Property taxes going up 2.3% in Lenox; split rate to continue
LENOX — Owners of an average-value single-family home will see a 2.3 percent increase in their property tax bill to $4,693 during the current 2016 fiscal year.
At its recent annual tax-classification public hearing, the Select Board voted unanimously to continue the split rate between residential and commercial-industrial taxes. The practice of a higher rate for nonresidential payers was first adopted in 2004.
About 30 percent of the state's cities and towns use the split rate, said Wayne Lemanski, chairman of the Board of Assessors.
Over the past year, the average assessed value of single-family residences increased in value by 4 percent to $385,957, while condo values declined slightly, he reported. The average commercial property gained 3.7 percent, while industrial values rose by 14.5 percent.
As explained by Town Manager Christopher Ketchen, the town could have imposed an additional $738,000 in total property taxes — known as the excess levy capacity — without bumping up against the limits of Proposition 2 1/2.
"This represents money that the town could choose to tax but has elected not to because of a conservative approach to budgeting and the availability of additional revenue sources," he said.
"We've been able to maintain services through other means aside from taxation," Ketchen said, "which is somewhat atypical in a town with our breadth of services. It provides a 'soft reserve' in case hotel-motel taxes, property values or motor vehicle excise taxes were to experience a decline, or if we were hit by unexpected capital expenses."
"It's a good and prudent reserve to maintain, and it's something we don't want to see erode through improper management of our operating costs," he said.
Ketchen also told the Select Board that the overall tax levy increase of "a very modest" 1.36 percent is the lowest in 20 years — "another positive development."
Revenue from rooms and meals taxes totaled $2.1 million for the 2015 fiscal year, but it's projected at $1.75 million for next year.
Asked by Selectman David Roche to explain the predicted decline, Ketchen said: "We've chosen to take a conservative approach when we declare our revenues for the 'tourist tax.' That source, as well as motor vehicle excise, is highly exposed to the broader economy. We're declaring the revenue that we anticipate to collect."
Any additional tax revenue from rooms and meals beyond his projection would go into the town's general fund to be certified by the state as "free cash," for possible use to fund capital investments such as road and sewer projects.
"We don't want to be over-exposed operationally to a revenue source that's vulnerable to a downturn in the economy," Ketchen stressed.
Selectman Channing Gibson pointed out that some residents perceive the free cash as a "petty cash account, that we're actually sitting on money that we could spend differently. I think that's a real misperception about how town finances work, and it makes people feel that we could be doing things that we don't actually think are prudent to do. But they say, 'You've got the money.' "
Ketchen remarked that "it's an unfortunate title, it's not free, and it isn't cash. Everything is subject to appropriation by town meeting; it's not something that even this board could tap into on an arbitrary basis.
"It's prudent by any accounting standard to maintain a reserve," he suggested. "It's equivalent to a savings account and we rely on having that to do capital work every year — roads, equipment, building maintenance."
"Unlike much of the rest of the country, Lenox takes a very prudent approach to how it manages its reserves," the town manager asserted.
According to Select Board Chairman Edward Lane, "We've set the standard where citizens are used to a certain way of life, certain services provided, and at the end of the day we've got to pay for that stuff. It's a relatively modest tax increase, but some people are going to be hit harder than others."
As recommended by the assessors, the split rate approved by the Select Board for the 2016 fiscal year is $12.16 per $1,000 of assessed value for residential properties, and $14.95 for commercial property.
The statewide median rate was $15.69 for residential and $17.30 for commercial in the previous fiscal year.
Out of 351 Massachusetts communities, Lenox is ranked at 229th for taxation of residential properties and 234th for commercial.
The total value of all town properties is $1.138 billion, up 2.7 percent from last year, Lemanski pointed out, but it's still down by 9 percent from the peak in 2009.
Average Lenox single-family home value: $385,957 (2016); $371,696 (2015)
Average residential property tax bill: $4,693 (2016); $4,583 (2015)
Excess tax levy capacity: $738,549 (2016); $395,758 (2015)
Total room and meal tax revenue: $2,170,774 (2015); $1,750,000 (2016, projected)
Note: The 2016 fiscal year runs from July 1, 2015, to June 30, 2016.
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