Taxes up as communities are buried in bills

Healthcare, pension, energy costs cited

Email|Print| Text size + 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."

Lynn, the region's largest city, will hike bills 5 percent, to $3,140 per year for the average homeowner, the third-lowest annual bill in the North area after Salisbury ($3,005) and Peabody ($3,050).

At the other end is Wenham, which was awaiting word late last week on state approval of a $12.92 rate for fiscal 2008 that would push the average bill to $7,959, a $350 increase. Second on the area list is Manchester-by-the-Sea, where the average home is assessed at $1 million and tax bills will average $7,905, a $287 increase. In Boxford, the average bill will be $7,423, an increase of $343.

Salem's average property tax bill will hit $4,054, an all-time high that is $227 more than homeowners paid last year, according to data presented last week at a City Council meeting.

In Everett, which has a large industrial base, homeowners will pay an average of $686 more: $3,523. Danvers's bills are going up $196, a 5 percent hike that will boost the average to $4,230.

The increase will be reflected in third-quarter tax bills due to go out Dec. 31. New tax rates for communities were approved this month by the state Department of Revenue. State law limits the amount of property taxes a community can collect to no more than 2.5 percent more than the prior year, excluding new growth.

"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.

"It's better than the plus-6 percent rate we saw earlier in the decade," Widmer said. "But communities still face the twin challenge of escalating property taxes and declining services."

The tax hikes also come as property assessments in some communities have remained flat or declined.

In Lynn, for example, the average value of a single-family home in 2007, compared with the year before, remained at $286,000. But Peabody's average assessed value declined 10 percent, to $351,800, while in Danvers, single-family assessments dropped 6 percent, to $406,800, data shows.

Lower assessments do not mean lower tax bills because a community still has to raise a certain amount of money to pay its bills. "Tax bills go up because city spending goes up," said Peter Caron, the city assessor in Lynn.

In Nahant, a peninsula town with no commercial tax base, property tax bills will increase an average of $800, to $5,306. The rise is due to a tax increase approved by voters three years ago to renovate the town's only elementary school and the Board of Selectmen's decision to shift the water and sewer debt to property tax bills.

"We had the cheapest tax bills and the highest water bills on the North Shore," said Selectman Robert Frary. "It was a poor decision, in the past, to put the debt we owed on the water bills. It's infrastructure improvements, and it belongs on the tax bills, so we shifted it there."

Frary said the move will enable taxpayers to claim the debt as a deduction.

One Nahant resident thinks the shift makes sense. "Our water bill was really, really high," said Kathy Ryan, 43, a mother of two. "I'm never for more taxes. But our tax rate was pretty low. I think the assessments have always been fair."

Another Nahant homeowner, Loreen Tirrell, said, "We have to look, as a town, at how to generate revenue that doesn't totally put it on the back of taxpayers." Tirrell, 49, a mother of two school-age children, added, "I've watched my mortgage go up and up and up. A lot of people have."

Some communities have tried to ease the burden of tax hikes on homeowners by adopting tax exemptions.

State law allows a community to grant exemptions to owner-occupied properties, where a discount of up to 20 percent is subtracted from the total average assessment.

Most single-family homeowners in Chelsea qualify for the exemption, said Ken Stein, city assessor.

Everett revived the exemption this year after suspending it last year. Malden adopted the exemption for the first time this year, allowing a 5 percent discount. "We've taken a cautious approach," said Bob Donnelly, city assessor.

So far, 7,641 of the city's 12,400 single-family homeowners have signed up for the exemption. The average tax bill for a homeowner who opts in would total $2,960,, instead of $3,149, according to the assessor's office.

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."

Kathy McCabe can be reached at

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