While Springfield’s mayor and councilors battled last week over the city’s controversial trash fee [see “Round One to Tosado?”], they were in accord over at least one point: lowering the city’s tax rate. Just not in complete accord.
This time last year, Springfield taxpayers were ready to storm City Hall with pitchforks and torches over news that their tax bills would be, once again, climbing. Homeowners found themselves paying $19.50 in taxes for every $1,000 of their property’s value; businesses were now charged $39.25 per $1,000 of value—in both cases, the highest tax rates in the commonwealth.
As the deadline for setting this year’s tax rate approached, city politicians were keenly aware of the pressure from both residents and business owners to lower those rates. Mayor Domenic Sarno offered a proposal he called “pro-homeowner and pro-jobs”: cutting the residential rate to $19.46 per $1,000 and the business rate to $39.06. Such cuts, the mayor said in a press release, would be “made possible as a result of the city’s ongoing prudent fiscal management.
“During these difficult financial times, my goal is to bring responsible tax relief to homeowners and businesses and to spur confidence and economic development,” Sarno continued. “My administration is fully committed to improving the quality of life and increasing economic opportunities for our residents and businesses. My proposal on this year’s tax rates extends relief to homeowners as well as to city businesses which will translate into job creation and additional economic development.”
Under Sarno’s plan, the average single-family homeowner’s tax bill would drop $52 from last year’s, from $2,685 to $2,633.
In the end, the Council opted for a more modest reduction, lowering the residential rate to $19.49—a one-cent reduction from last year’s rate—and the business rate to $38.97, a drop of 28 cents from last year.
The new rates passed with the barest of majorities: six of the 13 councilors voted against the proposal, saying it didn’t offer enough relief to homeowners. A particular sticking point for some councilors was the fact that the tax rate for businesses saw a much more significant drop than the residential rate.
“I understand we need to try to alleviate some of the burden on the business community,” at-large Councilor Jimmy Ferrera told the Advocate last week. “But the fact of the matter is, homeowners are struggling. I voted no on the proposal because I felt that the [residential] taxpayers need more of a break.”
Ferrera also took a jab at Sarno for not being willing to dig a little deeper into the city’s reserves to propose an even lower rate for homeowners. He pointed to the city’s much-touted new fiscal strengths, including a projected $44 million in reserves.
“It’s great we have all this money in the bank,” Ferrera said. “But there’s a time when there has to be some relief, some give-back to the community.”
The new tax rate had been recommended by a subcommittee of the Finance Committee. Ward 2 Councilor Mike Fenton, who co-chaired that subcommittee with Finance Chairman Tim Rooke, said the group was conscious of the tension between the residential and business rates. At public hearings held by the committee, Fenton said, “The resounding message we heard was that we needed to reduce the gap between what businesses pay and what residents pay.”
In the end, both groups saw their rates cut for the first time in more than a quarter of a century. “We weren’t moving mountains,” Fenton said. “We’re just in a situation where we’ve got the two highest tax rates in the state [and] we had the opportunity to lower them both.”
Dissenting councilors, Fenton added, were pushing for a residential rate of just one penny lower than the rate recommended by the subcommittee. That difference would only have saved homeowners a few dollars off their bills, he said, but would have risked pushing the business rate over $39 per $1,000—a risky move in a city that’s struggling to attract new businesses and retain existing ones.
“That was something that was pretty symbolically important to us,” Fenton said. “We need to stay competitive. We need to have a competitive edge. In an environment where we’re losing businesses … it’s certainly not competitive to have a business rate of over $39 per $1,000.”
