|Tyer Agrees to $1M Free Cash Increase to End Tax Standoff|
|Staff Reports, |
10:13PM / Monday, December 02, 2019
|Assessor Paula King and Director of Finance Matthew Kerwood go over the city's financials.|
Complete write-through and update from article posted Monday afternoon.
Mayor Linda Tyer explains her reasoning for acceding to the council's request for $1 million more in free cash to offset the tax rate.
PITTSFIELD, Mass. — Mayor Linda Tyer is blinking in the standoff over how much free cash to use against the tax rate.
Tyer has agreed to use $1.75 million from the city's free cash account, $1 million more than had been agreed upon in last spring's budget negotiations.
The mayor had initially brought forward a request to increase that original $750,000 by a half-million — bringing the total amount to $1.25 million — to keep the residential tax rate under $20 per $1,000 valuation.
However, that proposal opened the door for a City Council eager to reduce the rate further. Ward 6 Councilor John Krol upped the ante to $1 million and a majority of councilors lined up against Tyer's $750,000 compromise.
"Every day that passes that the City Council does not set a tax rate ... they are putting this city in peril," Tyer said Tuesday during a press conference. "We view our job as the responsible decision makers around this issue, which is why we put forth this order despite the fact that we don't agree with it."
The standoff lasted over two meetings leading up to Tuesday's special meeting to continue the tax classification hearing. Tyer has submitted an order to transfer "an additional amount not to exceed $1,000,000 from Certified Free Cash."
Another $1 million in free cash would yield a single tax rate of $24.37. Using the recommended shift, this rate will be split into a residential rate of $19.71 and a commercial rate of $40.36, per $1,000 valuation.
The mayor's compromise $1.5 million use of free cash would have taken $45 off the average tax bill; the use of $1.75 million would save another $9.71.
The city is working against a deadline and if a tax rate is not set this week it is unlikely tax bills will go out by Dec. 31. The city would be forced to borrow money if it cannot collect taxes.
Tyer said her recommendation is still to increase the free cash amount by $500,000 and reiterated that she was hesitant to budge because the city has to bolster its reserves. Her disagreement with the council is really about the "short game and the long game" in terms of the city's finances, she said.
She said her team can only make recommendations and it is up to the council to lock in the rate.
"I am aware of the political dynamics that are at play here and I am more concerned about the risk to the city than I am about winning this argument," Tyer said.
But she drew a line at $1 million.
"My concern has been with every compromise that we make they change their target so we are willing to go to a $1 million but no more," she said. "If they insist on more than they have a problem."
Four of the councilors rejecting the mayor's compromise amount will not be returning in January: Krol, Melissa Mazzeo, Donna Todd Rivers and Anthony Simonelli. They were joined by returning Ward 3 Councilor Kevin Morandi and Ward 4 Councilor Christopher Connell. The six have frequently voted together.
Tyer added that the council has yet to listen to city assessor's presentation, which adds some context for choosing a shift factor of 1.6562 with residential values on the rise and a flat commercial values.
"They have spent the last two meetings negotiating free cash without having any context," she said
Assessor Paula King explained that property values may be going up but the city is still recovering from the Great Recession. She said values are slowly climbing to what they were in 2010.
Tyer said her administration was aware values went up and that is the reason why they decided to use free cash to lower the tax rate and mitigate increases.
"We attempted to do that ... this is the disagreement," she said. "How far do we go? But I want to make it really clear we put $1.2 million on the table not $0."
Director of Finance Matthew Kerwood added that the city is at its levy ceiling and is restrained in its ability to raise taxes. He said this additional $250,000 would only lower the rate 5 cents.
"We are creeping toward that $25 (tax rate) so in my perspective it is paramount that we are doing everything we can ... to build those reserves," he said. "So when we get to that point we are positioned to then be able to utilize those reserves to back off that $25."
He said if Pittsfield dos hit a $25 per $1,000 valuation single tax rate, it will either rely on reserves or make budget reductions.
Tyer said she has worked hard to stabilize the financial crisis her administration inherited four years ago. Some tough decisions had to be made and new policies createed that this allocation goes against, she said.
Because Morandi proclaimed a charter objection at last week's meeting, the council never voted on the $750,000 compromise. At Tuesday's special meeting, the council will have to vote on Tyer's last $750,000 order before the new $1 million one.