NORTH ADAMS — An independent audit of the city's fiscal 2015 finances showed no substantial findings, but includes a warning that North Adams will quickly approach the tax levy ceiling.
The independent audit of fiscal 2015 was the fifth conducted by Scanlon and Associates under Mayor Richard Alcombright's tenure. The report was presented to the City Council at its regular meeting on Tuesday.
For the first time, this audit showed an "unmodified opinion," the best possible, which should help it if and when it goes out to the bond market, according to Tom Scanlon, Jr., a managing partner at Scanlon and Associates, which conducted the audit.
It did include a warning to the city that it is quickly approaching the tax levy ceiling and could bump against it soon.
In fiscal 2013, the city had $4,058,094 of breathing room before it reached the ceiling, but by fiscal 2016 that margin had dipped below $2 million.
Though municipalities have traditionally worried about the levy limit, which restricts tax levy increases to 2.5 percent every year, the ceiling provides an absolute endpoint. Once the ceiling, which is calculated as 2.5 percent of a city's total taxable property value, is reached, a municipality can't tax past it without an exemption.
As a rule of thumb, the ceiling caps the single-family homeowner's tax rate at $25 per every $1,000 of assessed value, Scanlon said.
"When I started 25 years ago, levy ceiling was a distant thought," Scanlon said.
Six of the seven cities that Scanlon and Associates audits are facing similar issues with the levy ceiling, Scanlon said. Of its 80 clients statewide, three of its clients have reached the ceiling in the past few years.
"It's starting to become real, where levy ceiling was nonexistent even eight years ago. I think in the next three years you're going to be dealing with this issue," Scanlon said.
Alcombright said the city has suffered losses in property value, which subsequently lowers the levy ceiling due to multiple demolitions in the city. Losses in state aid over the past decade have left holes in the city budget that were made up for through taxation, the mayor argued.
Property values, meanwhile, have lagged, Councilor Lisa Blackmer said.
Contact Adam Shanks at 413-496-6376.