2016-10-28 / Front Page

Council passes measure aimed at predicting valuation

By Michael Kelley Staff Writer

One of the elements of passing an annual budget that the town council routinely struggles with is predicting the value of all the taxable property in town, a figure that is used to determine the tax rate. A new methodology approved by councilors last week is aimed at better determining that number.

“The problem is we start the budget in April for the upcoming (fiscal year) and at that time we don’t know what the valuation will be, so we use a number for the next year that is a conservative estimate based on previous years,” said Councilor Will Rowan, who, as a member of the rules and policy committee, was the chief architect of the new policy.

The new policy, which gained universal approval of the six councilors in attendance, uses a 10-year average and provides both a low estimate (50 percent of the average growth) and a high estimate (150 percent of the average growth) as to what the valuation in a given year could be. The average growth over the last 10 years is $52.7 million and has ranged as high as $89.7 million in 2009 and as low as $14.6 million in 2012.

Councilor Peter Hayes, chairman of the rules and policy committee, said every year the council sets conservative estimates of the valuation and every year the valuation proves to be more robust, which has a positive impact on the tax rate.

Rowan said the policy is “not intended to influence the assessor in any way because that is an independent office.”

“It’s vitally important to have the assessor independent,” Town Manager Tom Hall said. “He’s got a tough job and it is important for him to above the fray.”

“This is about providing more information and as good a judgment we can make in the May and June timeframe on a number we won’t know until August,” Council Chairman Bill Donovan said.

Bayberry Lane resident Mike Turek asked why Town Assessor Matthew Sturgis couldn’t simply start his work earlier, say in February, so councilors could use the valuation number and not estimates in the spring. Hall said per state law, the valuation must be based on the value of all taxable property as of April 1. From there, the assessing department does “a ton” of work to determine the valuation figure. Because of all that work, Hall said it would be a stretch to have the final number much before early August.

Donovan said the body of work that is done post April “really takes you into August,” which is after the council has adopted a final municipal budget and voters have approved a school budget.

Hayes said the new policy is about “communicating out what the impact to the budget may be” and isn’t about determining a final tax rate. Sturgis determines the final valuation in August, which sets the tax rate taxpayers are billed in October and April.

The policy allows the council the flexibility to use other factors when determining an estimate valuation. Donovan said because it is a policy and not an ordinance, the council can “veer away” from it if necessary.

“I am leery of putting in a hard and fast rule. This is a tool. It is a guiding principle,” said Councilor Chris Caiazzo, who said he was in favor of using the methodology for a year or two before revisiting it to gauge its success or failure.

Staff Writer Michael Kelley can be reached at news@scarboroughleader.com.

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