Senate Passes Property Tax Reform Bill
With a vote of 36-0, the State Senate passed a bill that would slow down and then limit the amount that a community could raise property taxes in any given year.
The bill would lower the maximum annual increase to a community’s tax levy from the current 5.5 percent to 4 percent gradually, starting in fiscal 2008 and reaching 4 percent in 2013.
Rather than imposing a 4-percent cap immediately, [Senate Majority Leader M. Teresa] Paiva Weed said she chose the gradual cap to give cities and towns time to adjust. When Massachusetts capped local tax increases at 2.5 percent, she said, “a dramatic decrease overnight did have a negative impact on municipal services.”
There were quite a few changes made from the original proposal, including:
…a provision instructing judges to consider the caps in deciding whether to allow school committees to seek a higher appropriation than they receive from a city or town council.
The bill would apply the same percentage caps to school-spending increases as it would to tax levy increases….
Another amendment would excuse school committees from including state and federal aid in computing compliance with the cap….
The bill contains an exemption from the cap in four cases:
if a city or town experiences a loss in revenues other than property taxes, such as state aid or gambling revenues,
if a city’s or town’s health-insurance costs, retirement contributions or utility expenditures rise at a rate more than three times the cap specified for that year,
if a city or town experiences debt-service costs that exceed the prior year’s costs by a percentage greater than the cap specified for that year,
if a city or town “experiences substantial growth in its tax base as the result of major new construction which necessitates either significant infrastructure or school housing expenditures . . . or a significant increase in the need for essential municipal services.”
The original bill would have required a special election, paid for by the state, to override the cap in those circumstances. The bill, as passed, instead requires a supermajority vote — four fifths of the full membership — of the city or town council.
The Governor supports the measure, but it’s still up in the air as to whether or not the House will take it up. I’m betting against that happening. Nonetheless, kudos to Sen. Paiva Weed and the Senate for making the attempt.