Q & A on tax rate in state
Q. Who sets the tax rate each year?
A. The highest-ranking board in each community sets the rate -- selectmen, town council, or city council. The rate must be approved by the state Department of Revenue before bills can go out.
Q. How is the rate decided?
A. Each year (usually in the fall), a public hearing is held to set the tax rate for the next year. Typically, the chief assessor gives a presentation of the current financial situation, detailing town debt and upcoming projects. Those present at the meeting -- residents, business owners, town officials -- can offer opinions on how the rate should be allocated.
Q. How are tax bills related to property values?
A. The assessors adjust property values annually to reflect any new construction, demolitions, or renovations to a property. The analysis also looks at the market values for the most recent calendar year (so the assessments for 2006 reflect sales during the 2004 year). Homeowners can file a protest if they disagree with the assessment. The state used to require these updates to be done every three years, but recently mandated them to be done each year to avoid large spikes in property tax bills. When property values go up, local officials will often lower the tax rate so tax bills increase moderately. In recent years, that has not always been the case.
Q. Why do my bills go up by more than 2 1/2 percent? I thought that was against the law.
A. By state law, a city or town cannot increase taxes by more than 2.5 percent in one year without approval from the voters. Proposition 2 1/2 applies only to the overall tax levy, however, so increases to individual tax bills can exceed this level (if your bills are going up, someone else's may be going down). The levy can be increased by more than 2 1/2 percent if taxpayers approve an override or if your community has adopted the Community Preservation Act, which allows cities and towns to put a surcharge on your tax bill and use the money for local projects.
Q. What are residential exemptions?
A. According to the Department of Revenue, there are currently 11 cities and towns that offer a discount to owner-occupied residential properties. The discount can be up to 20 percent off of a property's assessed value, which can provide savings of more than $1,000 on an average bill. The exemption is meant to shift a portion of the tax burden off of lower-valued, single-family homes and on to multifamily properties, apartment buildings, and nonresident property owners. The communities that offer the exemption are Boston, Brookline, Cambridge, Chelsea, Marlborough, Nantucket, Somerset, Somerville, Tisbury, Waltham, and Watertown.
Q. Can I get a discount?
A. In some cases, yes. Massachusetts law allows for a variety of reductions for certain homeowners, including residents who are blind, older than 65, or a veteran. Some communities also let elderly residents do volunteer work to earn a tax credit. The discounts and applications vary by community, so check with your local assessors office to see if you are eligible.
Q. What does the money get used for?
A. Tax money is the primary source of income for a city or town. In 2004, local property taxes made up 52.9 percent of local budgets. The money is used for a variety of things, including the financing of public building projects, paying the annual salaries of municipal and school employees, and plowing the roads when it snows.
