An Unclear Tax Future Makes the Rec Center an Irresponsible Investment

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by

Jane Snow

On May 13, residents will vote on funding an $8.3 million Recreational Center. This amount does not include furnishings, gaming/sporting equipment or any recreational materials. The city is referring residents to a tax calculator on its website to understand what the project will cost them. For me, it was $51 based on my current property assessment. For 30 years I will pay additional taxes, but the amount will rise every year with my assessment.

The city’s tax calculator also shows that extra taxes of $36 per year for the high school renovation will end this year and suggests I count that as a “savings.” But for the next 10 years, I will still be paying for previous debt exclusions for the Bresnahan school, the Nock/Molin school, and the Senior Community Center. About $404 per year.

There is no mention that the high school and middle school need new roofs now. The current estimate for this is $3.3 million. There is no mention that our wastewater treatment plant requires at least $4.65 million for critical upgrades, a fact just presented to the city council on April 22. Both of these projects will require borrowing. And they are not the city’s only needs.

On April 26 Mayor Reardon, speaking on “Local Pulse,” talked about the city’s new budget, which will start on July 1. He said the city recently learned there will be a 14.5% increase, $2 million, just for staff health insurance.

Mayor Reardon also talked about capital spending projects, including $68 million for our water system. None of the projects he discussed have funding.

The mayor’s proposed budget and capital spending plan will not be officially submitted to the city council and residents until May 12, although early voting for the recreational center began on May 3.

Why is this so important to me? Because there has been no time for residents to digest and ask questions about the coming budget and tax rate before agreeing to add taxes for a recreational center. Or to understand what other debt exclusions, extra taxes for essential projects, we will face within the next five years.

Jane Snow
Newburyport resident

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Comments

One response to “An Unclear Tax Future Makes the Rec Center an Irresponsible Investment”

  1. Beth Trach Avatar
    Beth Trach

    It’s a common misconception that individual taxpayers’ share of the Rec Center debt exclusion will rise with their assessments. While this may be true of their standard taxes within the levy, a debt exclusion—like the one we’re voting on—is different. Here’s how it works.

    First, the bond (loan) amounts for the Rec Center are set at a fixed interest rate over a fixed period of time. This functions like a home mortgage, so the principal and interest are added together and spread evenly over 30 years. The city therefore has a predictable, stable amount to pay each year for the Rec Center.

    That stable amount to pay is then divided among assessed properties each year. An individual homeowner’s share of that amount depends on their assessed value *relative to their neighbors’ assessed value*. When all property values rise together, individual shares remain relatively stable *in comparison to each other*.

    The only way an individual would pay a larger share based on their assessment is if their assessed value shot up faster than their neighbors—perhaps due to a home addition, new garage, or swimming pool. If that happens, their share would rise by a few dollars per year, but their neighbors’ would fall—again, because this is a relative amount.

    So while it is true that the essayist’s taxes may continue to rise each year, it’s not because of the excluded debt that we are voting on. That amount is predictable and, barring any major home improvement projects, stable.

    Reply

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