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December 12, 2012

Kezer defends stand on tax rate

Mayor argues healthy reserves will serve the city well

AMESBURY — Despite mounting pressure, Mayor Thatcher Kezer yesterday continued to defend his decision not to use free cash to drive down the tax rate.

In advance of last night’s annual tax classification hearing, Kezer said he believes the community’s free cash could be better utilized elsewhere and that directing it toward offsetting the latest tax increase amounted to “poor financial planning” and could result in financial instability.

“It’s not a wise use of our free cash, because one, it creates a structural deficit the following year,” Kezer said. “And secondly, we’ve worked hard in order to start building our reserves to take care of certain issues.”

Kezer said a healthy reserve fund would allow the city to respond to unexpected financial hurdles in the short term while helping the city secure better borrowing rates for the next 20 years through its newly raised bond rating.

He added that having high reserves would allow the city to take advantage of any state or federal grants requiring a local match, including “some significant grants” for the redevelopment of the Lower Millyard.

The mayor has repeatedly said that he thinks the tax bill is a more important number than the tax rate, but that has been a difficult concept to communicate to taxpayers, who have become fixated on the new tax rate of $20.24.

Since the new rate was announced a couple of weeks ago, there have been calls from all corners of the city to use a portion of its free cash funds to drive the rate back down below the $20 threshold, if nothing else but to combat the perception that Amesbury is too expensive.

On Monday night, the City Council sent Kezer a resolution expressing its disappointment over the situation and urging him to reconsider his stance. Councilors said they understood the fiscal drawbacks of using free cash to offset the tax rate, but argued reassurances needed to be sent to taxpayers.

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