NewburyportNews.com, Newburyport, MA

December 12, 2012

Furor over rising tax rate

City Council OKs rate, but vows to take control of spending

By Mac Cerullo
Staff Writer

---- — AMESBURY — Saying it is time to cut spending, the City Council last night begrudgingly approved the new single tax rate of $20.24 for the coming year with a vow to bring costs under control in the next budget season.

The vote came as more than 50 residents packed City Hall Auditorium to voice their displeasure during the city’s annual tax classification hearing, which saw the council maintaining one rate for both the residential and commercial property in the city.

The discussion lasted late into the night, with the main issue at hand — whether to have a single tax rate or a split rate — lost in the overall debate over the tax rate itself and how to bring it down in the future.

While a few residents suggested finding creative ways to raise revenue outside of raising taxes — one idea in particular was to build solar farms all over the city on land that isn’t being used for anything else — largely the consensus was that spending in Amesbury had grown out of control.

“We’re going to be cut on local aid, which is going to put a further burden on our property taxes,” Councilor Joseph McMilleon said. “This can’t continue, the housing card is going to fall, it’s just a matter of time, so I see our only option is to stop spending.”

Most of the residents were particularly unhappy about the raises that city employees have received in recent years. Councilor Jim Kelcourse especially questioned the mayor about newly hired Assistant Superintendent of Schools Deirdre Farrell.

Farrell, who is leaving Newburyport schools to join Amesbury, will take over the duties previously held by former business administrator Mike Bergeron, among other duties. Bergeron earned $94,000 annually, while Farrell’s salary will be $129,000, which is what she had earned as assistant superintendent in Newburyport.

“We were able to get a franchise player from Newburyport,” Kezer said, highlighting Farrell’s role in Newburyport’s future school construction efforts. “Deirdre brings to the table experience to navigate that course, which hopefully can save us hundreds of thousands of dollars in savings alone.”

Noting the discrepancy in the two salaries, Kelcourse rebuked the mayor, arguing that even if the city wants to attract and retain the best candidates, it can’t afford to pay as much as it is.

“We’re not the New York Yankees,” he said, pointing out that police Chief Mark Gagnon is making 12 percent more than the police chief of Peabody, a community three times the population of Amesbury.

On the issue of the tax rate itself, the councilors expressed disappointment they weren’t aware when they were doing the budget in June that the city’s property values were decreasing so dramatically. In the past year, the city’s property values fell by $67 million, causing the rate to spike by 90 cents before taking spending increases into account.

Chief Assessor Mary Marino told the council that the building permits and new growth data, which are critical to determining the final assessment figures, aren’t available to her until July 1, which is after the budget is approved. Once all of the data is available, the process of gathering and certifying the values takes several months, she said.

“(This year), it was certified in late October, and that was early,” Marino said. “That’s why I can’t give you those figures in May.”

As far as the issue of using free cash to offset the tax increases, an idea that has been heavily discussed during the past week, Kezer said such a move would ultimately amount to a quick fix that wouldn’t save the city from high tax rates in the future.

“I compare it to eating sugar cubes,” Kezer said. “It would make us feel good in a short timeframe, but my concern has been is that if we were to use any amount of free cash in this budget, we’d be creating a structural deficit in the next year’s budget, so next year we’d have to make a $100,000 increase in taxes, the same in budget cuts or to use free cash again.”

During a special council meeting Monday night, a few councilors considered the possibility of tabling the tax classification hearing altogether in hopes of pressuring the mayor into using free cash to lower the rate. They suggested the city could potentially send out preliminary tax bills if they missed the state deadline to certify Amesbury’s tax rate.

That plan ultimately never came to fruition. According to the state Department of Revenue, a preliminary tax bill can only be mailed after the Dec. 31 deadline if the delay is a result of an assessment issue, and even then, prior written consent from the commissioner of revenue would be required.

Before the meeting began, Kezer explained that if Amesbury was in the process of selling a large piece of property that could have major assessment implications for the entire city, that would be one thing, but the state wouldn’t sign off on a preliminary tax bill because of a political disagreement.

“What would happen is we wouldn’t be able to mail tax bills until the spring deadline in May, which means it would be a double bill,” Kezer said. “So people would have to pay half of their annual taxes in one bill, and that’s not where we want to be.”

Given that fact, Kezer warned before the meeting that not voting on the classification hearing, and thus delaying the whole process with the state deadline creeping up, would be the worst thing the council could do financially for the city.

Ultimately, the city councilors agreed, deciding that taking action to certify a bad tax rate would be better than not taking action and sticking residents with a double tax bill in May.