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Tyer's tax rate greenlit as Pittsfield council rejects using additional $1 million in free cash to reduce property tax bills

Mayor Linda Tyer tax rate.jpg

Pittsfield Mayor Linda Tyer addresses the City Council on Tuesday night, in defense of her proposed tax rates. Tyer said using more of the city's free cash to cover the tax levy would hurt the city in the long run.

PITTSFIELD — The City Council voted 8-3 on Tuesday night to accept Mayor Linda Tyer’s original tax rate proposal, deciding to reject a proposal from some councilors to use an additional $1 million in free cash toward the city’s tax levy.

The net result will be an increase in the property tax bill for most Pittsfield homeowners, driven by rising property values and a tax levy that increased 3.17 percent over last year’s levy — the amount of money the city needs to raise from property taxes to finance the city’s budget.

At the heart of the discussion during the council meeting was whether it was better to give residents a break on their taxes this year or add to the city’s financial reserves that might one day cover future city costs. The end result would be the same — an increasing property tax bill for most residents and commercial property owners — but one proposal asked a little less from residents upfront.

“The time has come, and we need to use some of our rainy day fund to help individuals [who are] struggling,” Ward 7 Councilor Anthony Maffuccio said.

The council and Tyer agreed in June to put $1.5 million in free cash — that is, the money left in city coffers at the end of a fiscal year and that isn’t restricted in use — toward the city’s levy before passing a $179.2 million operating budget.

The proposals by Tyer as a result of that agreement, and the ones eventually approved by the council Tuesday, set the residential property tax rate at $18.56 per $1,000 in assessed value and the commercial property tax rate at $39.90 per $1,000 in assessed value. At those amounts, the rate for residential properties will decrease 69 cents per $1,000 in assessed value and the rate for commercial properties will decrease 9 cents over the fiscal year 2021 rate.

But, given how much property values have increased, many residents will end up paying more in city property taxes this year than they did last year. Over the course of the fiscal year, the owners of an average single-family home will pay $4,121.67, an increase of about $197, or 5 percent more, than their bill from the previous year.

The alternative before the council — to use additional free cash to lower the levy further — would have set the residential rate at $18.36 per $1,000 in assed value and the commercial rate at $39.48 per $1,000 in assessed value. Over the course of the year, that would mean that the average single-family home’s property bill would hit about $4,077 — a savings of about $44, or about 1 percent over the approved rates.

“I think it’s irresponsible to say that saving a household $40 a year is more compassionate than having a municipality that can’t cover big expenses as they come,” Ward 6 Councilor Dina Lampiasi said. “As a city, we need to have reserves, because we don’t know what is coming our way.”

The majority of councilors and Tyer argued that reducing the city’s free cash would have a longer impact on residents than the upfront savings would and would break from smart financial planning strategies.

The Massachusetts Department of Revenue recommends that free cash “should be restricted to paying one-time expenditures, funding capital projects, or replenishing other reserves.”

“If we continue to subsidize the municipal operating budget with free cash, there is a ripple effect on future budgets that far, far exceeds the tax value of the $44 annually on the average single-family home,” Tyer said.

Tyer said that using the total of $2.5 million in free cash would leave the city with three options next year: continue to cover the tax levy by pulling $2.5 million in free cash; find cuts to the city budget in that amount; or set a tax rate “that will be significantly higher in FY23 than what we are proposing for FY 22.”

The City Council has voted to use at least $1 million in free cash toward taxes every year since 2015 — save for last year, when it agreed to use $750,000 in free cash toward the tax levy.

“We are elected to make hard choices,” at large Councilor Earl Persip III said. “The easy choice is to say, ‘Hey, give a million dollars,’ we get a couple headlines in the paper, and we’re the saviors — the saviors of the tax rate.

“What the smart thing to do is to build our reserves,” Persip said.

Meg Britton-Mehlisch can be reached at mbritton@berkshireeagle.com or 413-496-6149.

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