For the first time since 1989, the Tisbury selectmen agreed, at a tax rate classification hearing Tuesday, to reduce the town’s residential exemption from 20 to 18 percent of the average residential property value. They also voted not to impose a tax shift that would increase the tax burden levied on commercial properties.
The residential exemption results in a portion of the tax levy being shifted from qualifying taxpayers domiciled in Tisbury to the tax bills for non-resident property owners. The exemption was originally adopted in 1988 at 10 percent and increased in 1989 by the selectmen serving at that time to 20 percent, the maximum the state allows.
In March 2012, the Tisbury selectmen eliminated the tax shift, a longstanding practice relentlessly criticized by the business community. The tax shift, implemented in 1986, collected a larger share of the town’s tax levy from commercial and industrial real estate and personal property owners than they would otherwise pay, if they were taxed at the rate applied to residential property.
The change in the residential exemption generated the most debate. In comments from the public, George Balco, Tisbury’s Steamship Authority port council representative and a former chairman of the finance and advisory committee, pointed out that the value of a 20 percent residential exemption actually is about 12 percent, because the residential tax rate is increased to make up the difference. He suggested eliminating the exemption slowly over time, to lessen the impact.
Michael Loberg, who serves on the board of health, said he also thought the exemption should be eliminated over time, to diminish the difference in the way the town treats residents versus non-residents.
“I see us as one group, and I see us as particularly enjoying not only the personalities but the financial largesse of some of our summer people,” Mr. Loberg said. “I don’t think we should do anything, unless it’s absolutely necessary, to put a division between the two groups.”
In the selectmen’s discussion at the close of the public portion of the hearing, selectman Tristan Israel said that the elimination of the tax shift had raised taxes for many residents.
“I don’t want to increase the burden on working folks,” he said.
Selectman chairman Jeff Kristal said that the town should consider getting rid of the Community Preservation Act so everyone’s taxes would be decreased by three percent.
“I’ve always been troubled by the fact that the residential exemption shifts the tax burden onto the homeowners who are not voters, who have no say in the matter, and who are essentially taxed without a voice in the matter,” selectman Jonathan Snyder said. In what he called a “radical motion,” he proposed reducing the exemption to 18 percent this year, with further reductions of two percent per year, over the next 10 years.
Mr. Israel took strong exception. “We are putting this on the backs of people who are struggling to be able to live here,” he said. “We got rid of the commercial shift last year, and now you’re trying to add another burden on these people. I just think it is wrong.”
Mr. Kristal, who said the selectmen are not empowered to set the residential exemption rate for future years, voted with Mr. Snyder to approve it at 18 percent. Mr. Israel voted no. The selectmen voted unanimously not to adopt a commercial tax shift.
Based on the selectmen’s decision, assistant assessor Ann Marie Cywinski said, the fiscal 2014 (FY14) tax rates would be $8.39 per $1,000 of assessed value for residential properties and $7.85 for commercial properties. Since almost 89 percent of the Tisbury’s tax revenue comes from the residential property class, the residential property tax rate is higher than the commercial rate because the town has to compensate for the decrease in revenue from the residential exemption, Ms. Cywinski explained in a phone conversation with The Times yesterday.
As Ms. Cywinski has explained in the past, some people mistakenly assume the percentage of the residential exemption is taken off their tax bill for their property’s total assessed value. Instead, the reduction is based on a formula. This year, Ms. Cywinski said there are 1,039 parcels in Tisbury that will benefit from the residential exemption. The amount taken off assessments in 2014 will be $137,825, which is 18 percent of the town’s average residential property valuation of $765,695. The exemption is granted to residents who apply and meet criteria established by the Department of Revenue and Board of Assessors.
The selectmen asked what the difference would be in the exemption at 18 percent versus 20. Municipal finance director Tim McLean said that on a property valued at $500,000, the exemption would be $990 less in taxes at 20 percent, and reduced by about $104 to $886 at 18 percent. Fire Chief John Schilling asked what the tax rate would be if there were no residential exemptions. Mr. McLean said it would result in a single tax rate at $7.85 per $1,000 of assessed value, give or take. He also pointed out that there is no change in revenue with a residential exemption, but rather a shift in the tax burden.
Ms. Cywinski also reported the town’s excess levy as $133,000, which she said may change pending state certification.