With Eye On Town’s Fiscal Challenges, Scrutiny Begins
Thu, 02/06/2020 - 3:20pm Heraldgroton
by Connie Sartini
While the Select Board and the Community Preservation Committee (CPC) met Monday night to discuss the future of the Community Preservation Act (CPA) funding, several members of the Select Board expressed concern about the serious financial challenges facing the town in the next few years, especially the likelihood of multiple overrides.
The CPA law allows the town to collect a three percent surcharge annually on the real estate taxes of residents. Groton voters approved adoption of this legislation in 2004, when the return from the state to the town was a 100 percent match. Since that time, the matching funds from the state have decreased, now returning about a 30 percent match to the town.
Town Manager Mark Haddad told the meeting that this was the first of many discussions that are planned between the Select Board and the CPC on the subject of the amount of CPA surtax. “No decision will be made tonight,” Haddad said, adding that if there are any decisions made to change the percentage of the surtax, it would have to be voted first at Town Meeting, followed by a ballot vote at the following election.
Haddad presented slides that showed the impact of lowering the CPA surtax from three percent to two percent and one percent respectively. Eliminating the entire surcharge eliminates all the $756,476 that is collected as an assessment on the real estate tax bill. He stressed that when the CPA surcharge is either reduced or eliminated, the only way to reallocate those funds to operating expenses is by overriding Proposition 2 1⁄2 and increasing the levy limit by a similar amount.
Currently, with the average home valued at $492,000, minus the $100,000 parcel reduction that is not calculated into the surcharge, this homeowner pays a CPA surcharge of $204.39.
Depending on a potential surcharge reduction or elimination, and the resulting impact on the Levy Limit, the tax real estate bill on a $492,000 home would increase between $63.96 and $191.88.
Haddad stressed that reviewing the last 10 years of capital budgets, he did not find one project that was removed from the Capital Budget and paid for by CPA funds.
CPC Chairman Dan Emerson pointed out the “tremendous value to the town” from the CPC funds that have been expended for open space, recreation, historic preservation. There is also more than $500,000 in an account that is set aside for affordable housing.
CPC member Bruce Easom explained that the CPC funds come from the Department of Revenue through a fee levied on real estate transactions by the Registry of Deeds. He said that all CPA towns at one percent will receive 17 percent match from a first pass, but those towns that have a three percent surtax receive funds not only from first pass of matching fund distribution, but also are eligible for two more rounds of funds distribution.
Emerson added, “The town controls the funds, not the state. Three percent funding gives us a great cushion. Trying to get to 40 percent matching is not as good as 100 percent matching, but it’s tremendous.”
Select Board Chairman Alison Manugian reminded attendees that this is a “conversation on how to move forward for opportunities and priorities.”
Selectman Josh Degen stressed, “The discussion is part of a large puzzle that will be laid out over the next four months,” adding, “There is a potential for a $3.2M shortfall and a $3.6M shortfall in the general budget. There is a potential for overrides over the next five to six years.”
Degen pointed out the next big expenses for the town include “replacement of Florence Roche Elementary School estimated last week at $60M and entirely on the shoulders of the Groton taxpayers, in addition to the costs for a Water Treatment Plant (to address manganese) and for the unfunded Federal/State mandate for the MS4 Stormwater Management System.”
He stated that he would never do away with the CPA but felt that it could be reduced to a two percent or one percent surtax. He added that making some of these changes “could almost fund an override for five years.”
Degen stressed, “The Select Board and the Finance Committee need to look at this and determine what is in the best interest of the taxpayers. What are the deficits coming forward?”
Select Board member John Giger said he felt that some of the projects approved by the CPC are not coordinated with the general operating fund. He asked, “After the project cost, what cost does the town incur?”
Easom commented that once the Surrenden Farm CPC payments are completed (in 2022), “Going forward we need to look at the needs of the town,” adding, “It is not desirable to collect more CPC funds than we need. It’s better in the hands of the taxpayer. As we move forward, the CPC needs to reach out to the school district.”
Finance Committee Chairman Bud Robertson did agreed with Degen on a projected five-year override. He said that the town brings in 3.5 percent and spends 4.5 percent, noting, “Over the last four years room taxes and building permits have saved us. Now, we have only Prop. 2 1/2 and construction. We still have a 1.5 percent deficit.”
According to Robertson, “75 to 80 percent of the costs for the school district and the town are in wages and benefits. Where do we get savings? Reduce wages or cut personnel? None of the $40M for the Florence Roche School comes from the CPC.”
“This is not an easy decision,” Robertson advised, “It is a big decision.” He added that “all the facts need to be on the table. We need to know what this means for this year or next year.”
Degen said that he heard the comments about how great the CPC is and how projects are funded. “We’re here to talk about the issue of the surtax – at three percent, at two percent, at one percent, or 0 percent. Put it all on the table,” adding, “Taxpayers need to know that if they keep this, here’s what it will cost you.”
Giger raised his concern with the town’s AAA bond rating being affected, cautioning that if the bond rating were to change it would cost the town more money to borrow.
The $500,000 plus currently in the CPC Affordable Housing account drew some concern, that if it is not used, how does the town get it out of the account. There was a suggestion of petitioning the Legislature to reallocate the funds. Easom pointed out that the salary of the Housing Coordinator was paid out of that account. He added that some towns had unsuccessfully tried to petition the Legislature.
Robertson said, “Cut or take the money from somewhere else.” Haddad responded, “There is a finite amount of money that the taxpayers have.”
Although the joint meeting ended, the Select Board and Finance Committee will continue the discussion this Saturday, February 8, starting at 8:30 a.m. to address the $3.6M deficit over the next five years and the impact of the proposed new Florence Roche Elementary School.
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