Numbers: taxes, revenue, the papers, and PACT

The opinion piece authored by Mr. Balestracci, Mr. Hoey, and Mr. Bloss in the Courier last week contained an unfortunate typographical error (apparently corrections were stripped by the Courier during the transfer of the article to the paper) and should have read less than $150 per YEAR rather than "per month" (or closer to $10 per month) regarding the amount that taxes are going up AS A RESULT OF THE INCREASE IN THE EDUCATION SIDE OF THE BUDGET (education is responsible for about 2.8% of the total 6.9% increase, see below) for a house that currently pays $5000 in taxes (assessed value ~$260K, market value ~$370K). This error has been noted and I understand there will be a retraction on the part of the Courier in the paper this week.

For detail oriented people I am including PACT calculations. You should be able to make your own calculations based on the assessed value of your house and your federal tax deduction rate:

PACT has assumed that the average homeowner in Guilford has a house with an assessed value of $300K (market value of ~$428,000 assessed at 70%):

Current taxes are $5,757 (mil rate 19.19 * $300K)
Taxes next year would be $6,153 (mil rate at 20.51 if the budget passes)
This is an increase of $396, or $32 per month (6.9% increase).

The tax increase can be broken down as follows:

Town side: 0%, no change
Education side: 3.46% increase of the education budget, +$1,667,804

Revenue (building permits, town clerk, interest, etc.): down $1,210,309
Revenue decrease from not drawing on fund balance: down $1,200,000
Overall revenue: down $2,410,309

The 6.9% tax increase is thus funding a ~$4.1M shortfall, ~$2.4 on the revenue side (half receipts and half fund balance) and ~$1.7M in an education increase.

To put it in % terms, of the 6.9% overall tax increase:
education increase: 41% of the increase or 2.82% of the 6.9%
revenue decrease: 30% of the increase or 2.05% of the 6.9%
fund balance issue: 29% of the increase or 2.03% of the 6.9%

Of this $396 overall tax increase for a $300K house ($32 per month, $1.08 per day total), the education side is thus responsible for 41% of the increase ($13.50 per month, $0.44 per day); revenue for 30% ($9.79 per month, $0.32 per day); and fund balance for 29% ($9.71 per month, $0.32 per day).

In order to reduce the tax rise to *zero*, due to decreased revenue, the budget would have to be cut by ~$4M = ~$8 per month for each $1 million cut or $32 . $4 million in cuts would be extremely severe to the town and education side, but would keep taxes at a zero percent increase in a year when revenue is down.

Of note, municipal taxes are deductible against federal taxes. For most homeowners in the median income range in Guilford this means that an additional ~28% can be taken off any, which is why some of the orignal PACT numbers were less than $6 per month for each million in the budget for the average homeowner. This is still correct, although in recent numbers we decided not to put in the tax deduction in order to not over simplify or be accused of under-estimating.

I would also comment that because we are weaning ourselves from the fund balance this year and will be renegotiating teacher contracts this summer (also have hopefully hit bottom on the low building permits etc.) there is reason to believe that taxes next year should not be up anywhere near as much if at all as they are this year(hopefully the state will not drastically reduce its contribution).

If you have read this far my hope is that this has clarified some of the numbers and points... feel free to contact me directly if you have any questions (chris.moore@guilfordpact.org). Please feel free to forward this information.

Chris