Issue #20: Think it’s expensive to live in Hebron?? One of the most experienced and respected statisticians in municipal budgets, Bill Generous of Windsor, has shared not only a summary of his database study (which has also been used by CCM), but has also weighed in specifically on Hebron for us. He clearly states: 4.80% is the annualized effective tax rate change for Hebron over the last 10 years. Compared to the median of 3.57% for CT towns, Hebron has experienced an additional 1.19% per year for the last 10 years. 5.47% is the median Fiscal Year 2008-09 property tax burden as a percent of income for dwellers in single family houses in Hebron. A weak economy and high unemployment will continue to put pressure on elected officials and voters to limit spending increases this year.
Attached is an Excel spreadsheet containing Fiscal Year 2009-10 town tax and spending changes as well as budget referendum results for CT towns. It provides more details and summary statistics than the spreadsheet I sent back in September 2009. Here is a sampling of information contained in the attached spreadsheet:
75 towns had at least one binding town budget referendum for Fiscal Year 2009-10, which reversed a trend of yearly increases in referendum town counts that culminated with 82 towns for the preceding budget season.
19.8% of town budget referendums resulted in rejected budgets. That is vastly less than the 51.5% rejection rate experienced over the prior 3 years.
0.91% is the median effective tax rate change for CT towns which was the lowest increase in over a decade (40.2% of towns had a change of 0% or less).
1.70% is the effective tax rate change for all CT towns combined. It is materially higher than the median effective tax rate change since many towns with larger tax bases had higher tax rate increases.
1.69% is the median billed tax levy increase for CT towns.
2.21% is the median annualized effective tax rate change for CT towns over the last 3 years (3.57% over the last 10 years).
0.07% is the median spending decrease for referendum towns. There were median spending increases of 3.62%, 5.01%, and 5.23% for the previous 3 years.
1.17% is the median net spending increase for Regional School Districts (0.76% for median gross spending increase).
1.65% was the median extra tax increase on homes due solely to revaluation for fully implemented revaluations in referendum towns. This represents a significant drop from the prior 3 years of 4.32%, 6.48%, and 6.69%.
4.80% is the annualized effective tax rate change for Hebron over the last 10 years. Compared to the median of 3.57% for CT towns, Hebron has experienced an additional 1.19% per year for the last 10 years.
5.47% is the median Fiscal Year 2008-09 property tax burden as a percent of income for dwellers in single family houses in Hebron.
Fiscal Year 2010-11 Town Budget Season
Will the median effective tax rate change for Fiscal Year 2010-11 be higher or lower than last year's median increase of 0.91%? It could be lower but probably will be higher.
The median Grand List growth not related to revaluation last year was 0.59%. The median "real" growth this year in Grand Lists is about 0.54% so the median grand list growth is likely to affect the median effective tax rate increase in a similar way as last year.
The median aid to towns from the state decreased last year by almost 2%. The Governor's proposed budget will continue to decrease aid to towns this year but by not much more than a median of half a percent. Relative to last year, this would require about a median half percent less of a tax rate increase for this year. What is eventually adopted for state aid to towns may differ materially from what the Governor proposed.
Town revenue other than property taxes and state aid (i.e. interest income, building permits, and charges for services) decreased last year for the typical town. If the median change in this revenue drops at one-third the rate it dropped last year, it would require about one-half percent less of a tax rate increase for this year compared to last year.
A lagging result of a recession is usually a decrease in the tax collection percentage. As the "adopted" collection percentage decreases, the tax rate increases. Some towns started to lower the expected tax collection percentage in their adopted budgets last year. For purposes of projecting a median tax rate increase, I'm assuming the median budgeted tax collection percentage will dip about 0.20% for this budget season.
Although median spending was flat last year, non-education spending was typically lower and education spending was higher, albeit with a lower increase than usual. It would be difficult to match the cuts in non-education spending this year and education spending is not going to decrease if there is a risk of losing part of the Education Cost Sharing grant. The net result is that median spending will likely increase this year and not remain flat like last year. Based on the above assumptions in the preceding paragraphs, below are projected median effective tax rate changes for given median spending increases.
Spending Tax Rate
0.5%:::::::::::::::::0.79%
1.0%:::::::::::::::::1.51%
1.5%:::::::::::::::::2.23%
2.0%:::::::::::::::::2.95%
2.5%:::::::::::::::::3.67%
3.0%:::::::::::::::::4.39%
3.5%:::::::::::::::::5.12%
Even though many education budgets have been adopted at the Board of Education level, it is too early in the budget adoption process to adequately gauge how final adopted spending might change for the typical town for Fiscal Year 2010-11. Last year, the severe recession had a profound effect on town spending increases. A weak economy and high unemployment will continue to put pressure on elected officials and voters to limit spending increases this year. Towns that crash dieted last year may have the urge to resume previous consumption habits. However much spending ultimately changes, it appears that the median tax rate change will be higher than the median spending change for the second year in a row. Flat or declining state aid coupled with low "real" grand list growth will do that.
Bill Generous
Windsor, CT