What do Property Taxes Mean for your Town?
Earlier this year, the Boston Globe published an article comparing the average percentage of change in the property tax bills of owners of single-family homes in Massachusetts municipalities between 2016 and 2012. Unsurprisingly, most municipalities experienced a net increase in their bills, varying from 2% to 33.1%. However, there are a handful of mostly Western municipalities that actually saw a decrease in their average annual bill. The increases or reductions tend to correlate with a municipality’s choice to increase property taxes within the Proposition 2 ½ cap, override Proposition 2 ½, pass debt exclusions or reduce budgets.
Property taxes are the major source of funding for municipal budgets, making up a significant portion of spending for school and town services. Tax levels play into people’s choice of where to live.
Property tax levels contribute to a town’s fiscal health as reflected in measures like size of stabilization fund per capita and total debt outstanding per capita. But what is the correlation between property tax levels and statistics residents use to assess the success of their communities? Two measures to look at are graduation rates and overall academic performance.
To provide some perspective, we looked at the five municipalities with the highest average percentage property tax increases and those with the highest average percentage property tax decreases from 2012 to 2016.
Figure 1: Massachusetts Municipalities with Highest and Lowest Property Tax Increases as a Percentage in 2016
|Municipality||Type of Municipality/
|Percentage Increase 2012-2016||Municipality||Type of Municipality/
|Percentage Decrease 2012-2016|
|Avon||Mature Suburban Town/4,464||33.1%||Erving||Rural/1,788||-11.1%|
|Rockport||Maturing New England Town/7,175||32.6%||Monroe||Rural/120||-3.5%|
|Wilmington||Established Suburb/23,370||32.6%||New Ashford||Rural/224||-7.4%|
It is important to note that all five “highest decrease” municipalities are rural towns with relatively small populations. Size factors into types of school districts, taxable property, and public projects the region is characterized by.
Using MassAnalysis, we compared 2014 stabilization funds per capita and outstanding debt per capita for each municipality.
Figure 2: Municipalities Highest and Lowest Property Tax Increases -Stabilization Fund and Outstanding Debt per capita in 2014
|Stabilization Fund per capita (2014)||Outstanding Debt per capita (2014)||Municipality
|Stabilization Fund per capita (2014)||Outstanding Debt per capita
On average, the “highest increase” municipalities have smaller stabilization funds and larger debt per capita, while the “highest decrease” municipalities have larger stabilization funds and either small or nonexistent debt per capita.
The outlier, Wilmington, has the commonwealth’s highest percentage increase in property taxes and a population of over 23,000, but does not have a stabilization fund. A sizeable stabilization fund is important because it is a measure of a town’ preparedness for emergencies of all kinds. At the same time, large debt may indicate a number of situations like ongoing capital projects, infrastructure improvements or poor cash management.
Using data from MassReportCards, we also looked at high school graduation rates and elementary school ratings for each municipality reviewed.
Figure 3: Municipalities Highest and Lowest Property Tax Increases –Graduation Rates from 2013-2014 and Elementary School Rating from 2009-2014
|Type of School District||Graduation Rate||Elementary School Rating||Municipality
|Type of School District||Graduation Rate||Elementary School Rating|
*Information not presently available for ranking.
The “highest increase” municipalities on average have a higher graduation rate than the “highest decrease” municipalities, the outlier being New Ashford with a 100% graduation rate. For the “highest increases,” the average elementary school rating wavers between a B and B+. The average elementary school rating for the “highest decreases” wavers between a C+ and B-.
Roger Perry Transparency Intern