Taxes up as communities are buried in bills
Healthcare, pension, energy costs cited
By Kathy McCabe
Globe Staff / December 23, 2007
Property taxes will jump a few hundred dollars in January in municipalities across the region, as local officials raise money to pay for rising health care, pension, and utility costs.
"Almost universally across the state, communities have a lack of money to pay for services," said Lynn Mayor Edward J. Clancy Jr. "We do all that we can to hold the line on taxes. The ideal thing would be to keep tax increases in line with inflation. . . . But that is not easy to accomplish."
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"Our costs just keep going up," said Mayor Robert J. Dolan of Melrose, where the average bill will rise to $4,409. "But there is no way of getting out of this circle without raising revenue."
With the exception of Boston, where a boom in commercial/industrial values will lead to lower residential tax bills this fiscal year, the outlook for most Bay State homeowners is not so promising, according to the Massachusetts Taxpayers Foundation, an independent, non-partisan organization focusing on tax policies.
"Cities and towns are in an extended period of fiscal squeeze," said Michael J. Widmer, executive director of the foundation. "The fundamental problem is that underlying costs are growing faster than underlying revenues."
The foundation's annual property tax survey, due to be released this month, will show that property taxes, including residential and commercial, will go up 5.1 statewide, Widmer said.
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Other communities have turned to commercial growth to avoid steep residential increases.
In Haverhill, where the average tax bill will go up $89 to $3,300, new retail development, including Target and BJ's Wholesale Club, was a boost, Mayor James Fiorentini said.
"We made a tremendous effort" to bring in new retailers, he said, boosting the value of commercial properties. "It was a big, big play for us."
For area localities, a big issue is that costs that rise faster than revenues. As much of an issue as that is, at least for now (most of) Massachusetts has been spared the chaos spread by the recent collapse of the housing value bubble (communities like Lawrence being an exception). Even with softer demand and the drying up of mortgage credit opportunities, demand will still remain much stronger for housing in the area than in other parts of the country. In New England, we have a built-in brake against wild speculation: limited ability to build more housing = steady demand. Compare the mildly softer market here with the craziness in places like Arizona and Florida, where whole communities and counties are collapsing with the exploded market. From today's New York Times:
This Is the Sound of a Bubble Bursting
Cape Coral, FL: TWO years ago, when Eric Feichthaler was elected mayor of this palm-fringed, middle-class city, he figured on spending a lot of time at ribbon-cuttings. Tens of thousands of people had moved here in recent years, turning musty flatlands into a grid of ranch homes painted in vibrant Sun Belt hues: lime green, apricot and canary yellow.
Mr. Feichthaler was keen to build a new high school. He hoped to widen roads and extend the reach of the sewage system, limiting pollution from leaky septic tanks. He wanted to add parks.
Now, most of his visions have shrunk. The real estate frenzy that once filled public coffers with property taxes has over the last two years given way to a devastating bust. Rather than christening new facilities, the mayor finds himself picking through the wreckage of speculative excess and broken dreams.
Last month, the city eliminated 18 building inspector jobs and 20 other positions within its Department of Community Development. They were no longer needed because construction has all but ceased. The city recently hired a landscaping company to cut overgrown lawns surrounding hundreds of abandoned homes.
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