06/11/2013

Final 2014 tax rate hinges on pending state budget decisions

Property taxes next year are likely to be higher than adopted budgets for 2014 anticipated. How much higher will depend on the state budget.

As the House Appropriations Committee debates recommendations for the state's biennial budget, Town officials are looking to make up for likely cuts to state revenue sharing by setting a higher tax rate in August when the tax commitment is finalized.

Officials are predicting an additional 16 cents on the tax dollar may be necessary to make up for the lost revenue, bringing the new rate to $16.56 - 4.5 percent over this year's rate of $15.84. Last month when the budgets were adopted the projected increase was 3.5 percent.

Because the 2013-14 municipal and school budgets have already been adopted, and the Town charter prohibits changes after May 31, setting a tax rate high enough to cover the lost revenue is the logical action, Town Manager Michael McGovern told councilors at their meeting June 10, 2013.

"Current law provides that revenue sharing is to be used solely for property tax relief so increases up or down go to the bottom line of the tax rate," he said in a memo to the council.

The adopted budget already includes $299,000 decrease that the School Department will need to contribute to teacher retirement, a state budget change that accounts for the bulk of the projected tax increase. (see spreadsheet and chart)

The most recent scenario anticipates a $215,500 reduction in revenue sharing, and approximately $40,000 less reimbursement for homestead property-tax exemptions.

"What's being proposed is that the budgets remain as adopted due to the charter deadline and the school vote and that the actual tax rate be set by the assessor based on the net changes in revenue sharing and in homestead exemption reimbursement," McGovern said. The council accepted McGovern's report.

The Legislature is expected to take its first budget votes on Thursday, June 12.