Fiscal 2021 taxes rise, fueled by growing budget and rising property values

When third-quarter fiscal 2021 tax bills arrive in their mailboxes this December, many Harvard residents will not be surprised to find that their taxes have gone up.

Taxes on property are the primary means by which Harvard raises the money it needs to pay for schools, police, fire, ambulance, and other town services. Taxes also pay principal and interest on outstanding debt, such as the $2.5 million the town owes in principal and interest for the new elementary school this year.

The amount town government needs to raise in any year is determined by the size of the budget approved by Town Meeting, minus the revenue it receives from the state and from motor vehicle excise taxes and other local fees. The total amount needed for fiscal 2021—which began July 1, 2020—is $24,322,072, an approximate 7% increase over fiscal 2020. Debt payments increased by more than $1 million, as debt service payments for the new elementary school reached their maximum. But during the same period, residential property values rose, resulting in a more modest increase in the rate at which all owners will be taxed, but higher bills for many.

The tax rate—the amount every $1,000 worth of property is taxed—is calculated by dividing the amount the town needs to cover its costs by the total value of all properties in Harvard. When town expenses rise, the rate goes up; when property values increase, the rate goes down. 

David Manzello, Harvard’s assessor, and Michael Saltsman, associate regional assessor, reported to the Select Board Tuesday that this year’s residential tax rate will increase 1.6%, from $18.47 per thousand dollars of a property’s assessed value to an estimated $18.78. That’s a significantly smaller increase than the 6% increase last year. (To calculate your own fiscal 2021 tax, see the sidebar at right.)

The more modest increase can be attributed in part to a rise in property values, the denominator in the tax rate formula. According to Harvard’s assessors, the total value of the town’s residential, commercial, industrial and personal properties—for purposes of the fiscal 2021 calculation—rose to $1,297,039,551. Compared to 2018, they report, the value of a single-family home in Harvard increased roughly 5.2% in calendar year 2019, the year used by the assessors to determine residential values.

Because changes in ownership of condominiums, apartments, vacant land, and other property classes are less frequent, their values are based on sales from calendar years 2018 and 2019. The average value of condominiums jumped 7.9%, “with variations from complex to complex,” Manzello said, while the value of vacant land decreased by about 4%. The value of commercial and industrial properties was essentially flat.

Changes in the values of particular properties are by no means uniform, the assessors are always careful to note. Trends in local real estate may cause some property types to increase in value, while others decline.

Owners of residential and agricultural properties pay 95.7% of the property taxes collected by the town, with all but 9% of that amount collected from the owners of Harvard’s 1,696 single-family homes. Taxes on commercial, industrial, and personal property contribute the remaining 4.3%.

While the big news of the yearly assessors’ report is always the announcement of the tax rate for the current fiscal year, the assessors have no say over that number, which is calculated by the state Department of Revenue. The purpose of the assessor’s report to the board is to recommend whether residential and commercial properties should be taxed at the same rate. This year, as in the past, the assessors recommended against increasing the rate on commercial, industrial, and personal properties (CIP) because, they say, it would have little effect. For every $1 that nonresidential rates are increased, they advise, residential taxes would drop by only 5 cents.

Tuesday night the Select Board accepted the assessor’s recommendation and voted 5-0 to tax every owner at the same rate. That rate is $18.75 per thousand. Homeowners, however, will pay 3 cents more—$18.78—due to the additional amount needed to reduce the tax burden of seniors who qualified for Harvard’s means-tested senior tax exemption. Eleven seniors applied for relief under that program, now in its second year, and 10 qualified, for a total of $34,618 in exemptions. According to the town’s bylaw, this amount is borne by nonexempt homeowners.

The maximum amount the town can raise in any given year, known as the levy limit (or maximum allowable levy), is determined by adding 2.5% to the previous year’s levy limit plus the value of newly taxable properties and any debt payments the town has agreed to exclude from the maximum amount permitted by Proposition 2½. This year’s levy is $208,633 less than the $24,530,705 maximum that state law allows.