Worcester taxpayer group pushes lower residential tax rate

Dec. 01--WORCESTER -- A citizens' tax watchdog group is asking the City Council to adopt a set of tax rates for this fiscal year that would shift more of the local property tax burden to businesses, although it is not calling for going all the way to the lowest possible residential tax rate.

The City Council is scheduled to set the fiscal 2018 tax rates Tuesday night.

The Coalition for Accurate Worcester Assessments on Real Estate is recommending that the council set the residential tax rate at $18.91 per $1,000 valuation and the commercial-industrial-personal property tax rate at $34.03.

The tax rates for the previous year were $19.22 for residential property and $32.93 for business properties.

Despite the drop in the tax rate for homeowners, they would still see a significant increase to their tax bill because assessments for residential properties have gone up at a far greater pace than those for business properties.

According to the city assessor, a residential tax rate of $18.91 translates into a $118 increase to the median tax bill for single-family homeowners.

Meanwhile, there would be a $20 increase to the median tax bill for condominium owners, a $190 increase to the median tax bill for two-family homeowners and a $278 increase to the median tax bill for three-family homeowners.

At the same time, the residential tax rate being recommended by AWARE would translate into a commercial-industrial-personal property tax rate of $34.03, which is $1.10 more than the previous year's tax rate.

With that, the median tax bill for business properties would go up by $331, according to the assessor.

The rates being recommended by AWARE are in sharp contrast to those that have been recommended by the Worcester Regional Chamber of Commerce.

The chamber is asking the council to set the residential tax rate at $19.34 and a rate of $32.94 for commercial, industrial and personal property.

The tax rates being recommended by the chamber would translate to an increase of $198 in the median residential tax bill and a $4 increase in the median commercial tax bill, according to the city assessor.

The lowest possible residential tax rate that could be adopted is $18.74, which would translate into a commercial-industrial tax rate of $34.49.

It was supposed to do that this past Tuesday night, but Councilor-at-Large Konstantina B. Lukes postponed that vote one week by tabling under privilege all items on the council agenda related to tax classification.

She postponed the tax rate vote because of "several outstanding issues" including ones raised by AWARE and those having to deal with the city's Health Insurance Trust.

In a statement it released Friday, AWARE said it was hoping that City Manager Edward M. Augustus Jr. was going to use more of the $9.2 million in surplus budget funds the city generated last fiscal year to provide tax relief for all taxpayers.

Mr. Augustus has recommended that $250,000 in so-called "free cash" be used to reduce the city's tax levy for this year. But AWARE said that will provide residential taxpayers an average savings of $2 while for businesses the average savings would be $12.

AWARE said if $2 million in free cash was used to provide tax relief, it would save residential taxpayers about $22, while the tax savings for commercial and industrial properties would be about $62.

But Mr. Augustus has made it clear he wants the city to stick to its seven-point financial plan. It calls for allocating 50 percent of free cash to the city's bond stabilization fund and 30 percent to the long-term liability for retiree health insurance, known as Other Post-Employment Benefits.

The manager said it was not be fiscally prudent for the city to deviate from that plan, which has helped the city improve its bond rating.

That, in turn, will save the city millions of tax dollars when it comes to borrowing for larger capital projects down the road.

Mr. Augustus also pointed out through its fiscal discipline the city has built up its unused tax-levy capacity to $13.6 million. By law, the city could have assessed as much as $307.2 million in property taxes this fiscal year, but instead its tax levy is $293.5 million.

The manager has also had to recommend using $1.1 million in free cash to stabilize the budget for the Worcester public schools.

The School Department has a budget shortfall this year because it needed to hire additional teachers to keep class size in check, and because of higher-than-anticipated special education services.

Contact Nick Kotsopoulos at [email protected]. Follow him on Twitter @NCKotsopoulos

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