Frequently Asked Questions Part 1
I have heard people criticize the way the town is run. If that’s true, why should I give the town more of my hard-earned money?
Not everyone agrees with every decision made by town and
school officials. The facts show Franklin is relatively well run. Our students
have excellent test scores and graduation rates, yet we spend below-average per
pupil compared to similar-sized communities. Our crime rate and rate of
fires are among the lowest in the state. Our recreation programs are hugely
popular. Independent rating agencies give the town’s financial management
high marks. Our tax rate is the lowest in the area. Our median home price is
among the highest. Thanks to great representation on Beacon Hill, we receive
well more than our share of state aid. Hundreds of volunteer citizens help keep
Franklin a great place to live.
Since 1989, more than 3,500 Proposition 2 1/2
override votes have occurred in communities across Massachusetts. About 40
percent of the time citizens have agreed to raise their own property taxes for
the good of their community.
No one likes to pay more taxes, especially in
tough economic times, and people can debate any number of town and school
decisions and policies. But the urgent issue Franklin faces is whether its
voters want to pay about $1 more a day to hire more police officers and
firefighters, improve staffing at its library, and to stabilize our educational
programs.
What has the town done to try to eliminate waste and bring spending under control?
· Streamlined operations
o Centralized administrative functions (e.g., facilities, HR, IT, accounting)
o Automated processes using information technology (e.g., payroll system)
· Reduced employee benefits
o Increased employee medical co-pays, saving $200K per year
· Increased volunteerism ( e.g., Senior Center reported 10,000 volunteer hours per year)
· Enhanced revenue
o Residents passed a $2.7M override in 2007
o Leased space on water tanks for cell towers
o Increased fees for services (e.g., sports participation fees, bus service)
o Approved a 0.75% meals tax that will take effect in FY 2010
o Agreed to share recreation services and our library director with Medway
· Spent cash reserves (e.g., used $7.5M 2005 to 2008)
· Delayed repairs to the public way (e.g., roads and sidewalks)
· Town and school employees agreed to defer pay increases in FY 2010
· Reduced headcount
o –Loss of more than 100 teaching positions
o –Loss of 7 school administrative positions
o –Loss of 32 municipal positions
· Held the line on department recommendations to increase headcount. For example, the number of police officers remains the same today as in 1999, despite a 12% increase in town population and a two-fold increase in number of police calls.
The fundamental financial problems the town faces have not been caused by waste, but by Franklin’s rapid growth over the last two decades. That growth dramatically increased the need for services like professional, well-staffed police and fire departments, updated streets and sidewalks, sewers and water lines, additional recreational facilities, and better schools. But the town’s ability to raise revenue through property taxes is restricted by the state law, and fixed costs for things like contractual obligations, utilities and health insurance keep increasing.
The town officials have found money in the past. They’ll find it again this time, won’t they?
Town and school leaders have done what they could to protect services for the community. The most critical issue facing Franklin is its dangerous reliance on state aid. We rank 1st out of 30 peer communities in the percent of town revenue that comes from state aid. But state aid is a revenue source over which we have no control. In fact, our over-reliance on state aid was cited by Moody’s Investors Service as a reason for downgrading Franklin’s bond rating in late 2009. The state aid we have come to rely on is estimated to decrease in the years ahead.
In the past, Franklin was able to protect core services by annually tapping into additional sources of revenue to avoid the need for property tax overrides. Those funding sources are no longer available. Franklin also has used legal settlement proceeds (which have been spent), incremental property tax revenue associated with rapid population growth (which has dried up almost completely), one-time revenues such as federal stimulus funds (which are set to expire after this year), and money from our emergency fund. We cannot continue to rely on one-time wind falls or state aid. It’s time to decide the type of community we are willing to fund as citizens and taxpayers.
Can’t we keep using money from the stabilization fund to get rid of our budget deficits?
No. Using one-time monies to pay for ongoing costs is what leads to deficits. The funds we have set aside now are the minimum we need to have on hand in the event of a disaster or serious emergency. If we use any more of this revenue to pay for annual costs, the money won’t exist to help the town through a crisis. And once the money is spent, how would the town continue to pay for important services year after year? If the town decided to use the entire $5 million rainy day fund in the town’s fiscal 2011 budget, how would it find that same amount when it came time to pay for the fiscal 2012 budget?
A split tax rate will not generate any additional funding. Think of the amount of money a town can raise from property taxes as a pizza. You can cut that pizza into four slices, eight slices or even more, but it is still the same pizza.
Proposition 2½, by law, prevents the amount that a community can raise from property taxes from increasing by more than 2.5% per year. A split tax rate would redistribute how much each class of property will pay in taxes, but it wouldn’t change the total amount of money the town could raise. If the town decided that commercial property owners should pay more, the tax rate for residential property would decrease but the total amount of the tax levy would stay exactly the same. Franklin would still have to pass a Prop 2 1/2 override for the town's total tax revenue to increase. The Franklin Board of Assessors and Town Council have opposed a split tax rate, arguing that a single rate creates an incentive for businesses to locate in Franklin.
These projects are the most visible examples of the Town’s effort to maintain and improve its buildings and facilities for the benefit of the general community. The vast majority of the funding for these renovations comes from the town’s long-term capital improvements plan, also known as the “20/20 Plan.” This is money the town borrows as part of its ongoing effort to upgrade public facilities, streets, sidewalks and buildings. A small part of the town's annual operating budget is used to pay off the debt that funds capital improvements, the same way a homeowner would pay off a mortgage over time.
The last time the town built a new recreation facility was 1990. Since then, the population has increased by about 10,000 people. We built three schools in that time period to house the surge in students, but we did not build any recreational facilities for them. The Town made improvements to existing fields, added new fields, and brought back into use the field and track at the High School. The existing track had not been useable for many years.
The senior citizen population in Franklin continues to grow. It is currently projected that citizens over 60 will increase from about 4,200 to over 7,500 in the next ten years. The old senior center had just two rooms and minimal parking which was completely inadequate for our population and programs. The new center has seen a three fold increase in participation. It has become a focal point for older adults and their families with many varied programs, services and activities to address the needs and interests of our senior and disabled residents.
Why do some citizens disagree with rating agencies about Franklin’s debt?
There are some assumptions about municipal borrowing that may seem contrary to the average person. Think of it this way. Individuals need to borrow money and then pay it back in order to establish their credit rating. Cities and towns do too. It is actually in the best interest of a city or town to carry debt. Most folks that buy a house want to pay off the mortgage as fast as they can. Eventually, they sell their home; hopefully make a profit; and, someone else takes on the mortgage. In the case of Franklin, however, the Town and its taxpayers own public property forever. We have hundreds of millions of dollars worth of infrastructure (buildings, parks, roads, schools, utilities) that need to be maintained, replaced, repaired, expanded, etc., on an ongoing basis to meet community needs.
Just as homeowners take out loans for additions, improvements or repairs to their property, the Town borrows money for similar purposes. In the case of city or town, ongoing manageable debt is one indicator of the fiscal strength because it demonstrates that the community is committed to taking care of important community property.
If we do not re-invest in our infrastructure in a timely manner, the overall appearance and operations of the Town suffers. The failure to invest would eventually hurt property values. Who wants to live in a town with a crumbling infrastructure? Every homeowner knows that structural problems don’t go away, they just get more expensive to fix.
Our goal as a Town is to maintain a debt level between 3.5% and 4% of our general fund revenues. This is a standard range for many municipalities. Our estimated FY 10 general fund revenue (excluding the debt exclusions) is $90,011,796 and our general fund debt is $3,283,433 or 3.6% of our general fund revenues. If we equate it to the average homeowner with a household income of $60,000 per year, the mortgage payment would be $2,160 per year or $180 per month.
The wording of the ballot question asks for $3 million, but I am
told $1.8 million will be used to maintain services in schools, $300,000 to
maintain town services and $900,000 for road repair. Can the town
guarantee that the funds from the override will always be spent exactly the
same way?
Only for one
year. There are some states where property taxes are divided into school
taxes and other taxes, but that is not the case in Massachusetts. All
property tax revenues flow into the town's general fund, and the Town Council
can only allocate money from the general fund one year at a time, based on the
town's priorities and needs. This provides flexibility in case circumstances
change; one year the Police could need more money and the next, it could be the
Library.
The override will balance the budget and prevent a major deficit. It will
increase the amount of money in the general fund that Franklin will have
available to meet our town's needs in future years, providing better financial
flexibility to help the schools, police, public safety and library, as well as
other important services. The percentage of Franklin's budget allocated
to each town department has been relatively stable from year to year, and it
would take extreme financial circumstances for the Town Council to attempt to
dramatically change the budget. Although they cannot legally make any
guarantees, the Town Council and Town Administrator have clearly stated their
intention of adhering to the numbers given in the override question in future
years.
Proposition 2½ was a Massachusetts ballot initiative that became state law when the voters approved it in 1980. The law puts a 2.5-percent cap on the amount of money a community can raise through property taxes from year to year, not counting revenue from the assessed value of new construction and building improvements.
It is important to understand that Proposition 2½ does not say that your property taxes cannot increase more than 2.5-percent a year. It simply says that the total amount of money raised through property taxes, known as the “tax levy,” cannot increase more than 2.5-percent annually. In addition, a community can increase its levy limit each year to reflect new growth in taxable properties.
What is a Proposition 2½ override?
There are three different ways a community can increase its property taxes above the levy limit. What the town of Franklin is considering putting before the voters is an override of its levy limit, which would increase the limit by a specific amount.
The other ways for a community to change how Proposition 2½ would apply are through a debt exclusion, which temporarily excludes from the levy limit an amount of money to pay for new debt, and a capital outlay exclusion, which allows a community to raise its levy limit for one year for the purpose of funding a specific capital project. In the past, Franklin voters have approved debt exclusions to build new schools.
When would the impact of an override take effect in Franklin?
The June 2010 override ballot question would apply to the fiscal 2011 budget. That is, the override would take effect on July 1, 2010. However, the increase in taxes would not show up until the third quarter tax bill which is mailed at the end of December and due by February 1, 2011.
What is my tax rate now and how does it compare to surrounding communities?
Franklin employs a single tax rate for both commercial property tax payers and residential property tax payers and that rate is currently 12.03 per thousand dollars of assessed property value. Fourteen of our thirty peer towns employ split, or dual property tax rates, one for residential payers and a higher rate for commercial payers. Set forth below is a chart in descending order which shows how Franklin’s $12.03 single property tax rate compares to our 15 other peer towns that employ a single property tax rate. Franklin also happens to have a lower property tax rate than most of our 14 peer towns that employ a split tax rate.
|
Town |
2010Tax Rate |
|
Sharon |
17.92 |
|
Westborough |
16.98 |
|
Holliston |
16.31 |
|
Medway |
16.29 |
|
Hopkinton |
15.76 |
|
Chelmsford |
15.15 |
|
Northborough |
14.38 |
|
Medfield |
14.24 |
|
Southborough |
14.06 |
|
Average |
13.95 |
|
Reading |
13.75 |
|
Millis |
13.64 |
|
Franklin |
12.03 |
|
Natick |
11.67 |
|
Foxborough |
10.91 |
|
North Attleborough |
10.44 |
|
Shrewsbury |
9.68 |
What would passage of a Proposition 2½ override mean to my tax bill?
On average, taxpayers will pay an additional $0.69 per $1,000 in assessed property value to support the $3 million override amount. The table to the right shows the impact for various assessed values.
|
Approximate Impact from |
|
|
Assessed Value |
Impact |
|
$ 200,000 $ 300,000 |
$138 $207 $276 $345 |
