At the recent Tri-Board meeting, I pointed out that residential property taxes have increased 46 percent over the last 10 years. Affording these increases is not just a problem for the seniors on fixed incomes.
These taxes are paid from household incomes, which have not risen at the same rate. According to the U.S. Census statistics, Andover’s median income rose by 17.8 pecent. When property taxes are rising more than 2.5 times as fast as income used to pay the taxes, a crisis cannot be far behind. The town manager said that property taxes may have gone up 46 percent in 10 years, but that’s because property values have increased and the taxes are based on the property values.
According to the 2013 Annual Town Meeting Finance Committee Report, the average residential tax was $5,466 in fiscal 2003 and $7,967 in fiscal 2013 — an increase of 45.75 percent. During the same period, the average assessed value increased from $470,000 in fiscal 2003 to $549,070 in fiscal 2013 — an increase of only 16.8 percent. Taxes, meanwhile, grew 2 1/2 times faster than home values and they are projected to rise another 13 percent by fiscal 2016.
It’s clear that in years when assessed values declined, tax rates were increased to account for lost home value to increase the tax revenue by the Prop 2 1/2 statutory limit. In most years when home values increased, the tax rate decreased or increased slightly, again to increase tax revenue within the statutory limit. Therefore, tax increases are not based on home values, but rather on the town’s budget requirements as determined by Proposition 2 1/2.
What can we learn from this? First, real estate taxes are not based on your home’s value, as most people think, but on the budget increase allowed by Proposition 2 1/2. Second, your taxes will increase every year as long as the town officials feel they are “entitled” to use the full tax levy. Third, this will not change unless the taxpayers and town officials introduce controls on spending with significant changes in the way the town conducts its business. Fourth, debt exclusions are a problem, but bloated town budgets are a larger problem. During the last 10 years, taxes from debt exclusions (overrides) decrease by 35 percent while taxes due to town operations increased by 50 percent under Proposition 2 1/2 from $5,211 per home to $7,800 per home.
131 Rattlesnake Hill Road