Toward the end of discussion about Wellesley’s omnibus budget at Annual Town Meeting on March 26, a Town Meeting member asked Executive Director Meghan Jop (through the moderator) if the town had a revenue goal in mind when it could stop raising property taxes.
In short, no.
In long, here’s what Jop said (see 2-hour, 46-minute mark of Wellesley Media recording):
“So you could stop raising taxes if you choose not to increase service, if you choose to diminish your work force, if you chosoe not to invest in your facilities, into public safety, and I think you’d see a diminished return on that investment in your property value. So to stay competitive in terms of, as you’ve been hearing, compensation, so raising taxation 2.5% plus new growth, so 2.5% if we look at school contracts vs. any other contracts and not adjusting for a cost-of-living adjustment, would you stay with your employer if they did not increase your base salary with the cost-of-living adjustments in every community where they’re increasing your costs in terms of my home, or my rent, or what have you in one of the most expensive places in the United States to live? So it is imperative in terms of operation, that is why we have taxation, to maintain the current level of operations that you have. I would say we use those dollars, and consider every penny of them, in evaluating how we’re going to do a budget each year. The schools certainly do, the town certainly does to try and get you the most economical return on your investment, and I would argue we’ve done a very good job on that, and that’s reflected in your property values. As a matter of fact, I looked up tax rates prior to this to see where Wellesley stood….”
Wellesley’s tax rate, Jop said, was the 72nd lowest in the state out of 351 communities, while property valuations are in the top five. “So arguably, I’d say, you are getting incredible value for your dollar,” she concluded with.
So while Wellesley has a comparably low residential property tax rate of $10.41 per $1,000 of assessed value, what residents see is a median tax bill that has risen 20% over the past 5 years to $16,088.
I’ve poked around on this topic before as well, asking people in the know about town, and found the answer to be that it’s highly unlikely tax increases will stop unless Wellesley somehow is able to drastically diversify its source of funds. Property taxes are projected to account for 81% of FY25 revenue, and Wellesley has repeatedly rejected the notion of shifting more of the tax burden on to commercial property owners due to the nature of Wellesley’s commercial districts (we don’t have a big industrial business base). While Wellesley has bounced back since the pandemic with improved local receipts from restaurant taxes, etc., that amount still pales in comparison to the property tax dollars.
Wellesley could also look at trimming its budget, say by eliminating positions, though it learned a few lessons about operating in a lean way during the pandemic personnel-wise. There was no talk at Town Meeting, other than with schools, of reducing headcount. In fact, the town is adding positions, such as for more custodians to address larger and more buildings, and a transportation and mobility coordinator who in theory could largely offset a budgeted $86K salary by securing the town more grants.
The town’s budget should be reduced in coming years as it completes funding of post-employment benefit plans and pays off debt obligations for big projects, but other big project costs and higher employee costs will likely offset that.
Revenue from new construction under housing development initiatives, plus spreading out the tax burden with the addition of new multi-family projects, could impact tax bills, but probably not significantly. The total assessed valuation of property in town is $16.5B for FY24, so it would take an awful lot of new growth to boost that enough to really change the tax rate in a noticeable way.
Outside of that you’d probably need to count on the state to change Proposition 2.5 to a lower allowed tax percentage increase or to come through with way more aid.
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While I, like everyone else, wince a little bit whenever I open my property tax bills, I find the idea of freezing them more than a little naive, and I wish we as residents and citizens were a little better informed.
Simply put, even at level service, inflation means the town’s costs are going to rise from year to year. Revenue will always have to increase to meet those costs. (Notice that Prop 2 1/2 means that in any year when inflation tops 2.5%, the Town will have a budget pinch.)
I’ve heard a lot of Town residents saying, “I’ve lived here since [some date in the previous century] and my taxes have gone up by [some large multiple], this is outrageous!” But they never say anything about the increase in their property value, or their household income, over the same time period. I’m guessing that even if those three things (tax bills, property values, household income) aren’t perfectly in sync, they probably have gone up by comparable amounts, with the obvious exception of fixed-income retirees.
If you’re paying attention, Town Meeting can be an interesting crash course in municipal finance. It sounds pretty boring on its face – sometimes it can be pretty boring – but it’s important and very much worth understanding.