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NORTH YARMOUTH — A tax on big-ticket personal property, due to be removed in the next fiscal year, could add 17.5 cents to the town’s tax rate, Town Manager Rosemary Roy said in an interview March 22.
The repeal would reduce North Yarmouth’s total taxable value by $4 million, although the town was only collecting about $100,000 from the tax, she noted.
The town’s fiscal 2018 tax rate will ultimately be derived by adding town expenses (minus town revenues), county and school assessments, and tax increment financing funds, and then dividing that total by the town’s total taxable value, currently $425 million.
Fairness was one reason the Board of Selectmen opted last November to eliminate the personal property tax, Roy said.
The tax assessor focuses primarily on real estate valuations, and then updates the personal property tax assessment through declarations that businesses complete, which tends to be done on the honor system, she explained.
“However, occasionally assessors can on their own (as time allows) or through the town officials be asked to visit businesses to review the records they have,” Roy noted in an email March 22. “Assessors pick up new homes, etc., through real estate transfers and activity in the Code Enforcement Office, and this, of course, is the priority. There is nothing generated for (personal property) outside of the form, which makes the assessor’s collection of information on the difficult side. Therefore, some tend to think this is an unfair process.”
During the Board of Selectmen’s Nov. 1, 2016, meeting – available on northyarmouth.org – Alex Konczal of Atlantic Valuation Services, which serves as the town’s assessor, recommended doing away with the tax.
“We’re finding that personal property is a large task in the assessing office, for a very small return,” he said. “It’s less than 1 percent of town revenue, and yet I definitely spend … somewhere in between 5 and 10 percent of my time dealing with personal property.”
Konczal added that the tax is “difficult to enforce properly, because it’s a voluntary program. You only get assessed if you either declare, or I go out and look for personal property that is used in a business.”
“For the people who manage to get away with not declaring, the people who are declaring are unequally disadvantaged by the fact that they’re honest enough to file for their personal property tax,” Konczal added.
“Voluntary taxes don’t work,” Selectman Paul Napolitano said during the meeting. “Go after it all, or don’t touch it at all.”
On a home assessed at $300,000, a 17.5-cent tax rate hike would mean a $52.50 increase on the tax bill.
Residents at Town Meeting on Saturday, April 8, will vote on budget items by line item, and in some cases choose between differing recommendations from the Board of Selectmen and Budget Committee. Depending on which spending amounts voters choose, the current tax rate of $17.62 per $1,000 of property valuation could rise between 17.5 and 25 cents, Roy said.
That increase, which does not reflect county and school assessments, would be primarily influenced by removal of the personal property tax.
This would not be the first time the town adjusted how it assesses personal property. The town had collected the tax from both residents and businesses in fiscal 2016, creating a personal property valuation of $7.5 million. But the Board of Selectmen, when hiring a new assessing firm, opted out of the resident collection for fiscal 2017, resulting in a reduction in that valuation to $4 million, Roy said.
The change added 9 cents to the fiscal 2017 tax rate.
While the decision to remove the tax rests solely with the Board of Selectmen, residents could still raise the issue during next month’s Town Meeting, Roy said.
“It has to be crafted (in such a way) at the Town Meeting, because there’s no article that refers to this,” she explained. “… The moderator will decide whether or not it can be brought up.”
The board could still decide after the annual meeting to reinstate the tax, or instead do so in fiscal year 2019, Roy said.
The Board of Selectmen is recommending a municipal budget of $2.56 million, an increase of 8.23 percent, or nearly $195,000. The Budget Committee recommends a $2.53 million budget, up nearly 7 percent, or about $164,000.
One difference regards adding a part-time administrative assistant for Roy; the Budget Committee supports the approximately $24,000 expenditure, and the Board of Selectmen does not.
Meanwhile, the Select Board favors adding a $31,000 heavy equipment laborer to the Public Works Department, and the Budget Committee does not.
Also, the Board of Selectmen is calling for a transfer of up to $200,000 from North Yarmouth’s undesignated fund balance to offset taxes, while the Budget Committee wants to use up to $150,000.