Pittsfield warned that leeway to tax without an override disappearing

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PITTSFIELD — The city's auditing firm is once again warning that stagnant property values and rising taxes are bringing Pittsfield ever closer to its maximum tax levy ceiling under Proposition 2 ½.

In briefing the City Council on audit figures for the fiscal year completed June 30, 2015, Thomas Scanlon Jr. on Tuesday said the city's taxing leeway continues to disappear. He said the levy ceiling is $6.79 million for the current fiscal year, down from $8.45 million the previous year, and well below the cushion of $22 million from fiscal 2009 — when the recession began to negatively affect property values.

That means the city's ability to raise its tax assessment without a Proposition 2 1/2 override vote could disappear within a few years if annual tax increases continue according to the recent average. The city's levy ceiling already has fallen $1.7 million below the annual 2.5 percent increase normally allowed under Proposition 2 ½.

Scanlon, of Scanlon & Associates of Deerfield, said Pittsfield is the first of the many municipalities the firm works with that has reached its levy ceiling, although others are in a similar position because of stagnant property values since the recession.

In setting the current city tax rates in November, the council approved a tax levy of $76.78 million for the current fiscal 2016, up from the $73.51 million level approved for fiscal 2015.

In November, the total valuation of city property was reported at $3.34 billion compared to $3.33 billion in fiscal 2015.

Acknowledging on Tuesday that "I don't have to run for office in the city," Scanlon once again recommended raising additional taxes over the next two budget years before the tax ceiling and the annual tax levy meet, and placing that money into a stabilization fund.

Scanlon said bonding companies take note of a municipality's taxing capacity and consider it an asset when issuing a bond rating, which can affect the rate of interest the city would have to pay in borrowing.

Raising taxes to place money in a stabilization fund could prove an extreme challenge, as the city faces numerous project or programming needs, such as for roadwork and wastewater treatment system upgrades, and calls for more police officers and firefighters and equipment, as well as for maintenance work on school buildings and City Hall.

Asked how much growth in total property valuation would significantly raise the city's debt ceiling, Scanlon said it would take about $39 million in new growth — such as construction of a casino — to raise the debt ceiling by $1 million.

"I think you will be there for a while," he said of stagnant property valuations.

Meanwhile, the School Committee is beginning its review of the fiscal 2017 budget, which now reflects a possible $2 million tax increase.

Matthew Kerwood, the city's director of finance and administration, told councilors Tuesday that the administration of Mayor Linda M. Tyer is exploring all options for creating a climate that fosters growth in Pittsfield while efficiently managing expenses, including cutting costs where necessary.

Kerwood said the situation is not a simple one of making cuts or increasing taxes, adding, "It is much more complicated than that."

Contact Jim Therrien at 413-496-6247.


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