Set­ting city taxes gets ‘com­pli­cated’

Stamford Advocate (Sunday) - - Front Page - By An­gela Carella

STAM­FORD — In the meet­ing that es­tab­lished the tax rate for the next fis­cal year, mem­bers of the Board of Fi­nance raised a ques­tion many res­i­dents ask when they look around the city.

Why, con­sid­er­ing all the de­vel­op­ment go­ing on, do taxes still go up?

The city col­lects more rev­enue each time a new prop­erty is added to the tax roll, so there should be no need to raise rates, Repub­li­can mem­ber Kieran Ryan said last week as the board de­cided le­vies for 2018-19.

“There is a lot of com­mer­cial de­vel­op­ment, and there has been for a long time,” said Ryan, a real es­tate at­tor­ney. “The city al­ways prom­ises tax re­lief, but it doesn’t ma­te­ri­al­ize. Prop­erty taxes go up year

af­ter year.”

Res­i­dents need a break, Ryan said.

“The me­dian in­come in Stam­ford is flat, and has been for 10 years,” he said. “Since 2003, the av­er­age value of a typ­i­cal sin­gle­fam­ily home has re­mained flat, but in that same pe­riod, taxes have in­creased sig­nif­i­cantly. In some cases, they have dou­bled.”

So even though the board low­ered the av­er­age mill rate, which de­ter­mines how much a prop­erty will be taxed, by 4.6 per­cent, Ryan and the other Repub­li­can board mem­ber, Sal Gabriele, voted against it.

“May­ors, go­ing back to Dan Mal­loy 20 years ago, al­ways say de­vel­op­ment will help the com­mu­nity by low­er­ing taxes and pay­ing for in­fra­struc­ture im­prove­ments,” Gabriele said. “Yet, taxes keep in­creas­ing and the roads are still in ter­ri­ble shape. I don’t see how it works for the av­er­age tax­payer.”

But it does, said board chair­man Richard Freed­man. He and the other Democrats voted 4-2 to pass new mill rates for the city’s four tax­ing dis­tricts, which av­er­age out to 25.28.

“The fact is that de­vel­op­ment has kept taxes down. It adds to the Grand List, which in­creases the tax base,” Freed­man said. “When there are more tax­pay­ers, the share for each is less.”

‘Wicked com­pli­cated’

Tax rates are the prod­uct of two things, Freed­man said — the in­crease in ex­pen­di­tures and the change in the Grand List, which is the to­tal of all tax­able prop­erty in the city.

“Ex­pen­di­tures go up, at least, with in­fla­tion, and of­ten faster than in­fla­tion,” Freed­man said. “The rea­son they of­ten go up faster is that pen­sion obli­ga­tions are grow­ing faster than in­fla­tion. So even if the city has the ex­act same num­ber of em­ploy­ees year af­ter year, wages will go up about 2 per­cent — roughly the rate of in­fla­tion — and pen­sions will go up 6 per­cent to 10 per­cent.”

Pen­sions, along with health-in­sur­ance costs, which also rise faster than in­fla­tion, com­prise about a quar­ter of the city bud­get, “so the only way to keep spend­ing fixed is to re­duce the head count, and the only way to do that is to re­duce ser­vices,” Freed­man said.

“But peo­ple want their garbage picked up, they want the streets plowed, the parks cleaned, po­lice and fire pro­tec­tion, and small class­room sizes,” he said. “So you have to bal­ance the eq­ui­ties, and it’s wicked com­pli­cated.”

Grand growth

De­vel­op­ment makes the job eas­ier, he said. Freed­man said he has worked on five city bud­gets and, for each, the Grand List, fed by de­vel­op­ment, has grown at least 1 per­cent.

“The Grand List is roughly $20 bil­lion. If it in­creases 1 per­cent, that’s $200 mil­lion, which is a lot of tax rev­enue. So if spend­ing goes up 3.5 per­cent, the ef­fec­tive tax in­crease is only 2.5 per­cent, off­set by the Grand List in­crease,” Freed­man said.

“All this de­vel­op­ment has pro­duced a pretty ef­fi­cient tax­ing and spend­ing model,” he said. “Some peo­ple may not want to hear that or be­lieve it, but it’s the truth. We have a pretty good sit­u­a­tion in Stam­ford.”

The re­sult this bud­get sea­son is an av­er­age tax in­crease of 1.9 per­cent for 2018-19. But be­cause prop­er­ties were reval­u­ated last year, that rate will ap­ply to al­most no one. The tax bill for each prop­erty will de­pend on its new value, a process the city un­der­goes every five years as state law re­quires.

Taxes on sin­gle-fam­ily homes are ex­pected to rise slightly, on av­er­age, but mul­ti­fam­ily homes could see 30 per­cent in­creases be­cause they priced out higher in the reval­u­a­tion. Taxes on apart­ment build­ings are ex­pected to go up an av­er­age 8.6 per­cent, and com­mer­cial prop­er­ties 5.5 per­cent.

The de­lib­er­a­tion

Dur­ing their meet­ing, fi­nance board mem­bers hashed out how much to place in the con­tin­gency re­serve, the fund that cov­ers non­bud­geted ex­penses that arise dur­ing the year. Their dis­cus­sion il­lus­trates how they weigh de­ci­sions.

Mayor David Martin orig­i­nally asked for $4.9 mil­lion for the con­tin­gency re­serve, but a fel­low Demo­crat on the board, David Kooris, made a mo­tion to in­crease it to $6.5 mil­lion.

It’s be­cause the domes that hold salt used dur­ing snow­plow­ing are empty, a num­ber of union con­tracts re­main un­set­tled, po­lice al­ways need more over­time money and rep­re­sen­ta­tives “want to leave room for a strat­egy for parks en­force­ment,” Kooris said.

Then there’s the wild card, he said — fund­ing from the state, which is bat­tling big bud­get short­falls. Last year, the city put money in the con­tin­gency re­serve in case promised state aid fell through, but it wasn’t enough.

“No one last year thought the gap would be more than $2 mil­lion, and it was $4.7 mil­lion,” Kooris said. “We can jus­tify adding to con­tin­gency just on mis­cal­cu­la­tion of state aid.”

Ryan and Gabriele said the mayor would have known that when he for­mu­lated his bud­get and re­quested $4.9 mil­lion in con­tin­gency, and he did not enu­mer­ate the last-minute need for more.

‘Be ready’

Demo­cratic board mem­ber Mary Lou Ri­naldi disagreed.

“I am prob­a­bly more con­ser­va­tive than my fel­low Democrats, but we have to have enough money to get done what needs to be done in the next year,” Ri­naldi said. “We have to be ready. We can’t set the con­tin­gency so close that we are un­der­funded.”

Freed­man un­der­scored that.

“Had we not set aside that $2 mil­lion last year, we might be send­ing out sup­ple­men­tal tax bills to peo­ple right now,” he said.

The fi­nal tax in­crease struck a good bal­ance, Demo­crat Dudley Wil­liams said.

“We all make a con­certed ef­fort to keep in­creases as low as pos­si­ble, but the other side of the coin is that there are ser­vices we need to pro­vide,” Wil­liams said. “We may dis­agree on the size of the con­tin­gency fund, but it’s not a re­sult of be­ing in­dif­fer­ent or be­ing ig­no­rant of the fact that even a mod­est tax in­crease presents a real strug­gle for in­di­vid­u­als and fam­i­lies. I am acutely aware of that. I don’t dis­miss it or take it lightly. Th­ese are hard de­ci­sions, and there are con­se­quences. I’d rather the tax in­crease was zero, but I think 1.9 per­cent re­flects a good ef­fort on all our parts.”

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