North Adams Council Opts to Reduce Tax Burden on Business
After nearly 90 minutes of discussion, the council voted 8-1 to keep the property tax shift at 1.71. It took the council some time to struggle through amending the order submitted by the mayor's office.
The difference will mean the average residential tax bill will rise about $20 more than proposed but councilors felt it was an important action to support the city's many small businesses.
The original proposal by the mayor would have moved the shift back to 1.73 and set a tax rate of $42.10 per $1,000 valuation for the commercial/industrial rate, which would have given North Adams the highest commercial tax rate in the state.
"I do think that it's really dangerous for us to be raising the commercial tax rate to $42.10," said City Councilor Benjamin Lamb. "Last year, we were really worried about hitting that $40 mark. ... It doesn't make us the highest in the Berkshires, it makes us the highest in the state."
The council last year under Mayor Richard Alcombright had shifted more of the burden to the residential side as a gesture to local businesses. City Councilor Joshua Moran said it was something of a thank-you.
"I want to be No. 1 in the city for a lot of things but this is not what I want to be No. 1 in," he said of the higher commercial rate.
Councilors Rebbecca Cohen, Wayne Wilkinson and President Keith Bona, all involved with small businesses, said the burden being borne by local business is growing with the mandated increases in minimum wage and contributions to employee health insurance.
Bona said adding a few thousand more to the tax bill on a small business may mean an employee gets her hours cut or prices for the consumer will go up. Businesses also pay more things like electricity, data and phone and already pay personal property tax on furniture and equipment.
"Every election I always hear two main things ... crime and jobs," he said. "And I don't feel reversing the shift is pro-jobs."
North Adams and Pittsfield have the highest commercial rates in the state but should the Pittsfield City Council approve Mayor Linda Tyer's proposal, that city's commercial rate could drop 4 cents to $39.94.
Even with the reduction in shift, North Adams' commercial rate will be $41.61 per $1,000 valuation, which still puts in the lead for highest at this point; the residential rate will be $19.11, up from the original proposal of $18.96 per $1,000.
Last year, the city had the 10th lowest tax bill in the state; the new rate moves it to 14th lowest so far out of the 350 or so towns and cities.
"We've seen an impressive and encouraging number of businesses come into the area but I feel that ... increasing the CIP shift is going to deter small businesses from continuing to come to North Adams," City Councilor Jason LaForest said. "I'm not fully in favor of moving this shift back again to the small businesses."
The presentation by Assessor Ross Vivori and Administrative Officer Michael Canales showed that the city's valuation has fallen in the residential, industrial and commercial sectors. Overall valuation is down $100,000 at $725,324,333 even though growth is up by $9 million. The largest increase in valuation is $4 million in personal property valuation that Vivori attributed to the large solar arrays in the city.
In answering questions, Vivori said the statistical analysis looks back over two fiscal years and hasn't picked up some of the larger projects such as the Tourists hotel or the increase in housing sales.
"If we go through the same process next year, we'll pick up that growth in those sales along with some of the other businesses coming into town," he said. "I can't promise anything but I believe next year, if things like Cumberland Farms [planned on Ashland Street] happen quickly and some of these other projects come to fruition, we will see more growth next year."
"We held the line on the budget to 1.91 percent increase so, yes, costs are increasing but we are being as fiscally responsible as we can within the budget that we have," the mayor said. "We're really operating on a maintenance budget this year. It's not a strategic or investment budget."
Canales explained that the city had been getting upwards of 54 percent of its budget in state aid prior to the economic global collapse in 2008. Those numbers have never fully recovered and now hover around 45 percent. The city has had a split rate since 1981 and had been at the top shift of 1.75 for quite some time but the past administration had pushed to keep it below that.
The tax levy for this year is $17,651,077, an increase of $744,487 or 4.4 percent from fiscal 2018. There are 2,641 residential parcels, 258 commercial entities and four industrial tax accounts and their property taxes account for 40 percent of the revenue to support the city budget. The rest is made up of state aid and receipts such as meals and rooms tax, excise, and other revenue.
A single rate would have been $24.34 per $1,000 for residential and commercial.
City Councilor Marie Harpin said she was concerned with the whole process, especially with the budget going up and the city's valuation going down.
"We need to look at this a little deeper to see who's going to be paying this tax burden," she said. The estimated tax increase of $110 on the residential side was going to hurt senior citizens and others with low or fixed incomes. "We keep increasing their taxes and we're not giving anything back in return."
Harpin asked if free cash couldn't be used to offset the tax rate but Bernard advised strongly against such a move since the city has made a priority of shoring up its reserves. It currently has more than $2 million but it is recommended to have 5 percent of its budget on hand. That translates to higher bond ratings and the ability to borrow.
"It would be at a cost of the reserve balance and future potential," the mayor said.
Harpin was the lone no vote on reducing the shift. Lamb noted that another town, Chelmsford, is exploring ways to possibly discount or exempt small businesses to separate them from larger corporations. It's not clear if that's even legal, he said, but it might be worth looking into.
"It feels like it's going to be a challenge for some of our small businesses," he said. "I want to see how creative we can be about this going forward"
The council also continued a public hearing on Cumberland Farms' application for two 24,000-gallon underground tanks to be installed on its proposed location on Ashland Street after errors were found on the application. The amounts given were correct in one instance and wrong in another. The signatories also had not been dated. Attorney Thomas Reidy apologized for the errors and said he would submit a perfect application for the next hearing.
Reidy said the company is targeting April for the start of construction and anticipated the closing on the city-owned property to occur before then.
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Tags: fiscal 2019, property taxes, tax classification,
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