Having been told we would have about a 5% tax increase, I was somewhat surprised when I opened the bill.
My property tax had gone from $712.13 per quarter to $778.22 per quarter. That’s an increase of 9.3%
At first I assumed that there must have been a dramatic increase in the valuation of my property.
However, I found that was not the case. My home on North Woodstock Road was still valued at $146,400.
Now, given the approved tax rate of $20.36 per thousand, that works out to an annual tax of $2,980.70.
On a quarterly basis that amounts to $745.18. But my bill is for $778.22.
It seems that the increase in my tax bill from last year should have been $33.05 per quarter. That yields an annual tax bill of $2,980.70, consistent with the approved tax rate and my home’s valuation.
However, for some reason, the quarterly increase has been doubled. Rather than paying an increase of $33.05, I’m being billed an increase of $66.10. On an annualized basis that means that my tax is not the approved $2,980.70 but rather $3,112.88, or about $21.26 per thousand.
I realized, after I was reminded of it, that the reality is that we are dealing with two different fiscal years. While I, and most of us, live in a January to December fiscal year, the town doesn’t. They live in a July to June fiscal year.
That means that once the council approves a tax rate the twelve month impact must be absorbed by the taxpayer in six months, i.e. their February and May tax bills. Hence the doubling of the impact.
However, the effect doesn’t end there. It carries over to the August and November tax bills. Any adjustment (usually upward) will be done in the following February and May bills.
The point of this exercise is this. When we are told in December that there will be a 5% increase, that isn’t exactly accurate. It may be the case for those living in the July to June accounting cycle. But, to those of us living in the much more common January through December world the real consequence is a 10% increase.
Occasionally this doesn’t exactly hold. There is the rare instance where the distribution among single residence, multi-family and commercial properties shifts the impact. But generally speaking, when the council says they’re approving a, say, 5% increase the reality is the average taxpayer is going to see a real increase of 10%.
It will be interesting to see if the five councilors who signed Councilor Vecchia’s pledge actually abide by it when the time comes to vote on the budget in April. It will be even more interesting to see if they can resist the temptation to add to the budget during the remainder of the year. If they do, then we might be able to expect a whopping 2% decrease in our tax bills come next February.
I’m not holding my breath.