Towns rely on property taxes for cash

BOSTON, Mass. (WWLP) - The Massachusetts Taxpayers Foundation released a report Wednesday that says the past two fiscal years have been the worst for cities and towns in the last 30 years. Strapped for cash, they’re turning to property taxes to generate revenue. 

“Long term, this is a problem because if you put more and more of the cost on property taxpayers that obviously is very difficult for families and individuals who are feeling their own fiscal pressures to say the least,” said Massachusetts Taxpayers Foundation president Michael Widmer.

It also poses a contradiction, property tax revenues have had the slowest growth since the passage of Proposition 2 ½, a measure that caps property tax hikes at 2 ½ percent annually.  But because the state has been cutting local aid, municipalities have been relying on property taxes to generate revenue, which represented 56.5% of their local budgets in 2010. Tax analysts say lawmakers need to find ways to tighten spending once again.

“The focus in 2012 and beyond needs to turn to the retiree healthcare obligations, huge liabilities, unfunded at this point in time,” said Widmer.

The report says dozens of communities are also taking advantage of new local option meals and hotel taxes to generate revenue. 

Nonetheless, state tax collections are rising in Massachusetts and Widmer speculates there will be an increase in local aid when the governor’s proposed state budget is released in January. But administration officials have been downplaying that optimism.

“We just won’t have the resources to do everything we’ve been doing this year and it’s going to be another challenging year to present a balanced budget,” said Administration and Finance Secretary Jay Gonzalez.