, my pre-budget-vote articles talked about the 6% tax increase assumed in the budget – an increase of $4.166 million (notice the uptrend compared to the $2.372 million last year). The same math principles apply. To stop that massive tax increase like some councilors are claiming, we’d have to find $4.166 million in budget cuts or other money to offset the increase. Last week, the City Council only trimmed about $433,000 from the budget to bring the tax increase down to the 5.4% neighborhood. That leaves us $3.733 million to go.
We only have about $7.8 million in savings (after already taking $450,000 out to balance this new budget), so taking another $3.733 million out is not really a good idea. Maybe we’ll hit the lottery, or maybe new growth will come in higher than the $1 million already assumed in the budget, or maybe they’ll be an unexpected massive amount of new Free Cash, or maybe we’ll get more state aid? I guess it’s possible. But, I wouldn’t bet the farm on it.
Just so you know, the Finance Committee specifically asked about potential new Free Cash during the budget review process. We were told that nobody’s expecting a big number. We also asked about the property valuations and were told that our Assessor still sees a rather flat real estate market.
So, wrapping up, it’s the same deal as last year except the numbers are bigger, we have over $2 million less in savings, and we’re getting much closer to the maximum we can tax under Prop 2 ½ as mentioned in last week’s article. The city is headed in the wrong direction.
If anyone has any questions or concerns about this situation, I’d be happy to try to address them.
Regards,
Dave Flaherty [email protected]
