Tisbury continues residential exemption and tax shift
The Tisbury selectmen voted to stay the course in fiscal year 2011 (FY11) and continue to shift more of the town's tax burden to commercial and industrial real estate and personal property.
They also voted to grant year-round residents a 20 percent break (the maximum the state allows) on their tax bills through a residential exemption. Nonresident taxpayers have to pick up the difference.
The decisions took place during a tax classification hearing during the selectmen's regular board meeting Tuesday night at the Katharine Cornell Theatre.
Tisbury is the only Island town that taxes residents at varying rates. The shift percentage rate is applied against the town's total tax levy. That shift along with the residential exemption is used to calculate individual tax bills for businesses and residents.
Assistant assessor Ann Marie Cywinski said if the selectmen kept the shift percentage at last year's rate of 130 percent and approved a 20 percent residential exemption, the residential tax rate would increase to $7.51 per $1,000 of assessed valuation this year, from $6.57 last year.
The new commercial rate would be $9.48 per $1,000 of assessed valuation, compared to $8.27 last year.
Under the formula used to calculate taxes, a 130-percent shift results in an additional seven percent of the town's tax levy being billed to commercial and industrial real estate, and personal property.
In terms of tax changes, on a residential property valued at $500,000, for example, a taxpayer eligible for a residential exemption would pay $2,596 in FY11, a $377 increase over $2,219 in FY10.
For a commercial property of the same value, FY11 taxes would go up to $4,740 from $4,165 in FY10, an increase of $575.
There was no public comment from business owners or residents prior to the selectmen's unanimous votes to approve the tax shift percentage and residential exemptions.
In regard to the residential exemption, selectman Tristan Israel said, "It's a tough year to make changes for people, so I would move that we keep the rate the same."
Tisbury selectmen have voted annually since 1988 to allow a 20-percent exemption. The money is appropriated in an article at town meeting.
Regarding the tax shift, Mr. Israel made a motion to keep the percentage at 130 percent, because he said the selectmen had substantially lowered the percentage of the shift to commercial properties over the last 4 to 5 years from 175 percent.
Ms. Cywinski said that although Tisbury's tax levy increased by 7 percent for FY11, assessments for the town decreased overall by 6 percent. As a result, the increase in the tax rate is 12 percent. Ms. Cywinski also said that Tisbury would have an excess levy capacity of $247,026 for FY11.
Assessments for FY11 were based on real estate sales that occurred before January 1, 2010, Ms. Cywinski said, and included numbers from 2008 and 2009 sales.
Why the tax increase?
Town treasurer and tax collector Tim McLean said about half of the tax increase is due to debt incurred for the new emergency services facility (ESF).
"Our debt has traditionally been about $1.2 million; this year, it's $1.875 million because the fire station is about $675,000 additional levy," Mr. McLean said. "Next year, the debt will come in at $1.675 million and for the next two years, and then we're back to the $1.2 million in debt that we traditionally had. So we're going to take a hit for the next three years, which is what we said at town meeting."
However, that is provided that voters don't approve any additional debt at upcoming town meetings, Mr. McLean said.
Selectman Geoghan Coogan asked him to explain to the audience and MVTV viewers how the combination of the town's assessments going down and the tax levy going up results in a tax increase.
Mr. McLean said that if property values had not gone down, the tax rate would have gone up by about half as much.
"We're raising the same amount of money," he said. "The fact that the values have gone down does not change the amount of money the town voted. If the values had stayed up, we wouldn't have seen as much of an increase."
Given the news about the FY11 tax increase, selectman chairman Jeff Kristal said, "We've got a boot; we fill it at town meeting. The best way not to fill the boot is not to spend at town meeting. But if we have projects we really, really need, we should be putting them on the warrant."
If not, Mr. Kristal said, "Let's not fill the boot so high, and therefore the tax rate and taxes will stay lower...Town meeting is extremely important for everybody to attend, because that's where their voice is heard."
Mr. McLean agreed, adding that the tax rate is based on what expenditures voters approve at town meeting.
"For the next three years, unless it's something extenuating, I think we should plan for major capital improvements, but I think we should also should do as much as we can to bring things back to a level where we were before," Mr. Israel said.
Mr. Kristal asked Mr. McLean what the town's debt situation might be after the next three years. Mr. McLean said the debt would likely remain at $1.2 million for five years after that, because the town would still be carrying debt for its wastewater system and the ESF.
Given all that, Mr. Israel said this is a time when dialogue within the community becomes important, because it may be necessary to put off big projects that the town has discussed, like building a new hall.
"The other thing is that we are already starting to feel the pressure of expansion of our wastewater capabilities — it's a two-edged sword," Mr. Israel said. "But I think that there are going to be circumstances forcing us more and more, whether we want to or don't want to, to really delve into that issue. And in fact, that may be the next big capital consideration this town needs to deal with. And everybody really needs to weigh in on what their priorities are."
Mr. Kristal said the selectmen and Finance and Advisory Committee have been discussing how to raise additional revenues. "There are a lot of things we can do over the next few years to bring the tax rate down," he said.
Figuring the residential exemption
Tisbury is 1 of only 14 Massachusetts cities and towns that offers a residential tax exemption.
According to Ms. Cywinski, 1,011 parcels out of a total of 2,918 residential parcels qualify for the exemption. Based on an average residential assessed value of $771,377 as of Jan. 1, 2010, 20 percent of the average FY11 residential parcel value amounts to $154,275, for which eligible taxpayers will receive a $1,158.61 tax dollar credit.
Granting the exemption raises the residential tax rate and shifts the residential tax burden from moderately valued homes to apartments, summer homes, and higher-valued homes. As a result, seasonal residents, who use fewer town services, pay more taxes.
The residential exemption applies to property owners who have filed an application along with copies of documents proving they lived year-round as Tisbury residents as of January 1, preceding the fiscal year for which they are applying for an exemption.
For example, to qualify for a residential exemption for FY11, a homeowner had to be domiciled in Tisbury as of Jan. 1, 2010. The period to apply for the exemption is from January 1, 2011, to March 31, 2011.
Contact the assessor's office at 508-696-4206 for more information.