[Ed note: My Southborough accepts signed letters to the editor submitted by Southborough residents. Letters may be emailed to mysouthborough@gmail.com.
The following letter is from Carl Guyer]
To the Editor:
It is the beginning of a new year and the start of the budget season for the Town of Southborough. Our elected officials, volunteers and town employees will put forward expected expenses in the upcoming fiscal year. Using this information, time will be spent by the Advisory Board, Select Board, School Committee, Police Chief, Fire Chief, DPW Director and host of others creating a proposed budget to be presented at Town Meeting in the spring. The members of the Town Meeting then vote to authorize the expenditure of the town’s tax revenues according to the budget. The underlying goal is to ensure all tax payers pay a reasonable cost during the next year fiscal year for town services .
Later in the fall, based on the approved budget, our Town Assessor is given the task to calculate real estate tax rates and present them at the annual Select Board’s tax classification meeting. In the 2023 this produced a residential tax rate higher than the rate on 87% of the residential property in the state. At the same time the commercial and industrial tax rates were higher than on just 29% of the commercial and industrial property in the state. A high residential rate and a low commercial rate. Why? Well, the “why” is complex. Numerically it is the result of Southborough’s rigid adherence to a tax strategy used for only 20% of the commercial and industrial property in the state. The math is the easy part, the complicated part is understanding the motivation for this out of date, out of sync approach.
Sadly, for residents the efforts of the months long budget process are lost at the annual Select Board’s tax classification meeting. In just a 15 to 30 minute presentation all the cost control efforts by elected officials, volunteers and town employees to deliver a reasonable residential tax rate are thwarted. If there is an actual strategy driving this, it does not appear to be working. Seems oddly unfair the effort made by so many good people is such a waste of time and effort.
Carl Guyer,
146 Middle Road
Carl
As you correctly point out, Town Meeting determines the total amount to be raised by the real estate tax. I believe they do so with the full expectation that both the commercial and residential tax rates will be the same. All of the tax projections presented are based on that assumption. That has been the operating assumption for the past decades and probably going back centuries.
Whether we should have a split rate is a point worthy of debate. The Select Board has the authority to split the rate. I for one am reluctant to do so for the following reasons:
The must fundamental reason is equity. As a group, the residents of the town consume more services than they pay for in taxes. Conversely, our commercial and industrial neighbors consume far less than they pay for. The simple fact is that commercial and industrial properties do not send kids to school where 2/3 of our property taxes go. Yes they do use police, fire, health and building services but they do not use our recreation programs, nor do they use the library or utilize the open space we are paying for.
The second equity point is that our commercial and industrial partners do not have a voice at Town Meeting or the ballot box. Only residents can vote. It seems unjust to me to stick these businesses with taxes we are not willing to pay ourselves just because we can vote and they cannot. I seem to recall that there was a fuss in Boston a few years back on just this subject.
We all want someone else to pay for the things we want. But, if we are not willing to tax ourselves for those public services why should we expect someone else to pick up the tab.
Al, all your ruminating about what is fair and just in the world is interesting, but how, as a member of Southborough’s Select Board, does it justify your voting to impose a high tax rate on the town’s residence for the purpose of providing our commercial and industrial property owners with a low tax rate ?
I did not vote to give Commercial and Industrial property owners a lower rate. I affirmed that they will pay a rate equal to that of residential property owners. Neither higher nor lower.
Absolutely Al you voted to require the commercial and industrial tax rate be the same as the residential rate. Since this is a requirement in setting tax rates for only 20% of the commercial and industrial property in the state, it is the reason in 2023 Southborough’s residential tax rate is higher than the tax rate on 87% of the residential property in the state and our commercial/industrial rate is higher than just 29% of the commercial/industrial property in the state. I am not sure you understand how this happens. You may not have known it at the time you voted, but that is the effect.
Of course this belies your assertion made in an earlier comment the residents of Southborough are getting more than they pay for. That shoe is apparently on the other foot.
Carl, I appreciate your thoughts and passion on this topic, but I just don’t agree with your conclusions. Out of 351 cities and towns in Massachusetts 118 have a split tax rate, and of that 118, 25 larger cities (populations over 50,000) make up 53% of the total CIP (Commercial, Industrial and Private Property) value of the entire state. These are cities like Boston, Worcester, Springfield, Cambridge, Lowell etc. Those cities also have average CIP assessed values as a percentage of total values of more than 25%, where the others like Southborough are less. If you look at the 50 most comparable towns to Southborough in terms of populations (7500-12,500) and percentage of CIP of less than 20% of total property values, there are only 7 that have a split tax rate. Of our neighboring towns of Marlborough, Northborough, Framingham, Westborough, Hopkinton and Ashland, only half of the towns, Marlborough, Framingham and Hopkinton have a split tax rate. This would make sense especially in Framingham and Marlborough with a much higher population and a percentage of CIP as a total value. While it is correct to say that Southborough has a higher residential tax rate than the of 87% of the total residential and open space values of the state, it is a bit misleading as that is including some very large outliers like Boston and Worcester that have very large commercial property bases due to the nature of being a major metropolitan city. In addition, looking solely at tax rate and not the actual taxes paid, as taxes paid is a combination of tax rate and property values. For example, Weston and Brookline have a lower tax rate than Southborough’s 14.76 (Weston 11.84 and Brookline 9.97) but their average single family tax bills are almost double that of Southborough (Weston $23,893, Brookline $21,322 and Southborough is $11,860). I think Al is correct in that as CIP business pay more than their fair share in terms of actual services that they consume, along with the impact COVID has had on our local businesses and the already uphill battles Southborough has to entice business to come to town, that a split tax rate just doesn’t make sense at this point, but possibly in the future if there is some significant new growth in CIP in the town.
Andrew, I would rate your demographic gymnastics as a 3.7 out of 10. I specially liked your comparing the real estate tax bills for residents in Southborough to communities where the average residential property value is 2.5 times higher than the average in Southborough. If you are into comparing tax bills there are 321 communities with tax bills lower than Southborough’s.
As far and you and Al thinking CIP businesses are paying more than their fair share, do you know the residents of Southborough paid 83% of the real estate taxes in 2023. Do you and Al think it should be higher ? Warning, don’t over 100%.
As Chairman of the Advisory Board do you have any advice for the Select Board on how to fix the problem of Southborough’s high residential rate and low commercial tax rate. The split tax rate method does work, but alternatives would be acceptable.
I think it is best that the town look for other sources of revenue outside of the levy, like a stormwater usage fee, increase meals tax, pilot payments, push for additional state aid. I think keeping the rate the same for CIP and residential makes sense for now. With such a low percentage of CIP as a part of total in this town, it would be really hard to do a split tax rate and not have either a very large increase in CIP rate or reduce town services. For example to get to the average state residential tax rate of $11.02 and not reduce the total levy, the CIP rate would need to be $32.82. That would more than double the existing rate, be the 7th highest in the state and would be the largest rate difference between residential and CIP in the state. I would rather work to increase our CIP portion in town by bringing in new businesses and then if the ratios look better, then a discussion on splitting the tax rates makes sense, but I do not think we are there yet. Thank you for the healthy discourse.
I think a key motivating factor for the tax setup is to ensure our commercial environment is competitive. As you can see when driving around town, it is often difficult to get businesses in Southborough and keep them. The goal is to have good, value added businesses in the community that add jobs, provide services, and contribute tax revenue.
The Town’s tax rate encourages the retention of existing businesses and the potential for new commercial endeavors. An adjustment to increase the commercial taxes may exacerbate conditions that are still playing out post-pandemic, particularly in light of current vacancy rates and the cost burden commercial businesses and property owners continue to bear.
The tax classification helps to preserve Southborough’s competitive advantage for various industries that are based here, while balancing, maintaining and preserving the character of the Town.
Here is an article discussing the various aspects of the tax rate that may be helpful in the discussion.
https://pioneerinstitute.org/blog/massachusetts-split-property-tax-rates-considerations-for-the-current-economic-climate/
Mr Nordstrom is a member of Southborough’s infamous Economic Development Committee (EDC). The EDC is the architect of the real estate tax policy that has lead to the current situation of a high residential tax rate and a low commercial rate. Many years ago they persuaded the then members of the Select Board to disavow their intention to adopt a split tax rate and follow their plan to lower residential tax rates by maintaining a low commercial tax rate. As i pointed out in the letter to the editor, this strategy has not worked.
If anyone has noticed, the Chairman of the Southborough Advisory Committee has put forward here a split rate proposal that has to be the most bizarre implementation in the state. His premise is that a split tax rate would drop Southborough’s 2023 residential tax rate of $14.76 to $11.02 per thousand. That would be nice, but will never happen. Of course it results in a high commercial and industrial rate of $32.82 which the Chairman declares unacceptable. I believe most would agree. So according to the Chairman, a high commercial and industrial tax rate to support an average residential is unfair. A reasonable assertion. But on the flip side our current high residential rate to support a below average commercial and industrial rate is assumed to be satisfactory. Why ?
Just adds to list of strange arguments being put forward to justify the current condition.
A reasonable implementation of a split tax rate could over time (multiple years) level the playing field by requiring both residential and commercial/industrial property owners to pay a tax rate somewhat above the state average for their classification. Southborough residents will not see average or below average tax rates for the foreseeable future even with a splitting of the tax rate.