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Local Aid and Finance New Bedford uses reserves to limit property tax increase
At a time when many cities and towns are struggling to maintain free cash at levels recommended by the Department of Revenue, New Bedford was able to use its reserves to soften the impact of a property tax increase.
According to data from the Division of Local Services, New Bedford reported no free cash in any year between 2003 and 2006. In fiscal 2007, the state certified almost $2.7 million in free cash, and this year, $8.5 million was certified.
Using about one third of the city’s total free cash for what Lang termed a “reverse override” helped reduce what would have been a 5.5 percent residential tax increase to 2.3 percent. The difference, Lang said, will save most homeowners between $100 and $300.
Lang, who assumed office in 2006, says that promoting competition in bidding processes for services such as health care, an aggressive approach to pursuing back taxes, and the bonding of earlier capital projects led to the emergence of sizable cash reserves over the past two years. The building up of free cash, according to Lang, was instrumental to the city receiving an AAA bond rating for the first time in nearly four decades.
According to data from the Department of Revenue, free cash statewide declined by 43 percent from fiscal 2002 to fiscal 2007 as cities and towns faced structural budget deficits related to rising costs, limited revenue-raising capacity, and inadequate local aid. In some cases, insufficient free cash has led to bond ratings being lowered.
Such fiscal pressures, Lang said, underscore the need for a more equitable means of generating revenue to finance city and town government.
“You can’t do it on the backs of taxpayers,” he said.
Local Aid and Finance New Bedford uses reserves to limit property tax increase
New Bedford uses reserves to limit property tax increase
At a time when many cities and towns are struggling to maintain free cash at levels recommended by the Department of Revenue, New Bedford was able to use its reserves to soften the impact of a property tax increase.
According to data from the Division of Local Services, New Bedford reported no free cash in any year between 2003 and 2006. In fiscal 2007, the state certified almost $2.7 million in free cash, and this year, $8.5 million was certified.
Using about one third of the city’s total free cash for what Lang termed a “reverse override” helped reduce what would have been a 5.5 percent residential tax increase to 2.3 percent. The difference, Lang said, will save most homeowners between $100 and $300.
Lang, who assumed office in 2006, says that promoting competition in bidding processes for services such as health care, an aggressive approach to pursuing back taxes, and the bonding of earlier capital projects led to the emergence of sizable cash reserves over the past two years. The building up of free cash, according to Lang, was instrumental to the city receiving an AAA bond rating for the first time in nearly four decades.
According to data from the Department of Revenue, free cash statewide declined by 43 percent from fiscal 2002 to fiscal 2007 as cities and towns faced structural budget deficits related to rising costs, limited revenue-raising capacity, and inadequate local aid. In some cases, insufficient free cash has led to bond ratings being lowered.
Such fiscal pressures, Lang said, underscore the need for a more equitable means of generating revenue to finance city and town government.
“You can’t do it on the backs of taxpayers,” he said.
Written by MMA Associate Editor Mitch Evich
