New Tax Rate Means Fitchburg Homeowners to Pay More
By Amanda Burke
FITCHBURG -- Single-family homeowners will be paying a larger share of the city’s tax base due to a new tax rate that sharply divided city councilors during a Council of Whole meeting Thursday.
Seven councilors favored the new rate, which shifts $703,192 from the residential tax base to the commercial-industrial tax bases, saying it will make the city more attractive to business in the long run.
Three councilors were opposed, arguing that homeowners should be protected from larger increases.
This vote means the owner of the average single-family home can expect to pay $238 more in taxes. Had the council approved the same rate calculation as last year, taxes would have increased $170 on average.
The city is working toward a single tax rate for commercial/industrial and residential taxpayers. Had the council voted for a single tax rate Thursday, the average homeowner’s annual taxes would have increased $306.
The new tax rate means the average industrial property owner will pay $600 less in property taxes this year, and the average commercial property owner will pay about $322 less.
Thanks to the city’s split tax rate, commercial/industrial taxpayers will still be paying a disproportionate share of the city’s taxes, paying for about 25 percent of tax revenues despite accounting for nearly 22 percent of the tax base.
“We have to remember that the lion’s share of the increase has nothing to do with the shift factor but with the budget that was approved by the city,” said Regional Assessor Harald Scheid on Friday.
The council last spring approved Mayor Stephen DiNatale’s $53,655,676 fiscal 2019 budget. The budget raised the tax levy by the maximum amount allowed under Proposition 2 1/2, plus $830,715 in new growth.
Ward 2 Councilor Paul Beauchemin mounted a passionate plea against shifting the tax rate. He said the council raised water and sewer rates, and it isn’t the right time to increase taxes.
“We raised everything and there’s only so much money in the pie for these families,” he said.
At-Large City Councilor Marcus DiNatale, waving his copy of the tax report in the air, vigorously disagreed with Beauchemin. He said residential taxes will rise regardless of shifting the tax burden because of the mayor’s budget.
He said “no one said it’s a cure-all” but shifting the tax burden off business “is one tool in the kit” that will benefit the local economy in the long run. For residents it is “short-term pain for long-term gain.”
In 1981, businesses represented about 40 percent of the tax base, DiNatale said. Businesses today represent 22 percent of the tax base.
DiNatale said the split tax rate has made the city unattractive to businesses. Fewer businesses locate here, leaving residents to pick up more of the taxes.
“That’s all you need to understand about why the dual tax rate is killing the city, has assisted in hurting the city, hurting the residents and their wallets,” he said. “Who covered the 50 percent drop? The residents. We’re trying to course-correct.”
City Council President Michael Kushmerek said Fitchburg is one of five communities in Worcester County with a split tax rate. Worcester is another one.
Failing to shift the tax burden, he said, could cause small businesses to leave the city. Those small businesses are largely the entities that will benefit from the measure.
“We’re not talking about Fortune 500 companies in Fitchburg,” he said. “Sure, we have several large companies in Fitchburg, the average company, the average commercial property that’s going to affected, we’re talking about dry cleaners down the road.”
At-Large Councilor Anthony Zarrella said the average resident will pay about $11 more in taxes for each percentage point shifted back homeowners. That means the average homeowner will pay over $66 more on their taxes this year than if councilors voted to keep last year’s rate.
For most that’s a manageable expense, he said. The city’s lowest-income residents, for whom the added expense will be most difficult to absorb, will pay less because their homes are valued lower, he said.
Regional Assessor George Bourgault offered the council “the good news”: Property values have risen the last five years, and in the past year 350,000 square feet of vacant or underutilized office space has been redeveloped, and several new development projects are underway.
“The last 18 months has been probably the best that I’ve seen it. The overall values in the city are up $209 million,” he said.
Scheid said the average residential tax bill in Fitchburg is “quite low” compared for the region.
He recommended the council shift 4 percent of the residential tax burden that was borne by businesses last year back to homeowners.
But councilors went one step further, voting 7-3 on a motion to shift 6 percent of the tax burden back to homeowners, a figure first floated by Zarrella. Ward 5 Councilor Marisa Fleming was absent.
DiNatale ultimately voted against the motion, arguing it was too large of a single-year shift.
Beauchemin and At-Large Councilor Sam Squailia also voted against the motion. Squailia said she supports a more gradual change to a unified tax rate, but the trend since 2014 has been to shift it 2 to 4 percent annually.
“In that time we’ve also raised the water bills multiple times, the sewer bills multiple times and, of course, I’m sure the electric rate will go up, so 6 percent feels too drastic to me,” she said.
Roy Nascimento, president and CEO of the North Worcester County Chamber of Commerce that represents 1,000 employers in 17 communities, said the city’s march toward a unified tax rate is an effective way to signal it is open for business.
“A single rate really benefits employers and residents alike a reduced commercial tax burden attracts further investment and helps create jobs,” she said.
CHANGES AT A GLANCE:
* Last year, the residential tax rate was $21.01 per $1,000 valuation. The owner of the average single-family home, valued at $178,845, paid $3,758 in taxes
* Last year, the commercial tax rate was $24.37 per $1,000 valuation. The owner of the average commercial property, valued at $318,097, paid $7,752 in taxes
* This year, the residential tax rate will be $20.49 per $1,000 valuation. The owner of the average single-family home, valued at $194,960, will pay $3,995 in taxes
* This year, the commercial tax rate will be $22.09 per $1,000 valuation. The owner of the average commercial property, valued at $336,300, will pay $7,430 in taxes