NewburyportNews.com, Newburyport, MA

December 11, 2012

Breaking down the layers of the rising tax rate

Amesbury City Notebook
Mac Cerullo

---- — Tonight, the City Council will hold its annual tax classification hearing during which councilors will likely vote to maintain a single tax rate for both residential and commercial properties.

As far as decision-making goes, that’s the only thing that will happen. The councilors don’t have the power to reduce the tax rate themselves, and there is little interest among the councilors in splitting the rate. The last time they did that, the council nearly started a riot in City Hall.

Regardless, there will likely be a large crowd in attendance to voice their displeasure toward Mayor Thatcher Kezer and the councilors for allowing the tax rate to increase again. The news that the tax rate would top the $20 threshold this year has caused frustration in Amesbury to boil over for some; and even if nothing can be done to lower the tax rate this year, tonight’s meeting will still serve as a forum for those who are unhappy about the tax rate to have their voices heard.

As for those of you who are wondering what all the fuss is about, this is what the issue boils down to.

First, you have the tax rate, which is determined by a mathematical formula in which you take the total dollars raised and appropriated in taxes and divide it by the city’s total property value in thousands. Amesbury’s tax rate for next year is expected to be $20.24 per thousand, which is $1.11 higher than last year’s rate.

Then, you have the tax bill, which is the actual amount that property owners pay in taxes annually. The tax bill is determined by multiplying the tax rate ($20.24) by the value of one’s property in increments of $1,000.

For the upcoming fiscal year, the average residential property in Amesbury — including single-family, multi-family, condominiums and apartments — will be worth $254,465. That means the average tax bill for Amesbury residents will be approximately $5,150.

Most of the attention has focused on Amesbury’s high residential tax rate, which was the 10th highest in the state last year and currently sits as the fifth highest this year with 134 communities still to report their new rates as of press time.

The calls for meaningful tax relief measures have grown louder in the past week, and the City Council even met for a special meeting last night to discuss the merits of using the city’s free cash in the future to drive the rate down.

Kezer’s response to all of this is that the tax rate isn’t what’s important, and that the tax bill is what people should be focusing on. He even went so far as to say “tax rates don’t matter, tax bills do” in a recent letter to the editor published by The Daily News.

That quote didn’t go over well with many residents, but the truth is that there is sound reasoning behind the mayor’s comments, even if you disagree with the premise.

If the tax rate is determined by the total dollars taxed divided by the total property values, then lower property values would naturally result in a higher rate, assuming the total dollars taxed stayed the same or went up. But at the same time, lower property values also mean a smaller amount to multiply the higher rate by, so the resulting tax bill usually winds up being close to the same amount.

In Amesbury’s case, the average residential tax bill for next year for all types of property is increasing by $73.04, and by $128.44 for single-family properties. Amesbury has increased spending in the past year, particularly in the school system, which would at least partially explain this year’s increase.

The problem with the mayor’s comments beyond their tone is that it ignores the problem of perception that high tax rates create. Tara Donahue-Scott, an Amesbury resident who works as a real estate agent at Re/Max on the River, told me that buyers moving to the area frequently write off Amesbury based on the tax rate alone, and that most of her co-workers deal with similar hurdles trying to sell Amesbury homes.

“It’s a lovely town with great schools and there are a ton of things that this town has to offer,” Donahue-Scott said. “However, the first knee-jerk reaction from anyone moving to the area is ‘too high taxes.’”

That’s a problem. It’s a problem that can’t be quantified by a mathematical equation, but it carries huge ramifications for the city nonetheless. You can point to all the great things that Amesbury has to offer, and you can make all the arguments about the tax rate vs. tax bill that you want, but at the end of the day, if people only see that tax rate, then everything else becomes moot.

So what should the city do?

Taxes in Amesbury have been an issue for a long time, and they’re likely going to remain a hot-button issue for the foreseeable future. There’s no easy fix, and there are a lot of factors that are out of the city’s control.

Regardless, if the city and its residents can engage in a meaningful dialogue on this issue, then progress can be made and the discussion can become less venomous.

As with any political issue, there are always going to be people who see things from different angles. That’s why it’s important that both sides see the whole story and can at least understand where the other side is coming from.

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The following meetings are scheduled this week and are open to the public:

Today

City Council, 7 p.m., City Hall Auditorium, Friend Street

Thursday

School Committee Policy Subcommittee, 9 a.m., superintendent’s office

Board of Assessors, 5:15 p.m., City Hall Auditorium

Monday

Conservation Commission, 6:30 p.m., Amesbury Health Center, 24 Morrill Place

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Mac Cerullo covers Amesbury for The Daily News. He can be reached at 978-462-6666, ext. 3238, or at mcerullo@newburyportnews.com. Follow Mac on Twitter at @MacCerullo.