Several Vineyard Haven business owners told the Tisbury selectmen at a tax classification hearing held on Dec. 4 that the town's split tax rate, which shifts an additional share of property taxes from residential to commercial properties, is having a detrimental effect on the community's business growth.
The selectmen were unable to decide the annual tax classification question that night, because given that this is a revaluation year for real estate in Tisbury, the town had not received preliminary certification from the Massachusetts Department of Revenue (DOR) for property values submitted for fiscal year 2008 (FY08). The Tisbury assessor's office received the certification yesterday and will schedule and advertise another hearing session in January.
At the Dec. 4 meeting, Phil Hale, owner of Martha's Vineyard Shipyard, told the selectmen that Tisbury has slipped compared to other Island towns in the number of businesses and people employed in town. "If businesses are paying a 160-percent tax shift and are declining, I think there's a parallel," he said.
Massachusetts law allows for a shift of the tax burden from the residential and open space classes of property to the commercial, industrial, and personal property classes (CIP). According to the DOR web site, 110 of 357 cities and towns in the state had split tax rates in FY07. Tisbury first voted a split tax rate and a residential exemption in 1988, according to the 2006 annual town report.
At last year's tax classification hearing, the selectmen voted to decrease the tax shift from 175 percent to 160, promising the town's business owners they would revisit the issue again this year. The FY07 residential tax rate was $5.63 per $1,000 of assessed valuation and the commercial rate $9.06 per $1,000 of assessed valuation.
Assistant assessor Ann Marie Cywinski explained this week that a shift of 160 percent results in an additional 6.54 percent of the town's tax levy being billed to commercial, industrial, and personal property classifications.
Pat Gregory, owner of EduComp and West Tisbury's town moderator, said that most of the other communities with split tax rates are larger and more industrial, compared to Tisbury. "I think we're abnormal in having a split tax rate, and I think it's had a negative impact on business growth in Tisbury," he said.
"Oak Bluffs and Edgartown don't have a split tax rate - it feels odd that this town does this," said Cronig's owner Steve Bernier. "We need a level playing field."
"We're in competition with other towns; we're losing tenants and business, because it's less expensive to do business in Oak Bluffs than Tisbury," said Sherman Goldstein, co-owner with his wife, Susan, of Mansion House Inn and Zephrus Restaurant.
Mr. Hale added, "I have to compete not only with Edgartown and Oak Bluffs, but also Falmouth."
Selectman chairman Tom Pachico asked the business owners whether any of them had looked at tax rates for comparable commercial properties in Falmouth, which does not have a split tax rate. Mr. Bernier liked that idea. "Let's look at dollars - let's pick some towns and some properties, and look at the taxes and make comparisons," he suggested.
In his nine years as a selectman, Mr. Pachico said he has heard many anecdotes about people leaving the Island because of taxes and high prices. "What's killing us down here is the price of fuel, groceries, housing," he said. "It's hard for people to make a life here with families - we're trying to keep it affordable."
The same is true for businesses, Mr. Goldstein pointed out. "The same issues the town residents face, the business community faces the same," he said. "Businesses will tighten their belts, too, and cut back."
When the selectmen reduced the tax shift to businesses last year, Mr. Goldstein said he and his wife put the savings toward hiring two new Island employees with health benefits.
Given that Mansion House paid about $135,000 in room taxes to Tisbury last year, if taxes go up he must increase his rates to cover the increases, Mr. Goldstein said. "If we lose our market share to other towns, Tisbury will suffer. Revenues will fall and the condition of downtown will suffer."
However, as Mr. Pachico reminded Mr. Goldstein and the other business owners, the selectmen supported their efforts to petition voters to allow beer and wine licensing in town as a way to boost downtown businesses. This was a business boosting effort, the selectmen reminded the business owners.
Mr. Pachico also reminded them that taxpayers pick up the tab for them in many ways, by paying for courtesy trash barrels, signage, the sewer system in downtown Vineyard Haven, and underground utilities. Peter Cronig, owner of Cronig's Real Estate, countered, "Most businesses don't have kids in school and don't get their garbage picked up."
Selectman Tristan Israel added that the selectmen seldom get credit for the improvements made downtown over the last 10 years that have benefited businesses.
A few town residents who attended the hearing pointed out that while businesses can raise prices to cover tax increases, residents often cannot do the same with their paychecks. "I'm staunchly against more tax on the taxpayers," said Peter Duart, a member of Tisbury's planning board, recalling the tax increases approved by voters at town meeting in April. "It's my disposable income against your bottom line."
His mother, Barbara Duart, an administrative secretary to the board of assessors, added, "I have nowhere to go if my taxes go up - businesses can raise their prices and cover it somehow, but I only have one paycheck."
Mr. Pachico said that town residents who complain about taxes in Tisbury might find they aren't so bad, compared to taxes in other cities and towns, especially in view of Tisbury's residential exemption.
Tisbury is one of 13 Massachusetts cities and towns, and the only one on the Island, offering a residential exemption. The others are Barnstable, Boston, Brookline, Cambridge, Chelsea, Everett, Marlborough, Nantucket, Somerset, Somerville, Waltham, and Watertown.
As the DOR web site explains, a residential exemption reduces the taxable valuation of each residential parcel that is a taxpayer's principal residence. Granting the exemption raises the residential tax rate and shifts the residential tax burden from low and moderately valued homes to apartments and higher valued homes.
The residential tax 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, in accordance with criteria established by the DOR and assessors under the provisions of Massachusetts General Law.
For example, to qualify for a residential exemption for fiscal year 2008, a homeowner must have been living in Tisbury as of Jan. 1, 2007. The period to apply for the exemption is from Jan. 1, 2008, to March 31, 2008.
At Tisbury's tax classification hearing in December 2006, the selectmen voted to continue the 20-percent residential exemption. Based on an average residential assessed value of $816,759 as of Jan. 1, 2006, for example, the tax value of the exemption was $919.67 in FY07. Ms. Cywinski said there are 988 residential exemptions for FY08. The selectmen vote on the residential exemption each year, and the money is appropriated in an article at town meeting.
In phone calls this week, the selectmen were asked how they explain to seasonal residents why they as a class are expected to pay more taxes when they use fewer services, such as the regional high school and Tisbury School, whose budgets account for about 38.5 percent of town's total budget.
Selectman Denys Wortman said he struggles with the issue. "I'm not Robin Hood - rob from the rich to give to the poor," he said. "You try to do what you can for those that really live here - that's the bottom line. No one's trying to put it to anybody else."
"It's really the Islanders that I think you've got to look at first," Mr. Wortman added. "And when I see people that I've known all my life saying I can't afford the taxes and I've got to move away, or it's hurting more and more, or I've got to think about moving away, you know, you try to do what you can to help, really, those who live here. And I don't mean to be harsh on those that are the summer people. It's a real tough thing."
Mr. Israel said that the tax shift and residential exemption were put in place some time ago, and although some people would like to see them eliminated, that would place a tremendous burden on year-round residents, especially the elderly and people living on fixed incomes. As for the residential exemption, Mr. Israel said, "You have a choice, where if you want to live here, you'll get it."
Mr. Pachico was of the same opinion, that people who do not qualify for a residential exemption because their primary residence is somewhere else have made their choice. "I'm trying to keep our residents here," he said. "I ran for election to represent the little guy, and that's what I'm trying to do."
Mr. Pachico likened the residential exemption to a luxury tax. "They're [seasonal residents] not here in the winter helping to keep a starving economy going, paying more for home heating fuel, groceries, gasoline, and everything else," he pointed out. "And they do cost us money - we still have to have the same amount of police officers and firefighters. Whether their kids go to school, that's beside the point. There are a lot of people that live here who get the reduction or don't get the reduction, that don't have kids, either.