DiNatale Opposes Tax Hike Proposal (04/25/10)
Posted 2010-04-25 20:54:32
House to debate bill that may cause hike in taxes
By Matt Murphy, mmurphy@lowellsun.com
Posted: 04/25/2010 06:37:37 AM EDT
BOSTON -- A quietly unveiled proposal to skirt local property tax caps landed with a thud last week on Beacon Hill where many local lawmakers quickly backed away from the plan and vowed to vote against the tax hike.
The proposal, written by House Ways and Means Chairman Charlie Murphy, would allow cities and towns to raise property taxes beyond the 2.5 percent limit each year to pay for tax abatements and exemptions.
The change could essentially turn Proposition 2 1/2 to Proposition 4 in many communities where homeowners are already taxed at the limit.
Cities and towns across the Commonwealth set aside $164.4 million to pay for tax rebates and exemptions in 2010, roughly 1.4 percent of the $11.6 billion collected statewide in property taxes. That money is currently raised under the Proposition 2 1/2 cap approved by voters in 1980 that limited any increase in property taxes to 2.5 percent of the previous year's levy plus new growth.
The new law would allow communities to create a revolving overlay account funded with property taxes raised above and beyond the 2.5 percent limit. Money left over can be carried over into the next fiscal year, but cannot be drawn out to help fund the annual budget.
In Leominster, for example, that city set aside $1.4 million in 2010 to pay for tax abatements, or 2.94 percent of its total tax levy. With the average single family in Leominster paying $3,296 in property taxes, the law change could empower town officials to increase tax bills by about $96.
Fitchburg's overlay account this year is just under $1.14 million, or 3 percent of its levy, while other towns set aside considerably less. Lunenburg set aside $141,583, less 1 percent of its total tax levy.
The House of Representatives is scheduled to debate the proposal Monday when it takes up a larger "municipal relief" bill aimed at giving cities and towns more tools to manage their budgets and make up for a 4 percent cut to local aid next year.
Many locals lawmakers, however, said voting for such a plan would be akin to approving another massive tax hike, something they have already promised not to do.
Asked whether or not he would support the change to the tax laws, state Rep. Dennis Rosa, D-Leominster, made his position clear.
"I think it violates not only the spirit of Proposition 2 1/2, but plain violates. It's too blatantly a tax increase. I don't care how they word it or what they say, they sold us on no new taxes and it clearly gives cities and towns the ability to raise taxes for a specific purpose," he said.
Rosa was not alone.
"This clearly goes against the commitment of the Speaker not to raise new taxes, and I won't support it," said Rep. Stephen DiNatale, D-Fitchburg.
In case it does pass, DiNatale has filed an amendment to make the overlay exclusion a local option, forcing city councils and boards of selectmen to decide for themselves if they want to raise money for abatements beyond the 2.5 percent cap.
"But don't get me wrong," DiNatale said. "I wouldn't be sad if it went away altogether."
Republicans are already prepared to offer an amendment during Monday's debate that would eliminate the overlay exclusion from the municipal relief bill, but it might not come to that.
Gov. Deval Patrick has threatened to veto the bill if the change to Proposition 2 1/2 gets through the Legislature, and some officials at the Statehouse late last week said they believed House Speaker Robert DeLeo might pull the plan before it comes to a vote.
Though many lawmakers pushed back on their heels by a public weary of tax hikes and job losses are reluctant to support a plan like this, some municipal groups are encouraging the flexibility to avoid deep service cuts and layoffs.
Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, said the organization has long supported efforts to move community overlay accounts outside the property tax cap.
Discrediting the vocal critics as "alarmists," Beckwith said such a change would not substantially alter Proposition 2 1/2 because it will not permanently lift a city or town's levy limit.
Further, he said it would allow cities and towns to more generously give back tax dollars to vulnerable populations, though the bill would be paid by average homeowners.
"The current tax system discourages communities and prevents communities from being able to expand the exemptions they give to seniors and veterans, for example," Beckwith said. "If they give more tax breaks to seniors and veterans now, the only way to pay for it is to cut services in the communities."
Fitchburg Mayor Lisa Wong said she was torn by the proposal, and said she was not sure she would try raise taxes even if the bill passed.
"That's actually a hard question. In times like this cities like Fitchburg who are overly dependent on state aid are desperate to find flexibility. If we wanted to raise money, this would be one easy way to do it, even though it's highly controversial," Wong said.
Fitchburg is already taxing property at close to its levy limit, but Wong said she is reluctant to raise taxes on residents.
"We'd have to think about it. We've been biting the bullet. That last few years have been tough. It might be a good idea to have as a tool, but not one we would go to first," Wong said.
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