Taxes and Growth in Williamstown by Pat Dunlavey

We pay too much property tax Conventional Wisdom

We pay too much property tax Local government and school spending are out of line Conventional Wisdom

We pay too much property tax Local government and school spending are out of line We get too little state aid Conventional Wisdom

We pay too much property tax Local government and school spending are out of line We get too little state aid The best option to avoid tax increases is new growth Conventional Wisdom

We pay too much property tax Local government and school spending are out of line We get too little state aid The best option to avoid tax increases is new growth But protected land and onerous regulations stifle growth Conventional Wisdom

How do our property tax bills compare? MeasurementAmountRank Avg. household property tax bill (2008)$4,63587/ – In 1988 we ranked 21 places higher Among towns with populations between 4,000 and 12,000, we ranked 31st out of 97 Source: Massachusetts Department of Revenue bill08.xls

One-in-six Williamstown property tax payers spent 30% or more of their household income on housing costs in 1999 Source: 2000 US Census H97 For how many of us are property taxes a hardship?

One-in-six Williamstown property tax payers spent 30% or more of their household income on housing costs in 1999 Surprisingly, we ranked near the bottom – 329 th out of 351 towns in Massachusetts – in this measure Source: 2000 US Census H97

$1,799 $42,926 $2,826 $75,366 SourcesAverage Household Income 1999:US Census Average Household Income 1990:Estimated from US Census household income distribution data Average Household Property Tax Bills:Massachusetts Department of Revenue (no median tax bill data available) Has there been any trend in property tax affordability?

Is spending for local government and schools out of line? Measurement*AmountRank Municipal spending/resident (2007)$2,466150/351 * Values do not count Williams students in population figures

Do we get too little state aid? Measurement*AmountRank State aid/resident (2007)$432122/351 * Values do not count Williams students in population figures

We pay too much property tax …In absolute terms - Yes …But relative to our income – No Local government and school spending are out of line - No We get too little state aid - No Conventional Wisdom Revisited

“…The best option to avoid tax increases is new growth, but protected land and onerous regulations stifle growth”

From a fiscal standpoint, how important is new growth? –What kind of new growth are we talking about?

“…The best option to avoid tax increases is new growth, but protected land and onerous regulations stifle growth” From a fiscal standpoint, how important is new growth? –What kind of new growth are we talking about? Do local regulations and our fondness for open space inhibit new growth (and thereby have a negative fiscal impact)?

New Growth and the Budget Budget is initially proposed as revenue limited, not expense driven. – Peter Fohlin Yearly expectation is that total municipal revenues will increase by about 3.5% - based in part on an annual increase in revenue from taxes on existing property that is at or near Proposition 2½ limits, and in part on an annual property tax revenue boost from “new growth”

New Growth and the Budget Budget is initially proposed as revenue limited, not expense driven. – Peter Fohlin Yearly expectation is that total municipal revenues will increase by about 3.5% - based in part on an annual increase in revenue from taxes on existing property that is at or near Proposition 2½ limits, and in part on an annual property tax revenue boost from “new growth” In recent years, the revenue from property taxes has been approaching $12M, increasing by around $480K per year. About $260K of that comes from what is allowed by Prop 2½, and another $220K comes from tax revenue on “new growth”

New Growth and the Budget Budget is initially proposed as revenue limited, not expense driven. – Peter Fohlin Yearly expectation is that total municipal revenues will increase by about 3.5% - based in part on an annual increase in revenue from taxes on existing property that is at or near Proposition 2½ limits, and in part on an annual property tax revenue boost from “new growth” In recent years, the revenue from property taxes has been approaching $12M, increasing by around $480K per year. About $260K of that comes from what is allowed by Prop 2½, and another $220K comes from tax revenue on “new growth” To get that $220K boost from “new growth” requires around $15-19M of “new growth”, depending on tax rate

New growth revenue break-down Source: Assessor’s new growth data and building permit data Σ = $220K

Is subdivision and new home construction important?

If all subdivision and new home construction ceased… The annual increase in our average household property tax bill would go from ~$190 to ~$224 (assuming we increased taxes to compensate for lost revenue)

“… protected land and onerous regulations stifle growth” How much land do we have available for growth?

Open Space – Numbers Total Williamstown acreage:30,005 Protected Open Space:11,673 1 Upland Conservation District:4,254 exclusive of the above 2 15,927 acres, or 53% of land is formally or practically protected from development 1 - From MassGIS Open Space 2/08 data layer. This includes but is not limited to: Mount Greylock Reservation (3,518); Other State-Owned Land (2,730); Hopkins Forest (1,990); Conservation Commission (515); Rural Lands Foundation (454); Trustees of Reservations (430) 2 - The total area of the Upland Conservation District is 11,571 acres, but much of it overlaps with protected open space Chapter 61, 61A and 61B lands not included

Chapter 61 forestry 2,870 acres Chapter 61A agricultural 4,243 acres Chapter 61B recreation lands 543 acres Between 1997 and 2008, the fraction of the tax base shielded by Chapter 61 increased from 3.0% to 4.9% Source: Assessor’s Chapter Land data Not to be confused with…

With all that Open Space, is there any land left for people (and development)?

We have ~9,000 developable acres 1 Williamstown ranks 116 th out of 351 towns in the amount of non-protected land per- capita: 2.2 acres 2 1 Updated net usable land area analysis by Pat Dunlavey, July MassGIS OpenSpace datalayer, February 2008; Williams College student population excluded

Are regulations stifling growth?

You need to ask: In comparison to what? –Williamstown’s regulations and enforcement don’t seem to be unusual (with the possible exception of the Upland Conservation District)

Are regulations stifling growth? You need to ask: In comparison to what? –Williamstown’s regulations and enforcement don’t seem to be unusual (with the possible exception of the Upland Conservation District) One investigation* suggests that… –Regulations may inhibit subdivision of land –Found no evidence that they inhibit home building * Patrick Dunlavey, Presented to the Williamstown Planning Board, July 2008

Constraints (Cost) Surface: 1.Slopes (25% = 1) 2.Water Resources Districts 1 & 2 (minus sewer buffer) 3.Wellhead Protection District 4.RPA 200’ buffer + Stream 100’ buffers

The constraint cost model correlates with where new subdivision happened Average modeled cost on 22 new subdivided parcels compared with all other parcels in NULA Modeled cost on parcels experiencing new home construction between 1998 and 2007 It does not correlate with where new home construction happened

Unanswered: Why do we rank high on average household tax bill? Measurement*AmountRank Avg. household property tax bill (2008)$4,63586/ – In 1988 we ranked 20 places higher * Values do not count Williams students in population figures

Commercial pulls its weight Source: Massachusetts Department of Revenue lvcl08.xls Williamstown ranks 148 th out of 313 towns in proportion of revenue contributed by commercial, industrial and personal property taxes Among small towns (>4,000 & <12,000 population), we rank 34/97

Tax-Exempt Stands Out Source: Massachusetts Department of Revenue propertyvalues08.xls With 29.4% tax-exempt property, Williamstown ranks 3 rd highest out of 313 towns Top Ten Tax-Exempt Valuations Municipality% of Total HUNTINGTON42.0% MOUNT WASHINGTON32.9% WILLIAMSTOWN29.4% DEERFIELD25.9% PETERSHAM25.5% CHELSEA24.0% BOSTON23.9% CAMBRIDGE22.5% LINCOLN22.1% NEW SALEM21.1%

Summing up Our taxes are somewhat higher than expected –they’re not affordable to a significant minority –but still more affordable for us than most towns ‘Growth Imperative’ may be overrated Regulation and protected land are probably not significantly inhibiting growth Tax-exempt property may explain high tax bills –increase in commercial tax base could correct imbalance

It’s not all about money Demographics –We’re moving to an older, less diverse population –Declining school enrollments could continue Community Values & Vision –See Williamstown Master Plan, Open Space Plan, etc.

For a copy of this slide show