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Finance Director Matthew Kerwood speaks to the City Council.

Pittsfield Continues Tax Classification Hearing Over Free Cash

By Jack GuerinoiBerkshires Staff
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Mayor Linda Tyer says she wants to focus on building reserves. 
PITTSFIELD, Mass. — The City Council on Tuesday continued the tax classification hearing after clashing with the mayor over how much free cash should be used to offset the tax rate.
At the end of a nearly three-hour meeting, councilors and Mayor Linda Tyer were at a stalemate with the majority of the council unsatisfied with Tyer's $750,000 compromise.
"We are taking this out of the pockets of our taxpayers and putting it into the city coffers," Ward 5 Councilor Donna Todd Rivers said. "I know that's how it works but at this moment we can afford to give some of that savings back."
The original proposal was a residential tax rate of $19.99 per $1,000 valuation and a commercial rate of $39.96 per $1,000 valuation, which holds the residential rate to a 57 cent increase and the commercial rate to a 2 cent increase.
This represents a 1.6312 shift, slightly differing from the 1.656 shift the council approved last year that yielded a residential rate of $19.42 and a commercial rate of $39.94. 
To accomplish this, the mayor requested that the council appropriate an additional $500,000 from free cash to offset the tax rate.
According to a communication from the mayor, the City Council originally approved to use $750,000 from free cash to lower the tax rate, however, it was found that this would not be enough to maintain a residential tax rate below $20 per $1,000 and a commercial rate under $40 per $1,000.
Right off the bat, the councilors wanted to use more and Ward 2 Councilor Kevin Morandi asked to increase this amount by another $250,000.
"I think we need to do all that we can to keep them down on the residential and commercial side," Morandi said. "Since we have this excess of free cash and we have done better than we have done in a while ... we should do anything we can do.
The city has an excess of $6.3 million in free cash, the highest amount the city has seen in 20 years. 
Ward 4 Councilor Christopher Connell and Councilor at Large Melissa Mazzeo agreed. Mazzeo wanted to keep the rate flat or continue to decrease it as they did last year.
Tyer said she was hesitant to use more free cash to offset the tax rate because she wanted to continue to increase money in the stabilization fund and wean the city off using free cash against the tax rate.
Director of Finance Matthew Kerwood agreed and said there are indicators that the coming years may be difficult and the city needs to be prepared.
"I wish I had a crystal ball but if I look at the indicators and the trends, 2021 and 2022 could be more difficult years," he said. "Talk to any economist and they will say there is a recession coming and we need to be prepared."
Kerwood added that these additional funds really would not go far on the tax rate and in order to keep the rate flat they would have to allocate near $1 million instead of $500,000. 
Ward 6 Councilor John Krol said he did not want to see $500,000 or $750,000 but wanted another $1 million allocated to offset the tax rate
Before preparing for the vote it was noted that if the council rejects the mayor's proposal and asked for more, the mayor could reject the increased allocation. 
The vote was 7-3 with only at-Large Councilors White and Peter Marchetti, and Ward 3 Councilor Nicholas Caccamo voting in favor.
Ward 1 Councilor Helen Moon was absent. 
The council took a 30-minute recess after going through the agenda giving the Board of Assesors time to calculate a $250,000 and a $500,000 increased allocation over the original $500,000.
A total free cash allocation of $750,000 would yield a single tax rate of $24.43. Using the recommended shift, this would mean a residential rate of $19.93 and a commercial rate of 39.85.
The additional free cash allocation of $1 million would create a single tax rate of $24.36. Using the recommended shift this would mean a residential rate of $19.88 and a commercial rate of $39.74.
After this, the majority of the councilors increased their desired amount to $1 million. Connell thought that if the city budgets better, they should have no issues going forward with using more free cash one year.
"We have the power right now to help out the residents and our businesses," he said. "We can't do this all of the time but now we have the opportunity."
Connell added that the numbers were misleading because of the increased assessed values that were up just over 4 percent on homes. 
Krol agreed.
"Property taxes have always been the most regressive form of taxation and we should not be discouraging people from investing in their properties," he said.
Tyer answered some questions and said free cash in 2017 was just over $3.5 million and since then it has been steadily growing. She reminded the council that $1 million in free cash was used in 2018 to offset the tax rate.   
She said she could not do another $1 million.
"I made my proposal and I believe that we need to keep building our reserves," she said. "If we put too much free cash toward this budget we are just going to go backwards toward a period of time when we had small reserves."
She was willing to compromise and upped her initial $500,000 bid to $750,000.
At-Large Councilor Earl Persip and Marchetti both thought the increase was acceptable and White added that he thought the smaller increase was a good compromise for all parties.
But the $750,000 allocation still failed 6-4 with only Persip, Marchetti, White, and Caccamo supporting it.
The council then voted on the original $500,000 amount again, which failed in the same fashion.
All of these votes needed at least six votes in favor.
The council voted to try again Nov. 26 and continued the hearing.

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