Tiverton FTR: Vote for zero percent tax increase

To the editor:

I write this letter to inform Tiverton taxpayers that on Tuesday, May 20, they can vote to not have a tax increase next year.  Yes, you read that right – a 0.0% tax levy increase will be Option 2 on the Financial Town Referendum (FTR) ballot.  Even better, if voters approve this Option 2 elector petition then the tax rate on our homes will actually drop a bit!

How is this possible?  Simple — the Budget Committee recommendation (also on the FTR ballot) proposes that the tax levy increase by the amount $602,837, all while there is $800,866 in the unreserved general fund (UGF) (this amount is in excess of the 3% minimum required by charter).  The 0% elector petition simply uses part of this amount to fund the exact budget recommended by the Budget Committee, rather than taxing taxpayers (again) for the amount.

It should be noted that the unrestricted fund balance of $800,866 is money accumulated because townspeople were overtaxed in previous years.  The town has been generating surpluses for several years and this elector petition aims to give some of this surplus back to taxpayers via no tax increase next year.

While naysayers will cite the town’s bond rating, I remind voters that several years ago the general fund balance dropped to about 1% all while we successfully bonded and built three new schools totaling over $30 million.  The sky did not fall and in fact we have three beautiful schools.

At the Financial Town Hearing (FTH) on May 1, we heard repeatedly that this money should be kept in the general fund so it can be spent next year.  To this I posed the fundamental question for voters:  ‘Do you want your overtaxed dollars in the town’s bank account or your own bank account?’  For me the answer is easy – I can spend my money next year better than the town can.

There is nothing new or inventive to using the UGF to reduce the upcoming year’s property taxes.  For years the Budget Committee recommended using some of the UGF to offset the upcoming year’s taxes.  And on page I-1 of this year’s docket, the Budget Committee even created a line item entitled “General Fund Surplus Withdrawal (to offset taxes)” – but the Budget Committee amount is curiously $0.

I urge all taxpayers to find 15 minutes to vote in the FTR on Tuesday May 20, and to support the 0.0% budget proposal submitted by elector petition (Option 2).  The polling places are the VFW, Country View Estates, and Amicable Church and early voting will be at Town Hall (625-6703) on Thursday, May 15 – Saturday, May 17.

Thank you for your FTR vote to control Tiverton’s property taxes.

Jeff Caron

Tiverton

 

One Comment;

  1. Mike said:

    GET THE FACTS!
    Please review this information and make an informed decision as you consider voting for a budget proposal for the Town of Tiverton.

    Will my taxes go up if I vote for Option 1?
    Your taxes will go up very little. Option 1 calls for very small increase of only 1.29% (Portsmouth voters recently approved a 2.4% increase). This is one of the lowest tax increases in recent history. In fact, the annual property tax bill on a home assessed at $300,000 will increase by only $74. That’s right, only $74 a year to ensure we maintain our schools and services, while strengthening our position with investors.

    Why should I not vote for the “0.0% tax increase” promised by Option 2?
    The budget proposed in Option 2 is the latest attempt by a small group with an extreme political agenda to cripple the town financially. Having failed in previous years to decimate funding to our school and community services, their strategy now is to strip the Unrestricted General Fund and claim the result is a “0.0% tax increase” that won’t cut services. Based on how finances actually work, this view is either woefully uninformed or intentionally deceptive. They even foolishly refer to the town’s General Fund, the guide of a town’s financial health, as a “slush fund.” As is usually the case, when something sounds too good to be true, it is.

    What is the purpose of the Unrestricted General Fund?
    The unrestricted general fund balance provides for stable tax rates, investment income and greater long-term planning capability. In addition, it ensures short-term cash availability when unanticipated expenditures occur. The unrestricted general fund balance has a significant impact on the town’s bond rating and its ability to borrow money for long-term investments in the community. Higher bond ratings result in lower interest rates on the town’s financial obligations. That’s why it must be maintained at sufficient levels.

    How much should the town allocate to the Unrestricted General Fund?
    Tiverton’s charter mandates a minimum amount of 3% of the total budget’s expenditures. However, the Government Finance Officers Association recommends, at a minimum, that governments “maintain unreserved fund balance in their general fund of no less than five to 15 percent.” Based on best practices, Tiverton’s elected officials have recently tried to increase the amount to stabilize taxes and town finances, and Option 1 puts the amount at only 4.7%, which is certainly reasonable. The town’s independent auditor even twice commended the council for its policy of wisely and prudently beginning to increase the town’s unreserved fund balance. Furthermore, two former Town Councilors who proposed growing the amount by 0.5% each year have gone against their own thinking, shortsightedly endorsed budget option 2, and put the town’s finances at risk – all to save just $74 a year.

    How much do other Rhode Island towns allocate to the Unrestricted General Fund?
    Our immediate neighbors, Portsmouth and Middletown, require a minimum of 8%, and 30 of the 39 other communities had a higher combined fund balance than Tiverton, as indicated in a 2012 State of RI report designed to measure fiscal stress on communities. Neighboring Little Compton’s Budget Committee is even advocating a 12% balance in order to maintain maximum financial flexibility and the only AAA (highest) credit rating in the state.

    Does the balance in the Unrestricted General Fund really drive bond ratings?
    Yes. In fact, Moody’s bond rating agency cautioned the town that building its reserves instead of drawing them down will “remain an important rating factor” for future borrowing (like next year’s library bond.) Tiverton’s town treasurer also warned regarding our rating in a May 1, 2014 letter to residents, “Moody’s has developed a new rating methodology … review of our general fund balance accounts for 50% of the Finance Review – that is a hefty portion.” She further cautioned, “Tapping into our UGF could cost us down the road. I urge you to protect your investment in the town.”

    What is the real financial impact – in dollars and cents – of a higher bond rating?
    Again, we need only look next door at Little Compton to find the answer. The benefits of the strategy to maintain the highest possible credit rating have already been proven because the town will save close to $1 million in interest on the school bond, according to their budget committee.

    Is Tiverton the highest taxed town in the highest taxed state?
    No. These are falsehoods put forth by the proponents of Option 2. First, Rhode Island’s highest personal income tax rate is not the highest in the country. Furthermore, Tiverton is not the highest taxed town. Tiverton’s residential property tax rate is actually closer to the median of Rhode Island cities and towns.

    Have taxes in Tiverton more than doubled in the past decade?
    No. This is another misrepresentation by the proponents of Option 2. “More than doubled” implies a greater than 100% increase to your property tax bill. Taxes have gone up, but they have gone up for all towns – as have assessments. Increases are driven by town expenditures, the increase in the value of property, improvements made to property, zoning changes, etc. An analysis was conducted on a significant sample, which concluded taxes have increased at a pace with inflation and with other towns. The claim by the proponents of Option 2 actually overstates the increase by more than two-thirds.

    Do elected official have plans for the amount allocated to the Unrestricted General Fund?
    No. The proponents of Option 2 mislead again. Their concern is that the UGF, or “slush fund” as they refer to it, will be raided to fund a contract with the teachers. However, this is simply not true. The proponents of Option 2 oppose anything to do with the schools, despite the fact that Tiverton’s teachers are the lowest paid in the state and the schools continue to perform very well. Nevertheless, any expenditure out of the UGF requires a vote of the citizens in the form of a referendum. The Town Council cannot just spend it.

    Please visit http://www.tiverton-today.com/yeson1 for more information.

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