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Wednesday, May 23, 2012

GoLocal: Worcester’s Contentious Tax Debate

Walter Bird Jr., GoLocalWorcester Reporter

Whether they liked it or not, Worcester taxpayers finally found out what their tax rate is this year. On Tuesday, just weeks before the end of the fiscal year, city councilors set the residential rate for fiscal 2012 at $16.84 per $1,000 assessed value. The commercial-industrial rate was set at $29.46 per $1,000.

The vote was hardly unanimous – a 6-5 decision in favor of Chairman and Mayor Joseph Petty’s motion. Three other proposals motioned or supported by four councilors never came to a vote. The decision – made during a tax classification hearing that was held months after it should have been – increases the residential tax rate by 78 cents, from $16.06 in fiscal 2011, while reducing the commercial-industrial rate by $15.15. It didn’t satisfy everyone and it wasn’t what the Worcester Regional Chamber of Commerce had hoped for (its member businesses had backed a proposal that would have bumped the residential tax rate up to $17.18 and lowered the commercial-industrial rate to $28.56).

In the end, some saw it as a move toward what many councilors agreed should be the end game – a single-payer tax rate that was shelved in 1984 when the city adopted a dual tax system. It just won’t happen overnight.

“It’s a move in the right direction,” said Chamber President and CEO Richard Kennedy. “I think it represents positive movement.”
'Fair, Competitive'

In proposing the new rates, Petty called them “fair” and “competitive for the city of Worcester.”

At-Large Councilor and former Mayor Joseph O’Brien, one of those voting in favor of the new rates, said he used to be committed to voting for the lowest possible tax rate for residents.

“That was a mistake,” he said, adding, “When you try to find the middle ground, you run the risk of making both sides unhappy.”

At-Large Councilor and 15th Worcester District state representative candidate Kate Toomey also voted in favor, calling for “some form of compromise.”

“We need to find a fair mix between homeowners and the business community,” said Toomey. “This is the most difficult vote during my time in office. But the mayor’s compromise is the best compromise.”

In Support

Also supporting the mayor were At-Large Councilors Frederick Rushton and Michael Germain, along with a reluctant District 1 Councilor Tony Economou, who had suggested residential and commercial-industrial rates of $17.08 and $28.82, respectively. His was the closest to the chamber’s proposal.

“This is an opportunity to seize the moment, to keep people in their homes and in their jobs,” Economou said. “It’s not residents. It’s not commercial. It’s all of us. We’re all in this together.”
The Opposition

District 5 Councilor William Eddy, At-Large Councilor Konstantina Lukes, District 2 Councilor Philip Palmieri, District 4 Councilor Sarai Rivera and District 3 Councilor George Russell all voted against Petty’s motion, with Eddy looking at the sheets of paper listing the different rate proposals and saying: “I can't find in here justification to look voters in the eye and tell them why I’m raising their taxes this year.”

Russell turned to the mayor when he spoke and said, “I hate to say I told you so, Mr. Mayor, but I told you so.”

The councilor has been a fierce critic of a property valuation process that saw the average residential property value decrease by 3.8 percent over last year. In contrast, some commercial properties saw their valuations skyrocket – in the most severe cases by as much as 400 percent.

“I told you this assessing process was not correct,” Russell said. “I’m not going to turn my back on voters to make good on the mistakes of past assessors or the current assessor.”
'A Challenge'

Among the businesses suffering sticker shock when commercial valuations came out was Saint-Gobain, formerly Norton Company. The average valuation for its properties went up 191 percent, and one of company's properties was on the 400 percent list.  Bob Smith, a vice president with the company, sounded a warning that Saint-Gobain could someday exit Worcester.

“We support a $70 million local payroll and spend $80 million in local community businesses,” Smith said. “We’ve donated $15 million in this city since 1990. Over the past two years, we’ve spent over $10 million to address infrastructure issues. The current valuation puts Saint-Gobain in Worcester among the highest-cost plants globally. It is going to be a challenge to make additional investments going forward.”

Some councilors and speakers at Tuesday’s hearing talked about the “us versus them” mentality when it comes to setting residential and commercial-industrial tax rates, among them Roberta Schaefer, president and CEO of The Worcester Regional Research Bureau.

“The only way to avoid this perennial battle,” said Schaefer, “is to phase in a single tax rate. The council should seize the opportunity to end a policy that has pitted us against one another.”

Her suggestion that a single tax rate could be ushered in within three years, however, was widely dismissed as impossible.

Bills to be Mailed

With the tax rate set, tax bills will soon be sent out. And unless the council decides otherwise, the first quarter bills for fiscal 2013 will arrive in the mail sometime in July. Then the council will meet in either November or December to set next year’s tax rate.

It all makes for a “recipe for disaster,” according to Palmieri, acknowledging no matter what councilors decided Tuesday night, tax bills would be enormous for many residents and business owners. That is likely to lead to a flood of abatement requests, which Lukes fears will be followed by even more after next year’s tax rate is set. Taxpayers have 30 days after receiving their bills to file an appeal.

Like some of her colleagues, Lukes referenced the valuation process. She went a step further, however, in calling for an all-out investigation into why the property values for some businesses went higher than ever before.

“Some have suggested it was criminal,” said Lukes. “Some said it was incompetence. We need an investigation. This council cannot solve those problems tonight. We can deal with the issue of the tax rate amid the controversy over the assessor.”
'An Investment' Made

While council chambers was packed when the hearing started at 7 p.m. – and the heat sweltering – the crowd thinned out considerably as the night wore on. There were noticeable departures when it became clear as councilors talked that the chamber’s proposed tax rate had not gained traction.

Among those walking out were Steve Vaillancourt and his wife, Lisa, of Millbury. They own Advanced Cleaning on Washburn Street, a business they moved to Worcester in 2005.

“We made an investment in ourselves by buying that property,” Steve Vaillancourt said before the hearing. “Do we have something that’s saleable when we retire?”

He said the couple’s first tax bill in 2005 was “just north of $3,000.” The last bill was just under $10,000, he said.

“We don’t think residents should take on everything here,” Lisa Vaillancourt said. “We’d like to see a middle ground.”

Stopped as they left the hearing almost two hours later, Steve Vaillancourt said he hadn’t heard what he’d hoped, saying: “I felt positive going into it. As soon as (Lukes) spoke, I knew where it was going. It’s too pro-constituent. You can see they’re playing right to their constituents. I can understand that, but there’s got to be some balance.”

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