WHITMAN — It may sound like a good thing for the town, but while a National Grid personal property report has added $72.8 million in new growth, it has raised the town’s levy limit — and it’s not expected to last.
The anomaly was discovered during an analysis of available funds, including new growth, according to Town Administrator Frank Lynam.
“Typically, we estimate new growth before Town Meeting and we plan our budget with an awareness of what our ability to raise funds is based, in part, on new growth,” he said.
The town had been notified in March that National Grid and its affiliates reported new growth of $72,784,278 in taxable personal property in Whitman in fiscal 2016. The growth was not presented until the classification hearing, which set the tax rate, Nov. 10.
Last year, the town’s total of taxable personal property was $9,745,287 — a value that had held fairly steady for years. Added to the National Grid growth, should put the total for new growth at about $81 million, which means National Grid’s report already includes a depreciation of about $8 million from the value of their personal property.
If that trend continues, the new growth funds from the National Grid property is going to run out in nine years, according to Lynam. He likened depending on the funds to balancing a budget with free cash.
Lynam will be recommending that the town uses the National Grid growth figures only for capital expenditures that are voted from year to year. He will recommend using $300,000 of it this year for the Duval school roof as well as more for other non-recurring capital projects.
“If you build the budget using personal property which doesn’t typically grow, unless you add more real property to it, your ability to raise money is going to drop each year,” Lynam said.
Real estate valuation is generally more reliable than that. Single-family homes will add $110,600 to the tax value, condos $23,400, two/three-families $15,500, multi-families $1,100, vacant land $4,400 and commercial $1,154,300.
“Real estate typically appreciates in value or, at least, kind of stays stable,” Lynam said. “Even in cases where it declines the total value of real estate is sufficient that it doesn’t impact us as a community.”
Even when property values are in decline, he noted, there is room between the levy limit and the levy ceiling to raise money for town operations. The levy ceiling is the most that can be assessed on property, including overrides.
“If we exceeded our levy limit and needed more money, we could call for an override election,” he said. “As long as the people vote it, we could then raise the tax revenue up to that levy ceiling — we can never go over that under any circumstances.”
Lynam said there is a “healthy difference between the two. This year’s levy limit is $23,142,555, with the ceiling at $35,582,215. The town has to raise $22,189,069 from real and personal property to operate. The tax rate is $15.59.
“The problem is personal property is a depreciating and depleting asset,” he said.