A bunch of maps about property taxes

There was a post recently on a Facebook group, Hello Holyoke!!! [sic] where someone complained that the city’s taxes are the highest in the state (spoiler – they’re not, though they are relatively high). Many others bemoaned the high tax rate, and blamed it for failing businesses, empty storefronts, and blighted mill buildings. This post inspired a lot of passion, vitriol, and bile from those who commented (pro-tip: once the number of comments on a post exceeds 20, it’s best not to read them).

hh_post
Facebook post on taxes. 

I don’t know too much about tax policy, and especially about municipal tax policy. That post got me interested in looking to see what tax rates are like across the valley, and how the various communities fall. Fortunately, the Massachusetts Department of Revenue has a really handy table showing all municipal tax rates, and so of course I made some maps.

Taxes Across the State

First, a comparison of taxes across the state. Property taxes are based on what’s called the “Mill Rate,” or taxes per $1,000 of assessed value. For example, Holyoke has a residential mill rate of 19.17. That means that our tax rate is 0.01917% of the assessed value of our house.

Res_rate_statewide
Residential Mill Rate
comm_rate_statewide
Commercial Mill Rate

Interestingly, most communities have just one property tax rate. A handful, including Holyoke, have a split property tax rate, where commercial property is taxed at a higher rate than residential. I’m not really sure why that is, except that perhaps the thought is that commercial and industrial property is less easily movable? I don’t know but would be interested in finding out.

Anyway, you can see that residential tax rates are lower inside Route 128, near Boston, and higher in the rest of the state. Commercial tax rates, on the other hand, are all over the place, though they do seem to be higher in the higher-population urban areas.

Those two maps, of course, are only showing the tax rate – not the actual amount of money being paid in taxes. Property values are WAY higher in the Boston area, so even though the rates are relatively low, the tax bills are still relatively high.

tax_bill_statewide
Average Residential Tax Bill. Some communities, like Boston and Cambridge, are missing. That’s just a quirk in the dataset I was using. 

Taxes in the Pioneer Valley

I also got curious about how Holyoke compares to our immediate neighbors. So let’s take a look.

res_rate_pv
Residential Mill Rate
comm_rate_PV
Commercial Mill Rate

The two maps above confirm that Holyoke’s tax rates are relatively high – though generally on par with Westfield and Springfield, two of the other largest communities in the Pioneer Valley. But property values in these communities are pretty low.

PV_Med_home values
Median Residential Property Value. Source: 2016 American Community Survey

So, with low property values, even a high rate doesn’t translate into especially high property tax bills. You can see this in the average residential tax bill.

PV_ave_tax_bill
Average Residential Tax Bill

Of course, this is just the residential tax bill. As shown above, Holyoke has a very high commercial tax rate – actually, the third highest in the state after Holbrook and Pittsfield (side note – where is Holbrook?). Regardless, commercial property values in Holyoke, Chicopee, and Springfield are also relatively low, meaning that the relatively higher rates probably still don’t translate into a disproportionately high tax bill compared to surrounding communities.

Thoughts on Economic Development

Now for the policy deep dive. The real question, of course, has to do with tax rates and economic development – that’s what the guy who posted was really complaining about. I don’t pretend to be an expert on economic development or tax policy, but it does seem to me that there are a lot of places in Massachusetts that are expensive to do business, and yet business is booming.

Kendall Square in Cambridge has some of the most expensive property in the world, but is a power-house commercial district nonetheless. Despite the sky-high cost of developing or renting property, Fortune 500 companies locate there because they have Harvard and MIT a stone’s throw away to pull talent from. They have ample high-end housing and restaurants and bars. And they have bike paths and the Red Line and the Charles River Basin. The cost of doing business, including local taxes, doesn’t seem to be a major impediment.

Indeed, the Urban Institute wrote about taxes:

Taxes are a consideration in business decisions about location, but they are not the only one. Although firms welcome tax incentives, availability of transportation and low labor costs more often drive business decisions about expansion or relocation. Corporate site selection professionals rank the availability of skilled labor and adequate land and infrastructure higher than they rank tax policy.

At a macro-scale, taxes appear to have a fairly tenuous connection to broader economic performance. The Brookings Institution put together this chart during the most recent debate on slashing the corporate tax rate:

brookings tax chart
Federal tax revenue (left) seems fairly unrelated to per capita GDP (right).  

Yes, taxes shouldn’t be any higher than they need to be (of course!). But economic success depends on so much more than the mill rate – Holyoke and the rest of the greater Rust Belt would be well served to remember that quality of schools, quality of life, and quality infrastructure are all crucial ingredients to effective, sustained economic development.

PS –  That’s where high-tax Holbrook is.

holbrook

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Upcoming Panel Discussion: 3 Ways to Take It to The Man

mb_advocacy_boot_camp_email_header

As some of you may know, I’m pretty engaged in the bicyclist community. I serve as the Vice Chair of the Holyoke Bicycle and Pedestrian Advisory Committee, Co-Chair the Steering Committee for the River Roll and Stroll (a very cool open streets event in its second year) and also volunteer as a Bicycle Maintenance Instructor at the Holyoke Urban Bike School.

A general effort woven throughout my life is trying to improve biking conditions, certainly a consequence of being an almost-daily rider since I was 18. I even did it professionally as the Programs Director for the Massachusetts Bicycle Coalition (MassBike) from 2011 to 2014. Since then, I’ve worked in the public sector, first for MassDOT and now for the Pioneer Valley Transit Authority. So I’ve seen both the nonprofit and the governmental sides of transportation planning.

This Saturday, I am going to be putting that decade-plus of experience to use at the MassBike 2018 Advocacy Boot Camp, an event where bicycle boosters from around the state can learn and network with other folks who want to improve bicycling. The title of my panel discussion is “Mass Mobilization: Working Within the System,” and I’ll be talking about how advocates can engage with public sector staff to further better biking conditions.

Here are three points I plan on making at the panel on Saturday.

1. Throw Their Own Policies in Their Faces

Bike advocates should feel like they have the wind at their backs in Massachusetts. That’s not to say that all fights will be easy, but there are many things going in our favor. For example, MassDOT released a Project Development and Design Guide in 2006 that prioritizes biking and walking facilities in roadway design. One of the most powerful arguments an advocate can make is that, for state roadway projects, MassDOT engineers need to stick to their own design guidance. Many municipalities also have Complete Streets policies – hold municipal staff accountable to the policies their own town/city has adopted.

Be polite. But don’t let them off easy if they are violating their own guidance.

2. Get Letterhead

Public sector professionals, especially those who engage the public frequently, have to deal with what I will generously call “zealots.” These are people who have a pet cause and, at every opportunity, speak at length to that cause. They will corner public employees, electeds, and anyone else to discuss their issue for extended lengths of time.

They undermine their own credibility by being so fanatically focused on their one issue, when public employees have to balance a number of competing issues at the same time. One way to avoid this pitfall is to instill the sense that, when you are advocating for better biking, it’s not because of a personal obsession, it’s because you represent a movement.

As one advocate put it (I’m paraphrasing), “I thought one day, ‘Hey, it’d be cool to have a bike path on this old railroad right of way. So I put together a website, Friends of the Community Path. Next thing I knew, a local newspaper picked up the story of a new grassroots movement that had formed and was demanding a new community path. And I got an email from a local elected official who wanted to talk to the group’s president.”

So get letterhead, a logo, business cards, a website, and anything else that will help to legitimize your cause when you talk to decision makers.

3. Don’t Wear Stinky Day-Glo

The stereotypical image of a bicyclist usually involves a lot of day-glo and lycra. I have been to so many public meetings where at least one attendee is a dude wearing his bike clothes, freshly sweaty from his 15 mile bike ride to get to said meeting. It may not be fair, but that first impression is probably not a good one. And then, after assaulting the olfactory senses of the planner or engineer running the meeting, you make your pitch for why bike facilities should be included.

It’s an uphill fight.

Instead, an advocate should consider taking the bus to the meeting, or maybe arrive early with a change of clothes and a stick of deodorant. You want these planners and designers to see you as a peer, to see themselves in your shoes. And, believe it or not, most people will go their whole lives without donning day-glo for an hour-long bike ride to get to a semi-professional meeting.

Public Employees Count on Advocates

In the end, any public sector employee who cares about the work they’re doing really depends on advocates to help them do their jobs. Even though civil servants should be apolitical, their work is still directly impacted by elected leadership. Mayors and City Councilors give policy direction which the staff is carrying out. So we depend on advocates to make the phone calls, write the letters, and show up to public meetings to demand that we do the right thing.

Without effective advocacy, we’ll keep getting the broken post-war urban development model that has failed our cities in so many ways. The most enlightened and dedicated civil service won’t change that without advocates backing them up.

A Local Option for Net Neutrality?

There are so many regulatory and legislative overhauls going on right now that it’s pretty hard to keep up. A big one that has gotten a little lost in the shuffle of tax legislation and Russian collusion is the overturning of Net Neutrality rules instituted by the Federal Communications Commission under the Obama Administration.

I’ve been concerned about this because the internet is so crucial to so much of my life. Like basically everyone else, I stream Netflix and have social media accounts and check my email. But so many other devices are network enabled, including our lamps and our thermostat. I download GIS files, Census files, and all kinds of other information for work. It shakes me to the bones to think that my access to these resources could be compromised.

One of the more interesting proposals I’ve seen floating around is that municipalities should create their own locally developed and controlled broadband internet infrastructure. To quote an article from Vice:

Net neutrality as a principle of the federal government will soon be dead, but the protections are wildly popular among the American people and are integral to the internet as we know it. Rather than putting such a core tenet of the internet in the hands of politicians, whose whims and interests change with their donors, net neutrality must be protected by a populist revolution in the ownership of internet infrastructure and networks.

This idea appeals to me a great deal, even if the technical feasibility is unclear. Greenfield already has a non-profit, community-owned broadband provider called GCET. A group in Holyoke has been trying to get the municipal utility provider to invest in “Fiber to the Home” (FTTH) for years now, though the Greenfield model is a mix of fiber and community-wide wifi.

I think like a lot of people, I feel mostly helpless when dealing with federal-level issues. When something is happening that I disagree with, my ability to influence those issues is minuscule. But if there is a solution at the local level, then that inspires a bit of hope.

Building Highways, Cutting Transit

As you might have read, the FY18 state budget reduced funding for transit (resulting in service cuts) and cut the Springfield-to-Boston rail study entirely. Adding insult to injury, the legislature decided in the same budget to fund a study on building a new exit on the Mass. Pike somewhere between Westfield and Lee, probably around Blandford. As the MassLive article puts it, “[State Representative] Pignatelli argued that a turnpike exit could spark economic development in the hill towns, as well as provide convenience to residents who must currently travel to Lee or Westfield to access I-90.”

blandford exit
Proposed area for a new exit

Cutting funding to transit and rail while funding a study for a new highway exit is a terrible move by the commonwealth for the following reasons:

  1. Environmental Goals: It runs totally counter to well-established state goals. For example, MassDOT went through an intensive process to create a sustainability plan (“GreenDOT”) and established mode shift goals of tripling the amount of biking, walking and transit by 2030. Also, the state has passed legislation to reduce greenhouse gas emissions to 25% below 1990 levels by 2020, and 80% below 1990 levels by 2050. Adding a Mass. Pike exit promotes driving and undermines both goals. 
  2. Land Use Goals: Just like building the highways in the first place resulted in the suburban boom that dominates our metro areas, building this new exit in the Hill Towns is indeed going to “spark economic development.” Land values will go up near the exit, farmers will subdivide and develop new single-family housing, and businesses will follow that new growth into what was once green fields. This runs totally contrary to the land use program goals of the state, which seeks to encourage Smart Growth and Transit-Oriented Development. 

    suburban development
    Big box stores, chain restaurants, and post-war suburban housing around Mass. Pike Exit 7
  3. Economic Goals: The same processes that sucked the Springfield and Holyoke economies dry in the post-war period will still be at work today if an exit is built. When our “Gateway Cities” (smaller regional hubs like Springfield, Holyoke, Fitchburg, etc., that have struggled economically over the past few decades) are finally starting to see a turnaround, it makes no sense for the state to facilitate businesses locating into rural areas.
  4. Equity Goals: And perhaps the most egregious of all, this highway exit is going to overwhelmingly benefit relatively well-to-do white families living in the Hill Towns, while the cuts to transit service disproportionately impacts low-income people of color. This is counter to the Civil Rights Act of 1964, in addition to multiple programs run by the MassDOT Office of Diversity and Civil Rights.
Poverty map
Map of poverty in Hampden and Hampshire Counties by Block Group. Note the dark blue of Springfield and Holyoke, and the light blue of Blandford. 

The political argument for the exit is that it will better serve people who live in Blandford, Chester, Russell, etc. And that’s true, it will (at least those who drive). But the people who live in these communities moved there knowing that highway access is not very good. And while their convenience would probably increase, their private benefit is outweighed by the cost to the public.

Not only would the new exit promote more driving, more destruction of farmland and open space, and the relocation of business activity from Springfield to Blandford, but there is also the opportunity cost of building the exit – what else could that money have been used for? (I have a suggestion – fully funding PVTA.)

If the state and the region are serious about climate change, about downtown revitalization, about smart growth, then PVPC and MassDOT must make crystal clear in this legislatively mandated study that the project hurts the public and conflicts with myriad state policy goals.

They say that actions speak louder than words. Massachusetts has some excellent policies on the books regarding climate change, active living, equity, and urban revitalization. Building this new exit would show that those policies are nothing more than just words.

S’Thievin Stetson and the Mortgage Interest Deduction

10403247_818327637918_449473574942174590_nMy wife and I recently closed on our new home in Holyoke, and we couldn’t be happier. We had been wanting to purchase a home for a long time, for a variety of reasons:

  1. I am a firm believer in the notion of building equity rather than paying rent.
  2. We were tired of the annual rent increase haggling with our landlord.
  3. We couldn’t really personalize our living space, since it wasn’t ours.
  4. Owning a home makes me feel more invested in a community, which as a civically engaged kind of guy, is important to me.

And on and on. But the biggest reason to buy a home for many is strictly monetary – we can now deduct our mortgage interest from our federal income taxes. On top of that, we can deduct municipal property tax from our federal income taxes. All told, according to a tax calculator I used at bankrate.com, we’re going to end up saving over $1,200 per year on our federal taxes on average for the next 30 years.

Wait, what?

Introducting S’Thievin Stetson

robin hood
Source: A.V. Club

We in the Anglo-American tradition tend to venerate the figure of Robin Hood, who stole from the rich and gave to the poor. This is reflected in our income tax policy, which progressively taxes higher incomes more than lower incomes. Well, I want to introduce “S’Thievin Stetson”, Robin Hood’s alter ego. S’Thievin inspired the Mortgage Interest Deduction (MID), one of America’s most regressive, costly, and (unfortunately) sacrosanct tax policies.

The MID was codified into the beast that it is today in the 1986 tax reforms that eliminated many specific deductions and exemptions, in addition to lowering the overall tax rate. For whatever reason, the MID survived those reforms. Today, the deduction costs American taxpayers over $70 billion per year in lost tax revenue, with the majority of the benefit going to households making over $100,000 per year.

regressive tax policy
Source: Center on Budget and Policy Priorities

The argument in favor of the MID most commonly used is that home ownership is a fundamentally good thing that we as a society should be supporting. It encourages community cohesion, promotes investment in the built environment of the town, and is a tool for investing wealth into a stable market (er… forget about that period between 2008 – 2010).

Except that research has shown other countries, like Canada, have similar home ownership rates without the MID. Whoops!

The Political Third Rail

So why do we have it? And why is it so sacred?

I suspect it has to do with who benefits: a whole lot of upper-middle class households.

income bracket
Source: The Atlantic

Much of the current political debate has to do with the 99% versus the 1%. Sure, that seems cut and dry enough. But what about when it’s the 80% versus the 20%? And what does it mean if that 20% produces many of the elected leaders who ultimately make these policy decisions?

I suspect that the MID is going to continue being a “political third rail” (ie touch it and die). Brookings proposed an interesting solution that would seek to shift some of the benefit away from the very wealthy and toward the middle class, but I doubt anything will come of it in the current federal political atmosphere. That doesn’t mean we shouldn’t try anyway.

Why You Should Care

Ultimately, this matters because when the wealthy pay less in taxes, the rest of us have to pay more. When a household making $200,000 decides to buy a home for $750,000, the renters making $40,000 have to pick up the slack in the federal balance sheet. Medicare, Medicaid, Social Security, roads and highways, education – all of these public goods fall increasingly on the backs of those less able to shoulder the burden.

Put differently, renters in Holyoke are subsidizing home owners in Longmeadow. That just doesn’t seem right. Lousy S’Thievin.