The Finance Committee, comprised of the entire membership of the City Council, conducted a public meeting on Thursday, April 14, 2005 at five o’clock and ten minutes P.M. in the Sullivan Chamber.
The purpose of the meeting was to discuss ideas and suggestions around property tax issues to be considered by the Special Committee on Property Tax and the Finance Committee.
Present at the meeting were Councillor Brian Murphy, Chair of the Committee, Mayor Michael A. Sullivan, Councillor Kenneth E. Reeves, City Manager Robert W. Healy, Deputy City Manager Richard Rossi, Administrative Assistant to the City Manager Maryellen Carvello, Assistant City Manager for Fiscal Affairs Louis DePasquale, Director of Financial Systems/Operations Claire Spinner, Assistant City Manager for Community Development Beth Rubenstein, Budget Director David Kale, Principal Budget Analyst David Holland, Director of Assessment Robert Reardon, Principal Assessor Faith McDonald, City Solicitor Donald Drisdell, City Auditor James Monagle and Deputy City Clerk Donna P. Lopez. Also present was Althea Buckley, 83A Wendell Street, Elie Yarden 143 Pleasant Street, Karen Klinger, 20 Beech Street, Stash Horowitz, 12 Florence Street, John Moot, 44 Coolidge Hill Road and Robert Winters, 366 Broadway.
Councillor Murphy opened the meeting and stated the purpose. The meeting is to brainstorm about issues that the Special Committee on Property Tax should address.
City Manager Healy spoke about managing the level of expectations for results. The budget would be submitted to the City Council on April 25, 2005. He suggested that the ideas be categorized as:
- No legislation needed;
- Legislative change;
- Administrative; and
The Special Committee, with Councillor Murphy as Chair, would do further analysis and report back to the City Council.
Mr. Healy spoke about incremental assessment. This has not been adopted and could be added to the list. Currently, property is evaluated as of January of each year. This change would allow the Assessors and the Inspectional Services Departments to partially increase the assessment in January based on the percentage of work completed. Under the current system, if a Certificate of Occupancy is issued in June, that change to the assessment does not take place until the following January. There is an administrative cost to this change, and it has mostly been used by communities in poor fiscal condition.
Mayor Sullivan suggested refining the residential exemption by class and adjusting the minimum tax.
Councillor Reeves suggested a lobbyist to strategize to move the statehouse to address the onerous tax reality. He spoke about the California point of sale formula. He questioned the Mayor about his meeting with the Co-Chairs of the Taxation Committee. Mayor Sullivan responded that the Co-Chairs do want to provide tax relief, but are concerned with what will be passed by the Legislature. Councillor Reeves expressed his concern with the loss of the senior exemption and estate planning. Could the residential exemption go to a senior if a trust exists, he asked. Mr. Reardon responded that it depends on the trust agreement. The trust is recorded with the property deed. If there is a question, a legal opinion is requested. Councillor Reeves commented on planning for retirement and tax increases. The system should be revised around predictability. Councillor Murphy commented that the State Legislature does not take ownership of property tax. The value of the asset and the ability to pay has a big disconnect. He suggested that all options for retirees should be reviewed.
Mr. Healy stated that there are municipal relief packages being proposed in the state legislature. He included the following examples:
- a local option 1% meals tax;
- commuter tax;
- parking and building permit fees increases;
- Closing the telecom loophole at the state level. Telecom companies are taking advantage of the loophole in the tax law resulting in an estimated $.5 million in uncollected taxes.
Mayor Sullivan commented that the City needed to testify on the telecom issue. He also discussed the freeze on all hires until approved by the City Manager, increased health care costs and prescription drug buying power to control costs. Each employee has to pay a dollar amount for their health insurance; if this dollar amount were state wide it would help cities and towns stated Mr. Rossi.
Councillor Reeves questioned Mr. Healy about an annual cap on the property tax. Mr. Healy stated that this would require legislative change. Proposition 21/2 was envisioned to have this effect. Mr. Reardon stated that Florida has a five percent annual cap, but negative aspects are being felt.
Councillor Reeves asked how the new parking fine money would be expended. Mr. Healy responded that the money off sets the property tax, but it is not a dramatic increase. The significant increase would be in the residential parking permits. Parking fees can only be applied to specific areas by statutory regulation. Traffic calming projects would be funded from the parking fees.
Councillor Reeves stated that it is a social assault to mail four tax bills rather than two tax bills. The government should make the quality of life better. If the parking fees could be used for quality of life issues it would be less of a social assault. Councillor Murphy suggested that the fee structure should be examined for permits and construction.
Mr. Moot spoke about the auto excise tax status. A flat tax may make more sense since vehicles, regardless of their age, cause the same wear and tear on the roads. Mr. Healy responded that there are more registered vehicles in the city, but the cars are being kept longer. Councillor Reeves stated that many states do not have auto excise tax and have better roadways. Mr. Reardon informed the committee that the Legislature has made no attempt to increase the fee. There has been an increase in the excise commitment for the first time in the last three years stated Mr. DePasquale.
Ms. Klinger stated that the city does not explain what is going on. She favored accountability and more communication by the city with the residents. Residents should know what they are getting for their increased taxation. Councillor Murphy agreed that the city needed to do a better job in communicating to residents. The Tax Facts brochure is mailed to residents. The city could list what the taxpayer is getting, such as new library, rubbish pick up and youth centers stated Mr. Rossi. Ms. Klinger suggested printed material be sent with the tax bill.
Ms. Buckley stated that the statute did not give the city the authority to divide the city into different tax districts. The whole area of the city should be used to determine fair market value. Services are citywide, she stated.
Mr. Yarden stated that the issue is value. His first value is the earth. He wanted the elimination of sustainable growth because it is coming to the end of its value. He loves Cambridge and wants to see it as a model for other U.S. cities. Services are provided by tax dollars. Money should not be spent unnecessarily because it destroys the earth.
Mr. Winters stated that redistribution of burden would make sense. He questioned if there is an option to base residential assessments on income. Mr. Reardon stated that the assessment revolves around the market. One, two and three family homes are not sold for income. Mr. Winters stated that the assessing model should contain additional factors to make it fairer. He suggested affordable rent agreements be provided a tax break and that the Tax Facts brochure be expanded made more flashy and distributed more frequently. Ms. Spinner stated that an explanation of the shift in the tax burden from commercial to residential and how this shift affects the tax bills has been added to the website. The brochure will be mailed four times a year instead of two. Mr. Winters stated that some residents would like more detail and suggested a link to more detail be added.
Councillor Reeves commented that educational institutions should pay a percentage in taxes; these institutions are businesses.
Mr. Horowitz stated that the City has to be realistic about how much burden can be placed on the taxpayer. The increase in the city budget will come from the residents. The city needs to start to look at the coordination of services offered and how much residents are willing to pay. Residents, he said, would not be willing to come up with more taxes. The city has positioned itself to purchase a building for the police station. Mr. Moot stated that bonding does cost the taxpayer. The problem in Cambridge is that there is no push for efficiency. He felt that a new library was not needed. Councillor Reeves stated that Cambridge desperately needed a new library.
Mr. Rossi spoke about the investment made by the city to rebuild and modernize the water treatment plant. A library is a major service that all the residents utilize. The sewer system is being maintained annually. Mr. DePasquale stated that the City Council voted to have a 0% increase in the water rate.
In conclusion the ideas and suggestions were categorized as follows:
NO LEGISLATION LEGISLATION REQUIRED
Quarterly tax bills adjust minimum tax
Incremental assessment refine residential exemption by class
Increase local revenues/options
1% meals tax
ADMINISTRATIVE commuter tax
more communication with CA tax system
residents by administration Collective bargaining
expanded, flashy and more frequent agreement/health insurance
Tax Facts brochure Cap on property tax increase
Change scale/rate for MVE
OTHER Parking fund allocation/restrictions
Consideration for property owners to agree
Lobbyist to keep rents affordable for specified period
Information on Estate Planning of time
and trusts Tax exempt properties/educational
Hiring/freeze review institutions
Control of health care and
Options for retirees
Examine fee structure
Councillor Murphy thanked all those present for their attendance. He stated that this is a good start with the brainstorming. There will be a series of meeting of the Special Committee on Property Tax and the Committee on Finance.
The meeting adjourned at six o’clock and fifty minutes P.M.
For the Committee,
Councillor Brian Murphy, Chair