April 20, 2006

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Manchester Publisher's Note: Budget bull
By Jody Reese

Mayor Frank Guinta would like us to believe he has reduced property taxes, but that is not the case. In fact, property taxes will increase this year as they have almost every year for the past generation.

Guinta claims a 1.23 percent tax rate decrease or 35 cents off for every $1,000 of assessed value or $35 off the standard property tax bill. The only problem with these numbers is that they aren't real.

In putting together his budget, Guinta chose to make it a political campaign prop instead of an actual budget. He did not include $2,763,266 in veterans' exemptions and tax abatements. When those costs are added back in to the budget, which they will have to be because they are actual money the city will have to pay taxpayers, the tax rate actually increases to around $28.52 per $1,000 of assessed value and that means the tax rate actually increased about two thirds of a percent.

Guinta's budget also runs into money problems in his projections for fees the departments will collect. Though from his numbers it's clear that he expects commercial and residential building and remodeling to continue, recent increases in borrowing rates and the general slowdown in real estate make that very unlikely. And Guinta reduced the amount of money he placed in contingency, which could have been used to make up for a shortfall in building fees.

I can see Guinta's point of view on all this. After reducing spending on education, parks, computers and customer service, he was still looking at a tax increase, though of only a few percent. The reevaluation wasn't his doing, yet eight weeks into his term there it was waiting to get in the way of his promise to cut taxes.

Inflation too causes Guinta problems in satisfying his tax-cut supporters. In his budget, Guinta increases spending by about $250,000 over last year's budget of about $267.7 million (the proposed 2007 is about $268 million). But that increase is actually a reduction in spending because of the rate of inflation, which is about 2.5 percent. Including the rate of inflation, a flat-funded budget (which buys the extact same amount of goods and services as last year's budget) would have been about $274.4 million. It's hard to put "I kept spending below the rate of inflation," on a campaign sign, though it would be accurate.

Guinta faces another, even tougher, problem with his tax-cutting efforts. The tax rate he is using is theoretical because of the citywide reevaluation underway. Changes in property assessments will increase taxable property in Manchester from around $5.3 billion to $9.5 billion, and decrease the tax rate to around $16 per $1,000 of assessed value, while at the same time likely increasing property taxes on older homes and commercial property. Owners of condominiums and new homes could see a small decrease in the taxes they have been paying, as the tax burden will now be more evenly spread across all property in the city.

In the end, campaign promises are easier to make than to keep. Cutting the tax rate without major cuts to all departments, including police, fire and highway, is just not possible. Claiming a tax cut by hiding huge costs such as abatements and veterans exemptions, won't really cut anything.


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