GREENFIELD — The average residential taxpayer will save $740 on their tax bill this fiscal year while nonresidential property owners will pay higher taxes after Town Council passed a split tax rate Wednesday night.
The proposal, made by Council Vice President Isaac Mass, splits the tax rate with a residential factor of one and a factor of 1.5 for all other classes of property — including commercial, industrial and personal property — for Fiscal Year 2018.
The split will save the average residential taxpayer $740 on their tax bill, but will increase the tax rate from $23.27 to $34.79 for nonresidential property owners. That, for example, will result in an increase of $204,000 in taxes for the owner of Leyden Woods — the town’s largest non-residential property owner — according to Chief Assessor Audrey Murphy.
The council voted 9-2 in favor of the split, with At-Large Councilor Penny Ricketts and Precinct 7 Councilor William Childs opposed.
As a means of compromise, the council also passed a small business exemption, 8-3, aimed at lessening the burden on mom-and-pop stores. The exemption would only apply to properties valued at less than $1 million that have 10 employees or fewer.
Mass said though his preference would be to lower taxes by expanding the tax base through economic development, he noted that many recently proposed projects have either been rejected or reduced in size. He said taxes can also be lowered through reduced town spending, which has proven much more difficult.
“The only other option for cutting residential taxes is to shift the burden onto someone else. It is a big shift and it will hurt commercial businesses, but you can’t keep doing the same thing and expect a different result,” Mass said. “This is a very difficult decision, but at the end of the day, it’s one that needs to be made. I see no reason to kick the can down the road. This is a liberal, progressive idea.”
He added that residents can use the money they’re saving on their tax bill to support local businesses.
Mass said although downtown businesses will be the most hurt by a split tax rate, they also receive many benefits of town spending, including a proposed new $1 million pedestrian plaza at Court Square and a proposed $20 million library.
“It’s downtown business that are going to cry about it, but they’re the ones getting the benefit of it,” he said.
Chief Assessor Audrey Murphy said the small business exemption will shift the burden within the same property class, meaning larger businesses would pay more in taxes than smaller businesses.
“You can’t shift more than 20 percent, that’s the only rule,” she said.
Murphy also noted that the exemption only applies to property owners, who are unlikely to pass the savings on to their tenants.
Mayor William Martin encouraged the board not to support a split rate, saying the town can gather enough information to discuss the idea during the first few months of 2018 in time for next fall’s vote. He said that there could be unintended consequences, such as higher rents as property owners and landlords pass increased costs on to tenants.
“A move to a split tax without a full review of fiscal and economic impact is to withhold discussion for most interest parties,” he said, adding, “I’m suggesting that there needs to be more impact studies to done with the split to commercial. Will we lose jobs. Will we lose momentum?”
Joseph Ruggeri, who serves on the Board of Assessors, also spoke against a split tax rate during the public hearing period. He said of Greenfield’s 6,743 parcels of land, 85 percent are considered residential and 15 percent are commercial.
“I think it’s also good to look at the values of all of the residential and the values of all of the commercial,” he said, noting 74 percent of Greenfield’s total value — $1.4 billion — is residential, while 26 percent is commercial/industrial.
“Our feeling on the board is there is no strong evidence that shows putting the burden on the commercial properties is beneficial to the overall scheme of the tax levy,” Ruggeri said.
At-Large Councilor Mark Maloni made an amendment during the meeting to propose a factor of 1.3 for nonresidential properties, which was rejected.
There was also some debate during the meeting about whether the timing of Mass’ proposal was appropriate.
“Raising the topic for council vote 48 hours before the meeting seems not only to be an accelerated approach, but lacks transparency and full disclosure,” Martin said.
However, Mass argued that the council has as much information as it could possibly receive at this point. He said a split tax rate has been discussed many times in the past, and neither the current nor previous administrations ever provided additional studies or data.
“The mayor is proposing that we wait and get more information. I’m trying to understand what more information we’re going to get,” Mass said.
At-large town councilor-elect Ashli Stempel spoke during the public hearing to say that while a split tax rate can help relieve tax burden at times, it needs to be looked at more closely. She said Mass’ proposal is too rushed, and supports the mayor’s idea of forming a task force to study the tax rate.
“When we work together, we have a really good result,” she said, adding, “My understanding is that the numbers are pretty similar from year to year, so if we were to use the numbers from 2017 to create that task force for early 2018, it would be pretty accurate.”
Ricketts agreed, saying she would have preferred to study the effects of a split rate in early 2018.
Other councilors, including At-Large Councilor Karen “Rudy” Renaud and Precinct 9 Councilor Daniel Leonovich, said the split rate is a worthwhile experiment that could be done away with next year if it isn’t successful.