Intro

Hello, and welcome to my site. If you are looking for a Boston / South Shore area real estate photographer, click "photography" above. For blog posts and photos, see below or the sampling to the left. Enjoy your stay!

Posts

The Levy Limit

Later in the week I'll be posting a comparison of taxes and other socioeconomic data between Quincy and similar communities in the 2000's. One of the points of comparison will be the levy limit, so I figured I'd write a short post first that offered a refresher on the basics first.

What is the Levy Limit?

The levy limit is one of the basic caps on how much a municipality can tax its property owners - it prevents property taxes from increasing too drastically year over year. For almost three decades, Proposition 2½ has imposed this limit on communities, which sets the maximum property tax that can be levied at 2.5% higher than the previous year's levy limit, plus exceptions.

As expected with government, there are many exceptions.

The first is new growth. If a developer comes into a city and adds millions of dollars of value to an empty lot, the city can tax it - new growth adds to the limit each year.

The second is actually a whole class of exceptions - Proposition 2½ Overrides. For a small class of expenses, such as servicing debt, a community may temporarily override their level limit. We mostly see overrides in the news in the context of a vote, but not all overides need voter approval.

Last, there is the levy ceiling. Where the levy limit caps tax growth, the levy ceiling caps total taxes. Set at 2.5% of the total full and fair cash value of all taxable property in the community. If the levy limit, though the normal 2.5% increase and new growth, would go over the levy ceiling, it is brought back down to the ceiling for that fiscal year.

The normal increase, new growth, and overrides are added up to get the new limit:

This Year's Limit = (Last Year's Limit) x 1.025 + New Growth + Overrides

If that result would put the limit over the levy ceiling, though, the limit gets set to the ceiling.

Where Can I Find These Data?

The Division of Local Services at the state Department of Revenue. From there, navigate to "MDM/TAB" which brings you to the Municipal Data and Financial Management homepage, where there is a huge variety of data on communities, their taxes, and their aid.

Later in the week I'll post some comparison numbers, both historic and from different South Shore communities.

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A Tale of Two Taxes

The following is my first post at The Patriot Ledger's election blog.

One of the discussions here that made me decide I'd like to contribute to the debate more was about taxes. Specifically, it was asked that someone show the difference between two tax increases, as measured by the average Quincy homeowner's tax bill. That single aggregate number doesn't tell the whole story - no one metric does - and there is actually a very large difference between a tax bill increase from house price appreciation and one from a tax rate increase.

Koch's contentious tax rate increase this year did a lot of good (keeping city workers employed, keeping the city running) in the face of a lot of bad news (house price DEpreciation and impending reductions in state aid putting downward pressure on city revenues). What was the appropriate balance of tax increases and budget cuts to get Quincy through the economic downturn with a minimum of pain to residents. It's an incredibly tough decision, did he make the correct call? Would Quincy be better off with fewer services but lower taxes? Or with more services and higher taxes?

I don't know; Nobody knows.

I wanted to make it clear that I'm not making a judgement about Koch's tax rate increase here, I just want to refute the argument that this year's tax increase imposes the same burden as one that came about through the housing market boom - because it is demonstrably untrue.

Let's look at the two situations from the homeowner's perspective. In case one, in the early-mid 2000's, the homeowner has just gotten hit with a 500 dollar property tax bump, due to their house being reassessed at a higher value. A $500 increase at a tax rate of around $10 per thousand dollars of property value translates to about $50,000 more equity in their home.

What's important to note is that this homeowner has a lot of options. If times are good (which they likely are, all the economic indicators like unemlployment rate, average salary, average hours per week, etc. were doing well), that equity can be leveraged into home improvements or expansions. If times are tough, they could sell their home into a booming market and keep the change. Is it great to be paying more in taxes? No, that's never fun, but this example family has their options open to help balance their budget.

On the other hand, a rate increase during a recession is very rough on families. The ability to pay is at a low because unemployment is high and even those who are employed are losing hours. Even the ability to reduce expenses by moving is weakened, as anyone attempting to sell their home will tell you. House price depreciation and a tax rate increase are a double whammy for homeowners - they have less and have to pay more to keep it.

Again, this isn't a value judgement about Koch's choices. These are hard times, and the alternative of more budget cuts could very well hurt the city even more than the tax increase. We're in the middle of a tremendous economic downturn, and anyone in the mayor's seat will be making tough choices. I've great respect for all the candidates - they are all fighting hard for a difficult and sometimes thankless job.

Later I'll be posting some actual numbers from the department of revenue, and links so you can go look these data up yourself. Both the Koch and Phelan campaigns use limited metrics to measure taxes, so it's important that we as voters take the time to educate ourselves.

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