What Will You Pay?—

Finance Director, Finance Bd.

Offer Tools To Tally Tax Bill

By John Voket

Newtown’s Board of Finance has collaborated with Finance Director Benjamin Spragg to help Newtown property owners determine their anticipated property tax obligation for the coming fiscal year, and get a better idea of their long-term obligation to the town’s most expensive capital project. Mr Spragg has posted an online spreadsheet that can be linked through the Finance Office website: www.newtown-ct.gov/Public_Documents/NewtownCT_Finance/07_Reval_Comparison_Rpt_0408.pdf.

The website posting provides all private property owners a comparison between their 2006 assessment figure and their 2007 post revaluation taxation rate. By taking that number and applying it to a simple formula unanimously endorsed by the finance board this week, interested taxpayers will get the most accurate prediction of their upcoming tax bill — provided the proposed budget, community/senior center, and high school appropriations pass April 22.

The April 22 referendum not only asks taxpayers to vote on the proposed $105,464,444 combined school and general government budget, but the $38.8 million appropriation for the construction phase of the high school expansion, as well as a $1 million appropriation for the design phase of a combined community and senior center.

According to chairman John Kortze, the finance board met April 14 to craft an accurate calculation of how much residents will pay if the current budget proposal is approved. The board deliberated for nearly two hours before unanimously endorsing a formula for homeowners to use based on the data taxpayers can obtain from the website.

Mr Kortze said it was important to his board to offer this information to the public because of “highly inaccurate” formulas being presented during several recent meetings. The finance board also discussed providing taxpayers an extra step to help them net out their personal cost to underwrite borrowing for the proposed high school addition.

While that breakout is fraught with caveats because of certain unknowns and estimates regarded as being somewhat fluid, Mr Kortze said, it is still about the most accurate formula for individual taxpayers to get a true representation of the high school’s ultimate out-of-pocket costs based on data provided by the school district.

In clarifying comments about the accuracy of taxpayer cost formulas tendered at recent public meetings, Mr Kortze explained that citizens’ attempts to boil down a cost-per-day scenario to minimize the net taxpayer impact of this historic budget request could not be accurately achieved before this week. He said a reputable formula would be impossible to calculate before the final budget was accepted by the Legislative Council.

“I heard one analogy that each taxpayer will pay an average of $25 per year for the new high school,” Mr Kortze told the finance board Monday

Since then all six members of the finance board and Mr Spragg have been considering the best way to present information that would yield accurate calculations taxpayers could rely on as they plan their household expenditures going forward if the budget and appropriations pass April 22.

Stressing the individual outcomes of each residential revaluation and the ultimate mill rate as determining factors in each taxpayer’s calculation, Mr Kortze said he was loathe to judge whether the 80-cents-per-day calculation applied to those paying $10,000 annually in property taxes is fair given the current economic climate.

“I’ll never make a value judgment about 80 cents per day when it comes to someone else’s money,” Mr Kortze told his fellow board members.

Mr Kortze stressed that calculations endorsed by the finance board this week would only be good for the first round budget proposal.

“If the taxpayer takes the online data which shows last year’s tax bill and the new assessment based on the proposed 23.2 mill rate, they can calculate the difference. And if the budget [and appropriations] pass as is, the difference will be their new tax payment,” Mr Kortze said.

“If the budget fails, we will amend the spreadsheet once a new proposed mill rate is set and taxpayers can simply recalculate.” (A mill represents $1 in taxation for every $1,000 in assessed property.)

During deliberations, the finance board determined the first year taxpayer cost for the high school — not including architect fees that were already approved and bonded — is $1,156,000. The proposed second phase of borrowing for years two–20 for the high school construction is $2.03 million.

Adding in the proposed annual $780,000 in fixed costs for just the expansion provided by the school district brings the annual debt service and operational costs to $3.08 million.

“That is the all-in taxpayer costs for the high school expansion not including architect fees, or accounting for any growth in enrollment,” Mr Kortze said. “All the numbers are based on anticipated enrollment when they open the doors [on the expansion].”

The finance board calculated that the total cost is determined by dividing $3.08 million by the $5.5 million proposed 2008 budget increase. Taking the $1,156,000, adding the $780,000 fixed costs and dividing the sum ($1,936,000) by $5.5 million, illustrates that 35 percent of the 6.4 percent gross budget increase represents high school spending exclusively in year one.

“That’s 0.5 of one mill in year one,” Mr Kortze confirmed.

By adding on the extra $1.14 million in debt service for year 2–20, and dividing the $3.08 million by the value of one mill at the proposed rate, taxpayers will pay 0.8 of a mill in years 2–20 of the borrowing cycle.

“That is strictly dependent on no changes in the current interest rate estimate, which is a wild card,” Mr Kortze said. “It’s just difficult to speculate because Newtown won’t go to market on those bonds until the end of 2008 and 2009, respectively.

“Ultimately, the accepted standard the board has agreed upon to answer the question ‘What will it cost taxpayers for the high school addition?’ is $300 annually for every $10,000 in property taxes in years 2 through 20.”

He said the finance board agreed, based on hard data provided, taxpayers “can make fairly accurate predictions when taking into account the caveats.”

“This is very complicated — it has lots of moving parts,” Mr Kortze concluded. “And it is complicated further by the new numbers coming from revaluation. But we believe this is the latest, best calculation taxpayers can use based on confirmed numbers.”