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Chelmsford Property Taxes Go Through the Roof

I just got my jaw-dropping 3rd quarter real estate tax bill. Chelmsford now has the distinction of being the 44th most expensive town in Massachusetts, far ahead of Tewksbury (144), Billerica (203), Tyngsboro (107), Westford (110), and even just ahead of Carlisle (51).*

What's causing the inflation-beating, salary-outstripping relentless rise in our property taxes? It's a story of compound interest. The town continues to increase its tax rate year to year by the maximum permitted by the state: 2.5%. So regardless of whether the value of your house goes up or down, it's irrelevant. The tax rate for the assessed value of your house is compounding at 2.5%.

That means if the assessed value of your house is 500K, you're currently paying $2,460 ($17.95 per $1,000) per quarter. If the trend continues, in 5 years, you'll be paying $2,719. In 10 years, you'll be paying $3,080. In 15 years, you'll be paying $3,490. If this continues unchecked, Chelmsford could be one of the most expensive towns in Massachusetts within a decade. One underlying problem is the town’s refusal to consider taxing commercial property at a higher level than residential.

What is soaking up the money? You'll have to ask the Town Manager and Selectmen. Also speak to the Assessor's office and the Treasurer/Collector. One reason is the capital budget: pouring tens of millions into a sewage system while neglecting other critical infrastructure, particularly the electrical grid and street lights. The school system, while good, is not outstanding or comparable to Westford's, for example. Another probable cause: the generous pensions that town employees enjoy but few residents do.

*Source: The Massachusetts Executive Office for Administration and Finance

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Roland Van Liew January 08, 2014 at 10:36 PM
Folks, remember, Prop 2.5 limits the total tax levy -- commercial and residential combined. So if commercial taxes go up, residential taxes must go down (given that they levy the maximum 2.5 aggregate already). Even if there was a classification differential of, say, 8% then the residential rates would go down about 2%. That would mean the increase this year would still be 3.5, well above the 2.5 max target. That indicates that commercial property values have plummeted -- again! -- relative to residential property values in Chelmsford. This did not occur in Billerica, where commercial properties remained flat relative to residential properties, so homeowners in Billerica are seeing a 2.58% increase as compared to Chelmsford's 5.5% increase. You're probably as sick as I am of hearing that "it's like this everywhere." No it's not. In any case, the biggest problem is bad policy, even more than the lack of classification. We have an arrogant town manager mired in the platitudes of his 30-year-old "growth solves everything - build, build, build" Harvard B-School "urban planning" education.
Tyler Jozefowicz January 09, 2014 at 10:02 AM
Rob C. The property tax levy will be increased by the maximum 2 1/2% each year, given past history. This will result in an absolute amount of cash in dollars from property tax revenue. The split rate will reshuffle the commercial /industrial , residential/single units /condos mixes, but will NOT result in "an extra pile of cash" beyond the 2 1/2 levy.
Rob C January 09, 2014 at 01:33 PM
Tyler, Leave increases out of the equation and look at it on a yearly basis. Here it is super simplified. In hypothetical Chelmsford there are 1,000 properties 800 residential, 200 commercial and somehow they all ended up to be valued at the same price. They currently all pay the same in taxes, $100 a year. That gives the town $100,000 a year to operate. Now if we split the rates and say the commercial properties now have to pay $150 a year. That extra $50 that they are collecting from the 200 commercial properties results in a $10,000 pile of cash, the town now has $110,000 coming in. Now the town has 3 basic options on what to do with this 10 grand. Option one, bill residential properties $87.50 or send each a check for $12.50 and continue to operate at 100K, option two stick it in the bank for future capital expense/payoff any debt and continue to operate at 100K or option four, spend it and operate at 110K a year. To me personally, option one is ideal and what should be done, two is acceptable but not preferred, but three is what will happen with that extra pile of cash. Governments in general avoid at all costs reducing taxes on its people. Remember, the people of MA voted in a binding referendum to have our income taxes reduced and we were all given a big middle finger by the state government. I fully expect to see another big middle finger from the local government if they end up splitting the tax rate and have to make a decision on whether or not to tax me less or spend more.
Tyler Jozefowicz January 09, 2014 at 03:24 PM
That is not the way it works as I understand it. The Commonwealth lets the towns know on the cherry sheets published every August the state contribution . Towns assess their various tax rates based on that. Then town assessment takes into consideration the State money,aid to local cities and towns , lottery money, etc., other revenue and grant sources, etc., and assesses the tax rates for the different classifications of property, TAKING INTO CONSIDERATION any split commercial tax formulas; can then up the levies no more than 2 1/2% after that. This is all done BEFORE bills are sent and any" piles of money" accrue . The rates adjust for the various tax classifications BEFORE any piles of money are received. The pie is mixed( tax classifications ) but the size ( total levy) remains the same. Maybe you want to talk to someone else at this point rather than me. That is my take.

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