Tisbury continues tax shift and residential exemption
By Janet Hefler
Published: December 3, 2009
Weighing requests from business owners for reduced commercial property taxes against concerns about increasing residential tax rates, Tisbury selectmen voted Tuesday night to ease their burden slightly.
In what has become an annual practice, selectmen also voted to let non-residential taxpayers shoulder more of the load for town services.
On the business side of the tax ledger, selectmen voted to reduce the shift percentage rate from 140 percent in fiscal year 2009 (FY09), which began on July 1, 2008, to 130 percent in FY10, which began on July 1, 2009.
Selectmen also voted to grant year-round residents a 20 percent break on their tax bills. Nonresident taxpayers have to pick up the difference. Tisbury is the only Island town that taxes residents at differing rates. For example, on Monday night Edgartown approved a single tax rate for all property classifications.
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.
Under the formula used to calculate taxes, a 130-percent shift results in an additional 7 percent of the town's tax levy being billed to commercial, industrial, and personal property parcels, assistant assessor Ann Marie Cywinski explained in a phone call yesterday.
In FY09, with a 140 percent tax shift and a 20 percent residential exemption, the commercial rate is $8.23 per $1,000 of assessed valuation and the residential rate $5.98 per $1,000 of assessed valuation.
By reducing the shift to 130 percent in FY10, the new commercial rate would be $8.27 per $1,000 of assessed valuation and the residential rate $6.57 per $1,000 of assessed valuation.
In terms of tax changes, on a residential property valued at $500,000, for example, a taxpayer eligible for a residential exemption would pay $2,219 in FY10, a $30 increase over $2,189 in FY09.
For a commercial property of the same value, FY10 taxes would decrease to $4,165 from $4,485 in FY09, for a savings of $320, Ms. Cywinski said. Overall values went down about 4 percent on residential class properties in FY09, while commercial class property values didn't change, she added.
Tax shift discussion
During the public comment session, Tisbury business owners Phil Hale and Pat Gregory spoke out against the tax shift, as they have for the past several years.
Mr. Hale, owner of Martha's Vineyard Shipyard, reminded the selectmen that many Tisbury business owners also are town residents, and that much of their revenue goes back into supporting the local economy.
Moreover, he added, businesses already are struggling in the midst of a significant recession. "For example, two hours ago, I found out that the health insurance increase for my company will be 32 percent next year," Mr. Hale said. "I feel the tax shift to businesses is absolutely inappropriate."
Mr. Gregory, owner of EduComp and president of the Tisbury Business Association, said that since the tax shift went in, Vineyard Haven has not maintained its position as the business center of the Island, as he had hoped it would.
"Let's make it even, get rid of this tax shift, and make Tisbury like almost all the other Massachusetts towns," Mr. Gregory said.
According to the Department of Revenue (DOR) website, 107 of 351 Massachusetts cities and towns had split tax rates in 2009.
Ross Schult, owner of Island Food Products, asked the selectmen to at least continue reducing the tax shift percentage. Peter Cronig, owner of Cronig's Real Estate, made a similar request by email.
On the other side of the issue, Don Amaral, a former Tisbury finance and advisory committee member, reminded the selectmen that residents on fixed incomes would find it difficult to come up with extra money for more taxes, especially with no Social Security increase this year.
During the selectmen's discussion session, selectman Jeffrey Kristal, owner of the Crocker House Inn, pointed out that reducing the tax shift gives commercial property owners a little extra money to put back into fixing up and maintaining their properties, which is a plus for the town.
"I don't want to shift it to zero right now, because that puts a burden on residential taxpayers," selectman Geoghan Coogan, a lawyer in private practice, said. "I do favor lowering the shift for commercial to 130 percent."
"I'm not in favor of lowering it," selectman chairman Tristan Israel, a landscaper, countered. He pointed out that reducing the tax shift by 35 percentage points since 2006 has resulted in incremental increases in taxes for residential property owners that begin to add up.
"I don't think this is the year to put more of a tax burden on our homeowners," Mr. Israel said.
Reducing the tax shift does more than ease the burden on commercial property owners, Mr. Coogan said. If their taxes go down a little, they can help their tenants by not raising rents, which in turn keeps businesses in town. Given that the residential exemption already is a tremendous discount, Mr. Coogan said he thought it was reasonable to reduce the tax shift to 130 percent for commercial property owners.
He and Mr. Kristal voted yes and Mr. Israel no on the 130 percent shift. In a subsequent vote, the selectmen unanimously approved continuing the residential exemption at the 20 percent level. Approval from DOR is pending for the tax rate, values and excess levy capacity.
Residential exemption
The residential exemption generated little discussion before the vote. The Tisbury selectmen have voted annually since 1988 to allow a 20-percent residential exemption. The money is appropriated in an article at town meeting.
According to the DOR website, a residential exemption reduces the taxable valuation of each residential parcel that is a taxpayer's principal residence.
Ms. Cywinski said 1,017 parcels out of a total of 2,918 residential parcels qualify for the exemption. Based on an average residential assessed value of $823,489 as of Jan. 1, 2009, the value of the average FY10 residential exemption will be $164,698.
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.
Tisbury is 1 of 14 Massachusetts cities and towns that offers it.
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 FY10, a homeowner had to be domiciled in Tisbury as of Jan. 1, 2009. The period to apply for the exemption is from January 1, 2010, to March 31, 2010. Contact the assessor's office at 508-696-4206 for more information.
