Budget Book Seems To Under-Project FY2024 Tax Increases by 23%

 

Photo by Towfiqu barbhuiya on Unsplash

The town released an updated "FY2024 Budget Book" on Monday, March 6th.   It corrected some of the resident-reported errors that were found in the March 3rd version.  (LINK)   

The final page of the budget book is a projection of next year's tax rate, and the impact on our real estate taxes of a budget that anticipates approval of a $1.3 million levy limit override.  The projection shows an $18.20 per $1,000 tax rate,  up from $17.19 this year.    According to the "executive summary" this is meant to show the "Estimated New Tax Liability,"  but if that's the case it's a miscalculation.

The new "3/6 Version" of the budget book seems to show the proposed FY2024 tax levy on page 34.  There are two lines listing levy amounts:

"Real Estate & Property Tax INSIDE"   $21,779,615   (an increase of $766,480 over FY2023) 

That seems to reflect last year's maximum allowed levy -- $21,150,844 -- increased by 2.5% to $21,679,615 for FY2024.  (The recapitulation sheet to calculate the FY2023 maximum levy is on page 135.)    The additional $100,000  is presumably an estimate of "new growth" from FY2023 -- the town is allowed to increase the levy limit by what new construction and improvements would have been levied at the FY2023 tax rate.

"Real Estate & Property Tax OUTSIDE"  $910,982  (no change from FY2023)

This leaves a deficit of $1,043,546 that the town cannot levy unless the levy limit is increased. 

That would make the full FY2024 tax levy after an override:

$21,779,615 

+  $910,982

+$1,043,546

-----------

$23,734,143

That's a $1,673,122 levy increase from FY2023.    We wouldn't need the to levy the maximum in FY2024:  after a $1.3 million dollar override, the town would still have a comparatively spacious $257K in additional levy capacity remaining.

In calculating the "Estimated Tax Liability" shown on page 153 and in the "Executive Summary" the town made some errors.   The town used a free calculator provided by the "Division of Local Services" and entered "$1,300,000"  as the amount to adjust by.    The calculator is not perfect to start with, but $1.3 Million is neither the amount of taxes we need the override to levy ($1,043,546) or the full levy increase in the FY24 budget. ($1,673,122.)    You can tinker with the calculator the town used here.

You can verify the error by recreating the calculation.  At $18.20 per $1000, the town would not generate enough revenue to meet the budget.  We could balance the budget with free cash...but then we wouldn't need a $1.3 million levy limit override.

The proper projected tax rate, using this approach, is $18.49 per $1000.  That raises the amount needed for the FY2024 budget.

The estimated tax liabilities in the budget book are low by about 23%.   Here's a corrected table of projected FY2024 tax liabilities, showing the difference.   (Compare with what's on page 150 of the budget book.)