The average residential property owner in Somerset will see a $597.34 increase in real estate taxes for the year with the shift in the tax burden that the selectmen approved last week.
“It’s a tough year, as we all know,” said Principal Assessor Pamela Lee said at a meeting of the selectmen and Board of Assessors.
The selectmen approved a shift that would give less tax burden to residential property owners and more tax burden to commercial property owners than the previous shift that had been in place last year. The Board of Assessors voted on that shift proposal and recommended it to the selectmen, who approved it after a long discussion.
The average residential property value for Fiscal Year 2019 is $278,632, which is $17,776 more than last year, an increase of seven percent. Lee said that property owners who have values greater than the average will see a higher tax increase and those with lower value will have a lower tax increase. She said all residential property owners will see a 15 percent increase in their property taxes.
Commercial property owners will see a 12 percent increase in their taxes. The average commercial property is valued at $300,000 and the owners of those properties will see a $1,025.30 increase. The average value of a commercial property in town remained the same from last year to this year.
The tax rates are $18.25 per $1,000 of valuation for residential property owners, which is an increase of $1.29 over last year, $32.61 per $1,000 of valuation for commercial and industrial property owners, which is an increase of $3.59, and $32.28 per $1,000 of valuation for personal property, which is an increase of $3.52 over last year. Personal property is equipment or other items that are used to run a business.
The selectmen also approved of exemptions of 10 percent of the average value of all eligible residential and commercial properties in Somerset.
All of the tax rates that were approved by the selectmen last Wednesday are subject to the approval by the Massachusetts Department of Revenue, but that approval is usually pretty routine.
The total value of the town is $2,177,540,610 which is a two percent increase over last year. The tax levy, which is the amount of revenue needed to operate the town, is up from $38,678,284 to $41,101,568. Lee said the increase in the levy was part of the reason for the tax increase. She said the change in value of the Brayton Point power plant property, that went down $106 million, also impacted the tax levy. She said there were other increases that caused the levy to go up. The value of the commercial properties in town went down by one percent.
Town Finance Director Joseph Bolton said the operating budgets for the town went up “modestly” this year.
With increases in values to properties in town, including the former power plant property, Bolton said more money than usual was put into the town’s overlay account which is used if property owners are successful in getting tax abatements or exemptions from the town because they dispute the values of their properties or have hardships. He said there is $1,526,000 in that account and another $3,486,000 will be put into the account, in case of abatements. If there is money left over in the overlay account, Bolton said it can be used for future tax abatements or can be applied anywhere to cover costs for the town.
There are exemptions from parts of their tax bills that senior citizens, military veterans, the blind and disabled can apply for, if they qualify under certain income requirements. Lee said people can call her office for information about those exemptions. Bolton said the town always has to have some money in the overlay account.
Selectmen Chairman Holly McNamara said she met with the assessors, Bolton and Town Administrator Richard Brown before last week’s meeting to go over different scenarios related to the taxes. She said they looked at the possibility of eliminating the residential exemption, but she said the biggest factor impacting the taxes was the $106 million decrease in the valuation of the former Brayton Point power plant property.
“That’s no one’s fault,” McNamara said of the decrease in the value of the property. “That’s just what it is.”
McNamara said Lee and the assessors have been working hard to negotiate with the owner of the Brayton Point property in order to get as much revenue as they can for the town.
“They are playing hard ball,” McNamara said.
McNamara said more free cash was used this year to keep the taxes down as much as possible than in some other years. She said if another $1 million from free cash could have been put into the general budget to keep the taxes down more, she would have supported it, but she said it would not have been a smart move because the town does not know how much money it will get from the Regional Greenhouse Gas Initiative fund next year. The town received $3.6 million from that fund this year to help it transition from losing significent revenue from two power plants that had been operating in town and had been receiving the revenue for several years. State Rep. Patricia Haddad has said that the town will not be receiving near as much money from that fund in the future. The fund is generated from fees and penalties paid by power plants.
McNamara noted there are some projects being developed in town that will bring in more money, such as a hotel and restaurants on Route 6, a marijuana dispensary on Brayton Point Road, two National Grid substations and expansion at Bristol Marine. She also noted there are projects being worked on in town that will cost the town money, such as on the Somerset Middle School building, and building projects at Diman Regional Vocational Technical High School and Bristol County Agricultural High School.
McNamara said the town can not continue to put as much tax burden on the residents as it has in past years, when the selectmen were trying to hold the line for businesses. She said a compromise was made on the shift. Lee said that if the selectmen had continued with the same tax shift that they used last year, the tax rate for residential properties would have been $18.63 per $1,000 of valuation and the commercial rate would have been $30.51,
“We’re all looking out for everyone,” McNamara said.
McNamara said the town’s operating budget is modest. She noted the selectmen will be paying the tax increase, too, on their residential properties. She said she is going to have to look at her tax bill and make some more money.
“I’m taking a huge hit,” McNamara said. “I don’t want to raise taxes.”
Lee said the selectmen and assessors have been trying to suppress large increases in taxes for a long time, but knew the time would come when they would have to make up for lost revenue from the power plants.
“I feel like we have exhausted all options,” McNamara said. “I feel that we’ve done all we can to get it where it is now.”
McNamara talked about an elderly man, who recently passed away, who used to come to selectmen’s meetings to ask the board to give exemptions to the elderly on their taxes.
“We have to sit tight through this transition period,” McNamara said. “We knew it was coming. It’s not going to be easy.”
Selectman Steven Moniz said he agreed with McNamara’s points. He thanked Bolton and the assessors for looking at the possible options to put less tax burden on the residential taxpayers. He said compromises had to be made.
“The residential taxpayer shouldn’t pay the brunt of what we are about to face,” Moniz said.
Moniz said he was glad there was a compromise on the commercial tax rate. He said he does not want to drive any businesses out of town and wants to attract new businesses to Somerset, but said they have to pay their fair share.
Moniz said it is not an easy time the town is in, but if the town continues in the direction it has been going in with fiscally responsible decisions, it will be in good shape.
Selectman David Berube said he thought more free cash should have been put into the general budget so that there was less of a tax increase impact on residents and commercial property owners. After last Monday’s Special Town Meeting, there was $3,542,949 left in the town’s free cash.
Berube said the increase in the commercial tax rate was too much for one year. He said he thinks the increase is a bad message to the business community that will discourage businesses from coming to Somerset at a time when the town is trying to attract new businesses because of loss of revenue from the power plants closing.
Between free cash and its stabilization account, Berube said the town has over $12 million that it could put into the budget. The stabilization account, which is like a rainy day fund for the town, has $8,592,000 in it. Over the years, town officials have said many times that that account would be used to stabilize the tax base if the power plants ever closed. At one time, the power plants made up 40 percent of the town’s tax revenue. Berube said the town will be getting some money from the RGGI fund in the future, even if it is not as much. He said the Montaup Electric power plant closed down eight years ago and the town is still getting $600,000 from the RGGI fund for that, so he said the town should still be getting money from the fund for the Brayton Point plant that closed down a year and a half ago.
Lee said the time for the conversation Berube was having about putting more money from free cash into the town’s general budget has passed. She said another town meeting would be needed to put more money into the budget. Berube said the town could have a Special Town Meeting next February or sometime next year to put more money from free cash or the stabilization account into the budget. McNamara said it costs a few thousand dollars to have a town meeting.
Berube questioned why so much money is being kept in the stabilization account. He said the reason why the money was being put aside was for a time when the town needs it.
McNamara asked why Berube was making those comments at the 11th hour. Lee said she sent out scenarios to the selectmen two weeks ago. Berube said he communicated with the assessors about those scenarios.
Brown said the town has been consistent about how it has used free cash in its budget. Free cash is money left over from prior years’ budgets or unanticipated revenue. He said that the town put $2 million from free cash into the budget in Fiscal Year 2015, $2.1 million in FY 2016, $4.4 million in FY17, $3.4 million in FY18 and is putting $3.75 million in this fiscal year.
Brown said that how Berube was proposing to use the free cash, at best case, was dangerous. He said the town does not know if it will have the revenue in the future to replace what is taken out of the stabilization account. He said the town is not yet receiving money from development that is starting in town and doesn’t know how much money Somerset will receive from the RGGI fund. He said the town also has labor contracts that it has not settled.
“We just have a whole host of unknowns and I think it’s dangerous to put additional money towards the levy,” Brown said.
Berube said Brown’s comments sounded like scare tactics. Brown took exception to that comment, noting that he was drawing on his 40 years of experience to give his best advice to the selectmen. When he was first hired for the job, Brown said he was told the town was trying to find a glide path to transition from losing the revenue from the power plants and he was following that approach.
Berube said he is not as conservative as Brown. He said the town has not used the stabilization fund for the budget. He said he wanted to use free cash at this time, and not the stabilization account.
McNamara said the owner of the Brayton Point property has indicated that they do not agree with the value that the town has placed on the property. That could mean the business will take the case to the state’s apellate tax board and could pay even less money in real estate and personal property taxes.
McNamara said putting another $2 million into the budget from free cash would decrease taxes by about $200 for the year. She said the statements Berube was making about the taxes were guesses.
“I don’t think we should gamble,” McNamara said. “This is not Vegas.”
Berube said the Brayton Point property value went down $106 million this year and will not be going down by that much next year. He said, if anything, the value of the property will be going up in the future. Berube said the marijuana dispensary and National Grid substations that are being built in Somerset will be bringing more tax revenue into the town.
Bolton said the town’s local receipts have remained strong. He said the excise tax revenue for vehicles has been particularly strong and those receipts also include fees for building inspections, other permits and the meals tax that is charged to restaurants and other establishments that sell prepared foods.
Berube said the residents would appreciate having another town meeting to put money into the budget to bring taxes down, rather than not doing anything at all, and he said there is something that can be done about it.
Berube said Somerset has one of the highest stabilization funds in the state for a town its size.
Marc Dionne, chairman of the Board of Assessors, said the value of the Brayton Point power plant property will go down slightly next year, so the town will have to put the same level of undesignated surplus money in the budget next year. He said the decreased value of the power plant property is going to affect the town for the next 10 years. Dionne said the town won’t be seeing significant tax revenue from economic development in town for two years. He said development on the Brayton Point property will be the biggest bang for the buck for the town, but that could take five to seven years to happen. While the company that owns the property has announced it will focus on wind energy, there have been no announcements of what will be going on the property, as demolition and other work is being done on the property to get it ready for development.
Berube said the value of the Brayton Point property will increase over time.
Berube said inserting more money from free cash into the budget to bring taxes down would be a one-time deal that would ease the burden on taxpayers in Somerset as the town waits for Brayton Point to be developed.
Brown said the savings in the stabilization fund could be eliminated in three to five years to stave off the impact of losing the money from the power plants. He said he can’t bank on the power plant property being developed. Brown said the town needs to clearly identify funding sources and begin to collect on them before figuring that money its budgets.
Moniz said his initial instinct was to put more free cash into the budget to relieve more of the burden on the taxpayers, but from a big picture perspective, he said that is not a good idea. He said the town was eventually going to have to take a hit on its taxes. Moniz said emptying out the town’s bank account, which is what a stabilization fund is, is not a good way to do business. He said the town will need that money for other projects in the future. Moniz said inserting another $2 million or $3 million into the budget to bring taxes down sounds like a great idea, but said the town would have to keep making that money up year after year until it was out of money. He said he also respects the years of experience that Brown has in working with municipal finances.
Dionne said he hopes to see some tax relief for the town in three to five years.
“There are too many uncertainties,” Dionne said. “There are too many what ifs.”
Dionne said Brown is following the glide path. He said Berube’s idea could push the town off a cliff. He said nobody wants to see the town’s taxes go up, but everyone has to pay their fair share.
“I feel comfortable in the path we’re on right now,” Dionne said. “I think it makes sense.”
Michael McDonald, a retired banker in town, said taxes may go up, but said Somerset has “the best services in the world.” He said if the taxes go up a couple hundred dollars again next year, it will still be a bargain.
Assessor Donald Setters, Jr. said the town’s new growth over the next 10 years will be sucked up by new spending. He said he had a concern about raising the commercial tax rate. Setters said he met in the middle of the road with the other assessors when they were discussing the tax shift. He said the decision should not be based on what is fair, but what will make the industrial tax base flourish for the town because that will provide the biggest tax impact on Somerset. He said addressing the industrial tax base is the best thing for the town’s long term future. He said Swansea has more of a shift to ease the tax burden on businesses than Somerset does because that town understands that if it raises the shift too high, it will hurt businesses. Somerset had been easing the tax burden on businesses for several years and Setters said the town is seeing some results of that. He said that values of the businesses have leveled off, but said more commercial property spaces are filled. Setters said the town was tied at the hip with the power plants for too many years, as far as depending on tax revenue from them.
Setters noted that some business owners in town also live in town, so pay residential property taxes, as well.
Setters, who owns a business and residential property in town, said he thinks the town needs to lower the commercial tax rate, but if it can’t do that, it should at least hold the line on the rate. He said if businesses can’t make money, they won’t come to Somerset. He said the tax increase for the commercial property owners this year will be a large hit to them. He said he would rather see lower commercial tax rates with property values going up, as a result.
“I hope it doesn’t hurt us in the long run,” Setters said.
McNamara said the commercial increase on the taxes was going to be a lot more than it ended up being. She said she knows many people who own small businesses in town, but she said she did not want to shift all of the increased tax burden on residential property owners. McNamara said Somerset also is in a unique situation that can’t be compared to other towns. Lee said there are some small businesses that qualify for tax exemptions. Even with the exemptions, Setters said the businesses still will be paying more than they do in most communities in Massachusetts.
Assessor Michael Correia said it is not an easy job to figure out how much of the tax burden should be split up between residential and commercial property owners. He said the assessors focus on values of properties and said they went through a lot of different scenarios before making a recommendation to the selectmen last week. At the end of the day, he said he thought the recommendation that was made was the appropriate one.
Correira said that Somerset could be prospering again in five to 10 years with the development of the Brayton Point power plant property. He said Commercial Development Company, Inc., which owns the Brayton Point property, has a good record of developing properties around the country. He said he does not think the town will get back to getting as much money as it did from the power plant property, when it received as much as $14 million, but said the property could really help the town’s tax base.
McNamara said she wants the public to know that everyone in town is affected by the tax increases.
“We’re all in this together,” McNamara said.
This article provided by NewsEdge.