Officials in Springfield, Massachusetts are proposing to use budget surplus funds to help reduce real estate tax bills.
In announcing a recommendation for new tax rates for residential and commercial and industrial property in Springfield, Mayor Domenic Sarno proposed taking $2.5 million in so-called “free cash” to reduce what the city must collect in real estate taxes in order to balance the fiscal year 2022 city budget.
“On the residential side the market is soaring, and I want to try to bring some type of relief to our taxpayers,” Sarno said.
Even if the free cash is applied to the tax levy, as Sarno proposes, the average tax bill for a single-family home will increase by $216 if the tax rates the mayor recommended are approved by the City Council.
Sarno is proposing decreases to both the residential and commercial/industrial property tax rates. Specifically, the recommended residential rate is $18.82 per $1,000 in assessed valuation, a reduction of 8 cents. The commercial rate would fall by 19 cents to $39.04 per $1,000 in assessed valuation.
“I am just trying to be fair,” Sarno said.
Without the free cash in the mix, the tax bill for the average single-family home would go up by $260 under the rate recommended by Sarno.
The assessed value of the average single-family home in Springfield has gone from just under $173.000 to just over $185,000, according to Patrick Greenhalgh, Chairman of the Board of Assessors.
“The residential market is rising at such a rate, the commercial market is relatively stagnant as a whole,” he said.
City Councilor Tracye Whitfield, who chairs the Finance Committee, believes more can be done to cushion the impact rising home prices have on property tax bills.
“It is too much of a burden on seniors and too much of a burden on low income folks,” Whitfield said. “I can’t agree with ( the mayor’s) recommendation.”
She said the mayor’s proposal to use $2.5 million in free cash both this fiscal year and next for property tax relief is laudable, but does not go far enough. She said the total amount of free cash applied to the tax levy should be double the mayor’s recommendation.
“Let’s think about doing better for the community,” Whitfield said.
Springfield has about $26 million in free cash, but the city’s chief finance officer, TJ Plante wants to hold on to most of it.
“In my mind, $2.5 million this year and $2.5 million next year is fair and the right way to spend free cash, but once it is gone it’s gone, and we should get money back in the stabilization fund as quickly as we can,” Plante said.
Nancy Creed, President of the Springfield Regional Chamber, endorsed Mayor Sarno’s tax rate recommendations.
“I do think it does find a balance,” Creed said. “If we are trying to find common ground, that kind of equal reduction does make sense.”
After an almost two-hour discussion Tuesday night, the city’s Tax Rate Setting Committee voted 3-2 to recommend a residential tax rate of $18.77 per $1,000 in assessed valuation and a commercial rate of $39.20 per $1,000 in assessed valuation.
Under that proposal, the tax bill for the average single-family home would increase by $207.
