During the annual tax classification hearing at Tuesday’s Select Board meeting, Michael Saltzman, Harvard’s associate regional assessor, reminded board members that the only question before them was whether to adopt a single or a split tax rate for the current fiscal year—and by unanimous vote, they chose to stick with a single rate.
State law allows a town to set different tax rates for residential and commercial or industrial properties. Devens, for example, has two; Harvard has always had one. That’s because the number of businesses is so small that even a significant increase in their rate would do little to reduce residential taxes, said Saltzman.
Harvard’s assessors estimate that to defray the cost of operating the town in fiscal 2022, the tax rate for residential and commercial properties will need to be set at $17.89 per $1,000 of assessed valuation, newly calculated to correct an error in the total amount appropriated by the spring session of Town Meeting (See story on page 1). While that rate is approximately 5% lower than last year’s $18.78 per $1,000, the bill of an average single family home will likely be higher. For one thing, the amount the town needs to raise through taxation has increased, and for another, so has the value of an Havard average home.
Taxes on property are the primary means by which Harvard raises money to pay for schools, police, fire, ambulance, and other town services. Taxes also pay principal and interest on outstanding debt, such as the $2.4 million the town owes this year for the new elementary school.
The amount the town needs to raise from property owners in any year, known as the levy, is determined by the size of the budget approved by Town Meeting, minus the money it receives in federal and state aid—including money the state pays to educate Devens students—and from motor vehicle excise taxes and other local fees. The amount town government needs to raise for fiscal 2022—which began July 1—is $24,933,047, an approximate 2.8% increase over fiscal 2021.
The tax rate 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.
The modest decline in this year’s rate 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 2022 calculation—rose by nearly $100 million to $1,396,843,166. Compared to 2019, they report, the value of a single-family home in Harvard increased roughly 6.6% in calendar year 2020, 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 2019 and 2020. The average value of condominiums rose 6.4%, “with variations from complex to complex,” Saltzman said, while the value of vacant land decreased by about 2.6%. The value of commercial property, flat the previous year, jumped 9.1%, but industrial properties were 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 95.4% of the property taxes collected by the town, with all but 9% of that amount collected from the owners of Harvard’s 1,698 single-family homes. Taxes on commercial, industrial, and personal property contribute the remaining 4.6%.
While the big news of the yearly assessors’ report is the current fiscal year’s estimated tax rate, the assessors have no say in the final number, which is calculated by the state Department of Revenue. The purpose of the assessors’ report to the board is to recommend whether residential and commercial properties should be taxed at the same rate.
A single tax rate, again
This year, as in the past, the assessors recommended not to raise the rate on commercial, industrial, and personal properties 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 property owner at the same rate of $17.89 per thousand. Homeowners, however, will pay 2 cents more—$17.91—due to the additional amount needed to reduce the tax burden of seniors who qualified for Harvard’s means-tested senior tax exemption. Seven qualified this year, for a total of $23,124 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 construction and any debt payments the town has agreed to exclude from the maximum amount permitted by Proposition 2½. This year’s levy is $225,940 less than the $25,218,987 maximum allowed by state law.
