Welcome to my October constituent update.
Real Estate Tax Rate
We are back in tax rate setting season again. The finance subcommittee had its first formal meeting with the assessor last Wednesday discussing the tax rate. I think several important points were discussed and worthy of consideration.
There are two elements that will raise your tax bill. The first is an overall increase in the existing total tax levy of the City from the previous year. Namely how much more the city spends. Last year the city council actually reduced the existing tax levy, so any increase in tax bill was from value changes. This year we are still talking about it and hope to reduce it further, but even before any further reduction the levy is up only about .75%, so again that will provide for a relatively minimal increase to the average bill.
I will comment that I think our switch to a city, the merits of which I know are often discussed, has been a benefit in this particular process. The levy increase over the last two years is under .5% and stabilization of the tax rate has been an articulated goal of the City Council. The original administration proposal for the two years of City government was a combined 4.7% on the existing tax levy. (2.2% in FY 2019 and 2.5% in FY 2020). The City Council was able to reduce the proposal by almost 90% to under .5% in the aggregate. As stated above, we are attempting to further reduce it before the tax rate is set. This is a good example of checks and balances working for the taxpayer in a city government.
Beyond an increase in spending, resulting in the levy increasing, people often think that an increase in home values alone will raise their taxes. This is not accurate. For that to be accurate, your home value has to raise above the average increase. If everyone had a 15% raise in home values, and the levy limit was not increased, there would be no increase in taxes. The tax rate per thousand would simply go down and the same amount would be collected on higher value.
We have actually seen this occur during the last several years. Despite our average tax bills rising, the tax rate as expressed in dollars has decreased due to the rise in property values.
What has driven individual residential tax bills in Framingham higher the last two years is not the increase in spending, but the shift in value. Residential values have risen faster than commercial values, therefore the residential sector is becoming a bigger piece of the overall real estate tax pie. Almost the entire tax bill increase is for this reason, namely the increase in residential value. Since commercial growth has been much slower, most commercial tax bills will go down.
I know that is a lot of complicated information to digest, but it is important to understand what is driving our tax bills and why. We have done a good job limiting tax levy increases, but we continue to see increases due to the value growth compared to other sectors.
More Municipal Revenue Information
The City gets its budget revenue from three major sources. Real Estate tax, state aid and a category called “local receipts.” When the budget is voted, the amount from each of these sources is estimated. For the last several years Framingham has overestimated expenses and underestimated revenue when finalizing the tax rate setting process. The result is that on the average the City has collected an average of around seven million dollars more than necessary each year. The money goes into what is called “free cash” and it can be used to offset spending in future years, but it still reflects an overcollection of taxes in the first year.
I have been advocating that we try to make our estimates a little bit closer to the actual expenses. If we were up some years, and down others I would feel better about it. But continuing to collect at such a substantial overage every year, six years running now, is depriving us of an opportunity to better control our tax rate. The position we are in during this current fiscal year (FY 20) is that we are increasing the existing tax levy about $1.4 million dollars. Given that we collected over $7,000,000 in excess revenue in the last fiscal year (FY 19), the finance subcommittee has asked the administration for a proposal that will eliminate the $1.4 million dollar increase and reduce the average tax bill increase to $100. In other words, use the overcollection to credit this year to maintain a zero increase in the tax levy. A small tax bill increase would still occur, but again that is totally based on the value shift discussed above.
The administration will be reporting back to us on this issue on November 4th. I am hopeful that we can find a solution that will benefit all. I think we can if we work together.
Eversource and Gas Leaks
An interesting issue that I heard raised during the “green” candidates forum many of us attended earlier this month, was the presences of small gas leaks in the City. The company is aware of, but does not fix them, as apparently, they are considered to be not dangerous. I am a runner, and as I run throughout town, I often smell pockets of natural gas at the same places and this made the reason much clearer to me. I feel badly for people who live near such leaks.
Whether they are dangerous or not I am unsure, but it seems like both an environmental concern and a quality of life concern to me. I brought this issue to the Eversource representatives’ attention when they attended a City Council meeting on an unrelated matter. They stated they would provide me with the locations of said leaks. The next day they retracted that promise and said they would provide them to the Fire Department. To my knowledge we have yet to receive the information but I am pursuing it
If you have had a particular problem with this issue, I would be interested in hearing about the location, and what if anything has been done to resolve it.
Tax Increment Financing (TIF)
Recently the Mayor has recommended to the City Council that a tax increment financing agreement (TIF) be executed with the owners of the Bancroft Building at 59 Fountain Street. They are currently remodeling the building into apartments. This is a creative project that very well may be a great historical reuse.
First as a bit of background a TIF is often used by a municipality to attract new business or development. People often think it is a tax giveback. It is not. Essentially what it does is in some manner phases in the full payment of additional tax growth as a result of the investment in the development. The program is popular because the City never collects less money than it has been on the property and usually collects more, just not as rapidly as they would without a TIF. It can be a very valuable tool.
The consideration of this TIF is presently under consideration by the Finance Subcommittee. We heard a lot of opposition to it at our meeting from the public. Committee members also expressed concern. The largest reason for opposition is because unlike the usual use of TIF to attract a project, this project is underway already. The motivation for the request seems to be to mitigate cost overruns in the project to date, which is a much different use of a TIF than we have seen in the past.
The outcome of this proposal is not presently known, however from the hearings to date it appears to have a difficult road. I will say I have received more public input, virtually all negative, on this issue than any other singular issue since I became a City Council member. The final decision is likely to come in November. If it is not approved, I truly believe it will be a matter of timing and motivation, as opposed to a rejection of TIFs as an economic development tool.
Quick Thoughts
As part of my re-election campaign I had the opportunity to do a presentation at the Callahan Senior Center. My visit once again reiterated to me the large number of varied programs the Center has to offer to seniors, and how they do it so well with such a small budget. In fact, the day of my presentation I got to play chair volleyball. It was very challenging. Another day I was at the center, I got to play BINGO. There are many seniors who are adept at handling six bingo cards at a time. Not me, I was limited to four and did not win at all. I left the center a little lighter in the wallet that day!
The applications for Team Framingham, the City’s fundraising marathon team closed this past week. The drawing will be held on November 12thto see who qualifies. This has been a great program in recent years that allows the City to utilize a couple of dozen “numbers” it is awarded as a host community for the benefit of local charities. Congratulations to all involved.
I went to the opening night of the Framingham History Center’s “Framingham’s Top 10” exhibit. It is going to be on display for 20 months and is well worth the visit. My favorite artifact is the old Shoppers World sign that was lit up for the occasion. The pinkish neon light brought back many memories to me as someone who worked at Shoppers World during high school and college. The History Center is well worth the visit.
I have attended some great events around the City this fall, and the weather has been great. The annual Pies on the Common last week had tremendous weather and great food. The Humane Society craft fair, also on the Common a few weeks ago, was full of vendors and people. I really enjoy going to these events and they are far too many to mention here, but it is a great way to enjoy the company of many in one period of time. This upcoming weekend another great annual event is the Rotary Club annual pancake breakfast. I hope to see you there!
As always thanks for reading these many words. If you have any questions, comments or concerns, they are most welcome, and I would love to hear from you. It truly helps me do my job better.
George King