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Wednesday, May 4, 2011

How much will taxes rise? Budget Hearing tonight.

At tonight's Town Council meeting, there will be another hearing on the proposed budget and on a new warrant item asking voters for authority to issue $1.2 million in bonds to replace decrepit town beach facilities with decent ones. It's another opportunity for CCA to whip up its anti-everything forces.

The town budget is a work in progress. It will cost roughly $25 million to run the town. About 56% of the budget covers the cost of sending town children to the Chariho school system. Registered Charlestown voters will be asked to vote on this budget on June 6th.

Progressive Charlestown has been providing the only extensive coverage of the budget and what it means to you. If you look at "Hot Topics," which is on the right hand side of the page, just above our Poll, you'll see a link labeled "Taxes." Click on that to see all the stories. In addition, we also provide you with our unique Progressive Charlestown Magic Tax Calculator that allows you to plug in your assessment numbers to see how the new tax rate affects you specifically.

The new Charlestown budget addresses expenditures and revenues. It will mean large increases in taxes for most Charlestown residents and much smaller increases - and even some tax cuts - for some of our town's millionaire absentee landowners.

Just to recap. What you pay for property tax is the product of the tax rate times assessed value.

Every property owner has received a new assessed value from the town based on a "statistical" reassessment of town values. A contractor hired by the town looked at sales of properties as well as a sampling of properties and generated the new numbers. The recession caused an overall drop in property value of around 15% or $400 million. As we've reported, the drop in property value was not evenly distributed. Most million dollar-plus property values fell by around 20%. Middle-class home values only fell by an average of 13% and 300 mid-range properties actually had their assessments increased.

So we started out with a tax rate of $7.48 per $1000 of property value prior to the reassessment. After the loss of $400 million in value, the tax rate had to be increased, just to stay even.

Result: the first bump was an additional $1.26 (16.8%), taking the rate to $8.74. And not to brag, but Progressive Charlestown predicted it to within a penny. Tom's calculations had the first bump at $8.75. Because assessment reductions were higher for millionaire properties than middle-class properties, the brunt of this bump falls on middle-class residents.

Then there are necessary increases in the town budget. Our town is run very conservatively with few frills so I had no quarrel with the need to increase the budget to, for example, provide long-overdue raises to town workers. I do question $300,000 of this portion of the budget which is, according to Town Council President Tom Gentz, a voluntary commitment of town funds toward the state's cost of carrying out its legal responsibility to maintain the Charlestown Breachway and Ninigret Pond.

I agree totally that Ninigret Pond is a treasure that must be maintained, but I have doubts about volunteering what amounts to a 12 cent tax increase when Mr. Gentz portrays it as necessary to "support seasonal home values; homes south of Route 1." Those are the property owners who are already getting the best deal out of the reassessment - let them pay to preserve their own damned property values!

Result: the second bump takes the tax rate from $8.74 to $8.95, an increase of 21 cents (2.8%).

According to the legal notice published by the town in the Westerly Sun (see below), the budget Charlestown voters will be asked to approve will probably contain a tax rate of $9.04, nine cents more than the $8.95 figure presented by the Budget Commission.

I checked to see where the additional nine cents came from and found that five cents was due to a math error. Four cents came from an April 22nd Town Council decision to add $100,000 for new litigation costs. Mainly, these costs will be caused by legal action brought against the Town by Town Council member Lisa DiBello. Interestingly, Ms. DiBello voted to add the $100,000 to the budget rather than recuse herself.

Result: the third bump takes the tax rate from $8.95 to $9.04, adding nine cents (1.7%).

There is the potential of additional bumps. Under state law, property tax increases are limited and in Charlestown's case, our property tax rate this year is capped at no higher than $9.17.

Lots of things can change that might affect the tax rate - some property owners are appealing their new assessments, we may face more legal actions, we may have to buy Larry LeBlanc's 91 acres to end our Whalerock soap opera. At Progressive Charlestown, we'll keep alert to developments and pass them on.

Author: Will Collette