{"id":116,"date":"2019-07-22T00:44:00","date_gmt":"2019-07-22T00:44:00","guid":{"rendered":"https:\/\/norwichobserver.com\/?p=116"},"modified":"2019-12-31T00:52:57","modified_gmt":"2019-12-31T00:52:57","slug":"amateur-hour-setting-the-norwich-property-tax-rate","status":"publish","type":"post","link":"https:\/\/norwichobserver.com\/index.php\/2019\/07\/22\/amateur-hour-setting-the-norwich-property-tax-rate\/","title":{"rendered":"‘Amateur hour’? Setting the Norwich property tax rate."},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Norwich property tax bills are out. The overall rate is lower. This post addresses the presentation\/discussion at the Selectboard meeting on\u00a0the\u00a0setting of the Town tax rate. It seemed disorganized to me. “Amateur hour” suggested one Selectboard\u00a0member.\u00a0 <\/p>\n\n\n\n

At the last Selectboard meeting, the Board, by a 3-2 vote, set the municipal tax rate at about a half-cent less than that recommended by the Town Manager. Selectboard members Pepper, Brochu and Langhus voted in favor of the motion.  Selectboard members Arnold and Layton favored the Town Manager\u2019s proposal. <\/p>\n\n\n\n

The majority opted to use about $42,000 of the budget “surplus,” compared to the $264,290 used last year, to “buy down” the tax rate. rate. (See endnote for explanation of the buy down process.)  As a result, the Town property tax rate, including Monetary Articles and Local Agreement rates, was set at $0.5090, a 1.08% increase from lat year, compared to the 2.20% increase requested by the Town Manager<\/a>.  See box below for final property tax rates compared to last year. <\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

Property tax rates for FY 20 and FY19. Source: Norwich Town Manager.Amateur Hour? <\/strong>The presentation\/discussion about the tax rate, which involved the\u00a0Selectboard, Town Manager, \u00a0Finance Committee Chair, and Town Treasurer lasted\u00a0about 90 minutes, a long time.\u00a0At one point during the discussion, one Selectboard member politely characterized the proceedings as “amateur hour.” I think, after watching the CATV video, that the\u00a0Board member has a point. It struck me\u00a0that the\u00a0Town Manager and\u00a0Selectboard had different expectations going into the\u00a0meeting about a possible buy down of the tax rate. That resulted in\u00a0two\u00a0general points of confusion. \u00a0 First, there was no certainty how much surplus money was available to “buy down” the tax rate. (See endnote for explanation of the buy down process.) In Norwich,\u00a0the amount of excess surplus is a key ingredient in setting the tax rate. \u00a0It struck me as odd\u00a0that no public official could or\u00a0would say,\u00a0with certainty,\u00a0the amount of the surplus, if any.\u00a0 Second, there was disagreement\u00a0about whether voter approval is required to spend surplus funds. Past practice in Norwich,\u00a0including last year under Town Manager Durfee, was to use surplus funds with Selectboard approval only<\/em>. \u00a0 Getting voter approval may be the better practice. The Selectboard and Town Manager need to put the topic on the agenda, no later than budget season, in order to avoid the same snafu next year.\u00a0 In the end, a decision needed to be made that night. <\/p>\n\n\n\n

The Selectboard majority\u00a0reduced taxes by a modest amount, around $42,000 or one percent of the annual budget.\u00a0
<\/p>\n\n\n\n

Selectboard Chair John Pepper offered this perspective in an email:\u00a0\u00a0“The majority of the board ended up believing it was best to let the taxpayers hold some of the ‘excess money’ (which was not clear how much actually existed) as opposed to defaulting to the town holding the excess money. In the end, it\u2019s the taxpayers money in my opinion. If and when taxes need to go up because something unexpected happens or we were somehow incorrect in our current decision making, then at least the taxpayers will have had use of their money in the meantime.”

Note, explaining buy down:\u00a0<\/strong> <\/p>\n\n\n\n

In the buy down scenario, undesignated surplus funds held by the Town are earmarked to pay expenses of\u00a0the next fiscal\u00a0year. That reduces the amount of revenues needed to be collected in taxes. \u00a0Less revenue needed\u00a0from taxes means a lower\u00a0property tax rate, all other variables remaining constant. Hence, surplus funds are used to “buy down” the\u00a0property tax rate.\u00a0 How much of the surplus in the\u00a0Undesignated Fund Balance (UFB)\u00a0to use is a matter of discretion.\u00a0The UFB is also the Town’s rainy day\/emergency fund, so it is prudent to keep some\u00a0reserves. See What\u2019s an “Undesignated Fund Balance”?<\/a>\u00a0 On the other hand, surplus funds belong the taxpayers. No reason for\u00a0the Town to keep it. \u00a0 Last year, the Selectboard specifically earmarked $264,290 from the UFB in setting the property tax rate for fiscal year 2019. The $264,290 reduced the property tax rate by over three cents. But, it may have depleted reserves by too much. See\u00a0Agenda Item: Undesignated Fund Balance<\/a>.
================== <\/p>\n\n\n\n

Originally published on HereCast on July 22, 2019<\/p>\n","protected":false},"excerpt":{"rendered":"

Norwich property tax bills are out. The overall rate is lower. This post addresses the presentation\/discussion at the Selectboard meeting on\u00a0the\u00a0setting of the Town tax rate. It seemed disorganized to me. “Amateur hour” suggested one Selectboard\u00a0member.\u00a0 At the last Selectboard meeting, the Board, by a 3-2 vote, set the municipal tax rate at about a half-cent less than that recommended by the Town Manager. Selectboard members Pepper, Brochu and Langhus voted in favor of the motion.  Selectboard members Arnold and Continue reading ‘Amateur hour’? Setting the Norwich property tax rate.<\/span>→<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-116","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n'Amateur hour'? 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It seemed disorganized to me. “Amateur hour” suggested one Selectboard\u00a0member.\u00a0 At the last Selectboard meeting, the Board, by a 3-2 vote, set the municipal tax rate at about a half-cent less than that recommended by the Town Manager. Selectboard members Pepper, Brochu and Langhus voted in favor of the motion.  Selectboard members Arnold and Continue reading ‘Amateur hour’? 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