Recently, a Recorder headline read “tax rate drops in Greenfield” and yet many of our real estate tax bills went up. This is confusing. Here’s my take. If you already know all this or if numbers make you queasy, skip to the comics page.
First, your property tax bill is calculated by taking the “assessed value” of your property — land, residence, outbuildings — and multiplying it by the “tax rate.” Tax rates are given in dollars per thousand of value.
For instance, my property is assessed in 2022 at $154,700 (rate is $22.32 per thousand — total tax $3,465.11). Last year, it was assessed at $138,400 (rate was $22.93 per thousand — total tax $3,173.51). This is all public record available via the assessors’ webpage.
These numbers come from the “actual” tax bill, sent in December, due on Jan. 1 of the next year. With a quarterly tax bill system, perversely, we always get the “real” bill, including the new assessed value, right at Christmastime — nice touch. The fiscal year is half over by then, as it starts July 1. The two earlier bills you got are “estimated”, based on the previous year’s bill.
OK, the tax rate dropped 61 cents and I paid $291.60 more –— What? Obviously, the increase in value exceeded the reduction in rate this year for my property.
I get the value change. House prices have gone up substantially. The state Department of Revenue (DOR) wants the assessments to reflect the elusive “full and fair market value.” The assessors annually have to adjust values based on sales. These adjustments apply to whole classes — they can not “spot assess” a single property (assessors will adjust individual values based on new construction, and changes in condition, size and function, however). Will prices keep growing? Was my house really worth that on 1Jan. 1, 2021 — the target date of the 2022 assessment? Who knows?
Back to the tax rate. How does it happen? Well, that’s a process.
First comes the city’s budget, which should be done by July 1 for the new fiscal year. A budget is exactly that — what the city plans to spend to operate, undertake capital (building) projects and meet debt obligations (loans, bonds, pensions, etc.). Once the city decides whether it wants to “split” the tax rate (residential vs commercial/industrial), the assessors have to calculate the “levy” — the actual amount the city has to raise in local taxes. The levy is the budget less any revenue the city can use to help pay for the budget — state and federal aid, dog licenses, dump stickers, parking tickets, pot sales, etc.
Once the city confirms that it hasn’t gone over the “levy limit” set by Proposition 2½, all that has to happen is to take the total levy and divide it by the total value of the city (all real estate and “personal property” — such as utility company and other equipment, boats, etc.), get “certified” by the state Department of Revenue and — tada! — a new tax rate is born.
Greenfield’s FY2022 budget is almost $67 million. State aid is estimated at about $18.5 million, the other revenue about $11.5 million, totaling about $30 million. Subtracting $30 million from the budget leaves the levy — about $37 million. I’ve simplified these numbers a bit, but they’re near correct. The total assessed value of Greenfield is about $1.6 billion. So $37 million divided by $1.6 billion gives 2.23% — a $22.3 per $1,000 value tax rate. A property worth $100,000 would pay $2,230 in tax. These numbers are all available on the DOR’s Bureau of Local Services’ Databank website — an excellent source.
So, does the rate actually matter? Not really, all I care about is the bill. The rate’s really the tail of the dog. If the values go up, the rate goes down — assuming the same levy. If the levy goes up, the tax rate goes up — assuming the same overall value of the city.
Greenfield’s tax rate for 2022 is the third highest in the commonwealth. Well, why is that? Budget too high? Overall value ($1.6 billion) too low? Both? Do we want a split tax rate?
These questions will be the subject of my next screed — assuming the Recorder allows me the space.
Henry Leuchtman lives in Greenfield.