Fiscal sustainability: Some modest proposals

By Bob Rakoff

The Town of Amherst is not fiscally sustainable without significant changes. The major problem is that nearly 50 percent of the land in town is exempt from property taxes, which account for 70 percent of the Town’s annual revenues. State aid makes up another 20 percent, while 10 percent comes from other sources.

The Town has limited control over these sources of revenue. The state makes its own decisions about local assistance. And the ability of the town to increase property tax revenue is constrained by law, by the regional real estate market, by a limited supply of buildable land that is appropriately zoned for development, and, of course, by the unpopularity of tax increases.

At the same time, demand for public services continues to increase beyond the growth of our tax base; we already face one of the highest property tax rates in the state. Deferred capital projects (library, school, fire, public works) pose significant financing challenges, even in an era of low interest rates. Voter approval of a tax override in 2022 to finance a new elementary school is by no means assured.

In response to this tension between the supply of tax revenue and the demand for expanded and quality services, there have been two kinds of responses.

Some people call for retrenchment, with deferral or scaling back of some capital projects along with cutbacks in regular annual spending. Others see more intensive commercial and apartment development as the route to a more sustainable and affordable future that does not sacrifice needed building projects or popular programs.

Retrenchment is not politically popular, and its proponents are also largely opposed to increased apartment development. Meanwhile, proponents of expanding apartment construction to increase tax revenue acknowledge that such development may make expansion of town-financed services (e.g., schools, library, public safety) even more necessary. Of course, if apartment development attracts mostly households without children, then the impact on school spending is lessened. But that would mean more apartments for college students, not working families, hardly the best or most equitable future for our diverse town.

There seem to be no easy answers. We need new revenue sources. And we need new, outside-the-box thinking.

So, in the spirit of Jonathan Swift, here are a few modest proposals for a more sustainable fiscal future for Amherst.

NULLIFICATION. Texas has taken the lead in declaring that it has the right and power to nullify federal laws it dislikes. Let the Lone Star State be our guide here. The Town should declare as oppressive the state and federal laws that prevent the taxation of property owned by non-profit organizations and move expeditiously to tax the holdings of Amherst College, Hampshire College, and other rich, tax-exempt landowners.

UMASS STUDENTS. There is not much we can do to get more money out of UMass. But UMass students are another story. Those students spend millions of dollars to purchase credit hours. Those credit hours are a commodity that is ripe for taxation. Let’s go after them.

Photo by Adi Coco on Unsplash

GAMBLING. Instead of pursuing boring and expensive capital projects that will never return real profits to the town, we should pursue the more lucrative path of casino development. Perhaps go for double-or-nothing by locating a casino on the capped landfill.

NAMING RIGHTS. We already have a library named for the benefactor, Samuel Minot Jones. Let’s sell the naming rights for other buildings and spaces. Imagine a Jeff Bezos Elementary School, or a Warren Buffet Public Works edifice. Or imagine buying your local fruit and veg on the Apple Computer/Steve Jobs Memorial Town Common.


ANNEXATION. As one local wag put it (OK, it was our own Nick Grabbe), the Town of Amherst has outsourced its commercial development to the Town of Hadley, which reaps the benefits of an expanded tax base, increased revenue, and low tax rates for homeowners. We need to take control of that development and seize those tax benefits. The town should raise a militia (perhaps ROTC at the University could assist), march directly down the hill, and forcibly annex the Town of Hadley. This would add substantially to our commercial tax base while providing us with valuable agricultural and waterfront property. The likelihood that there are more gun owners in Hadley than in Amherst should not deter us. Be of stout heart.

Pretty wacky, I know. But both fantasy and reality require outside assistance to move toward fiscal sustainability. The state grants the town new taxing authority. A rich benefactor comes to town. Neighboring towns join forces to work together on common problems.

It’s this last case that points the way to a new path. Not through conquest, but through regional cooperation. The accident of having a big state institution or less valuable property should not determine a town’s ability to offer and pay for public services. Equity and efficiency demand a shared, regional approach to governance. And for Amherst that means re-creating Hampshire County government. What that would entail, and promise, will be the subject of a future article.

11 thoughts on “Fiscal sustainability: Some modest proposals”

    1. Based on my training to be on the Board of Assessors, I don’t believe that Amherst can tax rental housing “as a business”, as Mr. Collins puts it. In Amherst, we have decided NOT to split the tax rate between residential property and commercial property, as every community in the Commonwealth can do if its leadership sees fit. Even if we had a split rate, however, taxing commercial property and residential property at two different rates, rental housing, under state law, would still be “residential”. So I’m missing out on what Mr. Collins is referring to, as I believe it’s an impossibility in this state.

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  1. An immodest proposal:

    Whereas Northampton and Amherst are each part (I’d say the best parts) of the same regional economy, and
    Whereas Northampton benefits from a broader business tax revenue base than Amherst, and
    Whereas Am(h)erst has an extra “H” that we all know is famously silent, while North-ampton is missing a “H,” and they’ve been using our “H” without recompense for longer than any of us can recall…

    Therefore a license deal/assessment between the two municipalities can square things up nicely, bringing revenue to Am’erst while NorthHampton can clear its conscience and finally pay its fair share.

    Happy to work on this with you,
    Tom Porter

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  2. I would add a couple of thoughts. First, Amherst’s per-capita and household incomes are low, while family income is relatively high, according to Wikipedia. Per-capita income may not be a useful context for property tax rates since it probably includes students living on untaxed land. I have to say I am stumped about the difference between household and family income, but my point is that residents’ ability to pay the tax bill is relevant. Second, regarding Bob’s final proposal, I remind readers that Hadley spun off its Amherst precinct in 1759, so perhaps we have grounds for requesting that they take us back.

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  3. I enjoyed this clever post. Even as the “solutions” are off the wall, they are insightful regarding the problems we face. On the one hand, I agree that regional government is probably the best strategy for the future; these are regional problems that no one town can address effectively on its own. On the other hand, most towns in Hampshire County were the direct cause of the demise of Hampshire County government. I am, therefore, VERY curious about how Bob Rakoff believes they can be convinced to start over.

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  4. Just to add some law, under Prop 2.5, there’s an absolute cap on our tax rate of $25 per thousand of assessed value, unless we as a town vote in an override to go over that. I wish that there was some way for people to remain calm on taxes. When I hear about property tax bills in New York state and New Jersey, I’m happy to be here. I got an earful from my dentist the other day about taxes, and the question for me always is, so what’s your standard, the line at which you’re overtaxed? I’m not sure we always answer that question for ourselves. But I admit: a 5 figure annual property tax bill is hard to swallow. My household is not there yet, but I will notice it if and when it happens.

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  5. Ha ha. I get that this is supposed to be silly, but it’s based on perpetuating the idea that “we already face one of the highest property tax rates in the state.” Actually, we don’t.

    The state has data on average single-family tax bills here: https://dlsgateway.dor.state.ma.us/reports/rdPage.aspx?rdReport=AverageSingleTaxBill.SingleFamTaxBill_wRange.

    According to this file, average single-family tax bills in 2021 ranged from $764 in Hancock to $21,648 in Weston. Amherst is 54th on this list, at $8,190. And the list doesn’t include some other towns like Brookline, Sudbury, Concord, and Andover, which have adopted some residential exemptions. So presumably we’re around 60th in the state. And we value public services like schools, libraries, roads, public safety, senior center, etc.

    Should we keep looking for ways of increasing revenues and spending efficiently? Of course. But that should be done with a sense of proportion and values, and not out of a misplaced feeling of grievance at being wickedly overtaxed.

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    1. Thanks for your comment, Andy. You are correct; Amherst has one of the highest average single-family tax bills in the region, not the state. Still, if Amherst ranks 54th, doesn’t that means that about 85 percent of Massachusetts cites and towns have lower taxes? And I would bet that in Weston, the average net worth, gross income and assessed value are higher than in Amherst.
      .

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    2. Thanks Andy. I’m guessing Mr. Rakoff has conflated tax rate with amount taxed. I believe Amherst has a very high tax rate, probably not the highest, but high. As you note, it’s the amount one pays that counts.

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  6. I Simply cannot resist:

    As to my own part, having turned my thoughts for many years upon this important subject, and maturely weighed the several schemes of other projectors, I have always found them grossly mistaken in their computation. It is true, an 18-year old just dropped from its home town may be supported by its parents for four years (or more, depending on frequency and intensity of alcohol intake), with little other support; at most not above the value of a few hundred dollars in tax revenue, which the town may certainly get, or the value in local business tax levies, by its lawful occupation of bar hopping and heavy partying; and it is exactly at 18 years of age that I propose to provide for them in such a manner as instead of being a charge upon their parents or the parish, or wanting food and raiment for the rest of their college careers, they shall on the contrary contribute to the feeding, and partly to the clothing, of many townspeople.

    Eat the college students. (With no apologies to Jonathan Swift)

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