In Massachusetts, local property taxes pay for most municipal services. Usually, those taxes are calculated as a certain percentage of the assessed value of real property.
So, what happens when property values plummet because of a poor real estate market?
That’s exactly the question officials in Worcester are facing as they confront news that property values in the city have declined by almost 10 percent, or $1.2 billion, in the most recent review period. You can read more about the issue in today’s Worcester Telegram.
This scenario places heavy pressure on local leaders in these challenging economic times. If assessments are 10 percent below last year, that means tax rates will go up in order to collect the same amount of revenue as last year.
Unfortunately, the state does not seem to have a plan. At the very least we should reach consensus on an Early Aid Resolution in January to give cities and towns a funding number to rely on during municipal and school budgeting. One thing I know is that the amount of money cities and towns receive for local aid is a vital lifeline. Some people on Beacon Hill think that the state’s local aid accounts should be trimmed as a way for the state to solve its own fiscal problems. As a general matter it may be fair to say that everything should be on the table during budget talks, but I personally believe it’s more important than ever before that we protect local aid from cuts. Without local aid, and with problems like those facing Worcester, essential local services will be placed in unacceptable severe jeopardy.
I will continue to hold local and school aid as a priority.
What do you think? Please feel free to post a comment below.
