Winthrop Circle, looking toward Medford Square. Photo (cc) 2021 by Dan Kennedy
Warning: Hardcore Medford post ahead.
Forty years of Proposition 2-1/2 have caught up with us in Medford. City Councilors Zac Bears and Kit Collins have proposed a $12 million override, which they say is needed to solve our long-term structural deficit. Mayor Breanna Lungo-Koehn, seeking a compromise, has come back with a counteroffer for an override that would add $3 million to the property-tax levy. Thanks to Gannett, all of this is playing out in the absence of any regular news coverage.
The debate is going to come down to whether Medford residents can afford to pay more property taxes. I’ve attempted to provide some baseline numbers, drawing on data from the state and the U.S. Census. (Thanks to those of you who helped me find what I needed.) You can look at those numbers here. Let me offer a few takeaways.
First, Medford’s residential property-tax rate is very low — just $9.01 per $1,000 of assessed valuation, placing us at No. 317 of the 348 cities and towns for which I was able to get data. (There are 351 municipalities in the state.) But that’s an irrelevant number, derived from our soaring property values. So let’s get to the good stuff.
Second, our property-tax burden per capita, based on a residential property tax levy of $105.3 million, is $1,766. That puts Medford at No. 248, or in the 29th percentile. By that measure, the property-tax burden here is relatively low. The per capita burden in bordering communities: $4,676 (Winchester, No. 23); $2,911 (Arlington, No. 95); $1,798 (Somerville, No. 244); $1,244 (Malden, No. 321); and $947 (Everett, No. 338). Everett is not an affluent community, but I suspect its property-tax burden is unusually low because of the taxes paid by the Encore casino.
Now, that tells you a lot. But our third breakdown should be the most useful, because it’s based on some measure of whether a community can actually afford its residential property taxes. I’ve taken the tax burden per capita and divided it by median household income. That might sound like apples-and-oranges, but it’s not, since I’m doing it consistently for all 348 cities and towns. In other words, the percentage for any one community may not mean much, but the ranking should work as a pretty accurate measure. Let me walk us through this a bit more carefully.
In Medford, the median household income is $101,168, which makes us a relatively affluent community (No. 129). With per capita residential taxes of $1,766, that gives us 1.75% for property-tax burden as a percentage of per capita income. By that measure, Medford is No. 313. That puts us at the 10th percentile. In other words, the property-tax burden is higher in 90% of Massachusetts communities than it is in Medford. Again, let’s look at our neighboring cities and towns.
- Winchester, 2.7% (No. 108)
- Arlington, 2.54% (No. 133)
- Somerville, 1.76% (No. 308)
- Malden, 1.67% (No. 324)
- Everett, 1.25% (No. 341)
Let me offer one final calculation. If you add the mayor’s proposed $3 million override to our total tax levy of $105.3 million, that would be an increase of a little more than 2.8%. If you go with the Bears-Collins proposal to add $12 million, that’s 11.4%. That latter move would bring the property-tax burden as a percentage of per capita income to 1.94% and move Medford up to No. 265. But we would still be in just the 24th percentile, with residents of 76% of other communities paying more of their income on property taxes.
One argument we’re already hearing is that the override — especially the more aggressive $12 million override — is being pushed by affluent newcomers to Medford, and that longtime residents can’t afford it. There is something to that. If you’ve lived here for all or most of your life, you may very well be house-rich but relatively income-poor. We don’t want to force residents into selling because they can’t afford to pay their taxes. Property values are already spiraling out of control in Medford — up 10.1% between June 2021 and June 2022, according to Redfin.
By every objective measure, though, Medford residents can afford either override option, and even the higher of the two would still leave us well below the state average.
Correction: I’ve rewritten the top to clarify that Councilors Bears and Collins’ proposal came first, followed by Mayor Lungo-Koehn’s counterproposal.
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Steve Ross
Good analysis and good start. My metric would have been tax per household, not per capita. Towns get their funding from many sources. In theory, they set the tax rate by dividing the part of the budget to be raised by property tax, by the total assessed value of all property. In MA, that’s also subject to prop 2.5, and there may be separate calculations for commercial and residential property. If the projected expenses cannot be easily reduced without “cheating” on long-term needs (like maintaining what you have), the tax should be raised. That’s a “structural” deficit. If the budget contains a lot of aspirational services, that’s subject to more debate. If higher taxes gives owners of rental properties more reason to raise rents, that’s a story. No local press? Arrgh.
When I created one of the first analytic reporting courses more than 30 years ago, property tax exercise was the very first chapter in the textbook I wrote for the course. Local newspapers considered property taxes the biggest regular local story of any year. Sigh.
Dan Kennedy
Thanks, Steve. Ideally, I would have been able to go with tax per household, but I didn’t have that. As I said, it makes for an odd calculation if you’re looking at one community. But in terms of ranking, I suspect the results would be almost identical.
Steve Schnapp
Many thanks for providing solid facts and figures to the Medford tax increase debate.
I’m wondering if you would consider using “levy” instead of “burden” to describe the amount of taxes one pays. While “burden” is common usage, it is a value-laden word that is intended to convey hardship. It is true that taxes (and a tax increase) are clearly burdensome for low income and some moderate income individuals and families. It is also true that due to the lack of progressive taxation, high income and high wealth individuals and families, are not burdened.
Thank you.
Steve Ross
I was born and brought up mainly in Dorchester, in a working class family that lived paycheck to paycheck. I’ve always felt that MA gives back far more than it takes.
But I avoid simple “solutions.” The top 1% already pays almost 40% of federal taxes and New York taxes. New York rates are progressive.
The big issue is not the rate. It is what is not taxed at all — assets. Increases in stock prices and property values arent taxed until they are sold. And even then, they are taxed at preferential “capital gains” rates (originally designed to factor in inflation) after holding only 1 year!
That’s the mess that has to be untangled and my guess is it will have to be done in many smaller steps.
Plenty of greedheads, plenty of “cash poor, asset -rich folks” and plenty of far left folks who think just “taxing the rich” more will solve every problem.
Boston delivers about the same services as NYC, but at a much higher quality level. If Boston’s $4 billion budget were scaled up to NYC size, NYC budget would be $50 billion. It is actually over $100 billion. Its residential property is undertaxed, BTW, because values are tied to value of rent-stabilized properties, which after 75 years are way out of touch with reality. Thus, NYC taxes the poors’ low income to pay astonishing salaries to most city employees and tax subsidies to big commercial real estate developers.
Mike
I’m concerned that your approach to using metrics like median household income (which on paper seems high) obscures deeper financial issues. Inflation of 8%+ is a real drag on household cash flow. And that’s just one issue. I’d also look at the debt:equity ratios (not that you’d want folks to tap their homes to cover basic expenses like taxes, but it would give you a sense of whether residents are strapped), how long the median resident has owned their house, percentage of retirees, and so on.
Median is superior to average (mean), but I’d want to see the plot to better understand whether the town is actually both very rich and very poor, or whether most folks reside within 20% of that $101k median.
Just some thoughts.
Dan Kennedy
That’s all fine, but even if you leave out income, property taxes in Medford a quite low when compared to nearly every other city and town in the state. What you’re asking for is pretty much not obtainable.
Dan Kennedy
Steve, thanks. “Levy” has a specific meaning when it comes to property taxes, so I guess I’ll stick with “burden.” And yes, property taxes are extremely regressive.
Steve Ross
I end up melding census data with state data when I do broadband studies. I usually work at county level, but sub-town level is available. Not sure it makes much difference in Medford, which has pretty good mix of larger single-family homes and condos, etc. But looking at how Somerville has evolved, with lots of big homes broken into smaller units for singles and young families and aged, the per capita data would be misleading.
Progressives killed a plan to remove the $10k limit on deducting state/local taxes from federal, quoting a fake study that said almost all the benefit would go to high-income families. But many retirees pay property taxes near or over the limit. They are property-rich and cash-poor. Tax policies like this (remember the “marriage penalty”) get out of whack with reality over time.
Steve Ross
The property tax RATE is set by dividing the mount of budgeted money to be raised by property tax, by the total assessed value of all taxed properties in town. If the budget goes up 2.5% and property values also go up 2.5% the RATE stays the same but the amount to be raised goes up 2.5%.
If the budget goes up 10%, the amount to be raised by the taxes goes up 10%. The rate rises.
YOUR property taxes could go up more in either case, because your property value is more — maybe in a newly fashionable part of town, maybe because you installed a new kitchen. But someone else’s tax would go up less.
Somehow the word has gotten around that only the value (or lack of value) of your property counts, as reflected in the assessment.
Taxes in Revere lately have fallen because new development has added new property value while the extra population has not (yet) added a correspondingly large amount to the town budget. My property taxes have fallen even though my condo on the beach has increased a LOT in value, mainly because it is close to the subway. But my taxes have not fallen as much as for owners in older, less ritzy neighborhoods. The Green Line extension has raised property values quite a bit in Somerville. I’m sure taxes have not gone up as fast.
Sharon Hessney
Thank you for putting data in context. Rarely done even when we had local reporters. Reporters cannot be afraid of data. Data without context is just numbers.
Steve Ross
Amen. When I created the mandatory 20-class-contact-hours data course at Columbia’s Graduate School of Journalism in 1990, it was aimed at making everyday reporters data-literate. A third of my students, at an Ivy League graduate school, could not calculate a rate or percent. Dan was teaching a data course at NEU. Our students (and students of other data pioneers) had a big competitive advantage, especially at business magazines.
Yesterday I posted a new NYT story on what went wrong in Sri Lanka. All personality and political. In a comment to the post, I referenced my story on the topic, from April 8, predicting what would happen … and showing why, and suggesting solutions.
NYT has some of the best data folks of any media operation, but the numbers folks are mainly NOT reporters, and vice-versa.
We have a lot of missionary work to do.
Mike
The day when I can read a paper and NOT see “percent” sustituted incorrectly for “percentage points” will be a good day.
Gordon Jamieson
The real question is whether there is a plan
Guessing the lower number is a short term fix that will have voters facing another override soon .. Perhaps as soon as next year?
In Arlington overrides are presented within the context of a plan that states what residents will get/preserve upon passage .. And a guarantee regarding how long it will be (at minimum) until another override would be contemplated
Arlington has operated under this approach for over twenty years .. So again .. Is there a plan?!
sberczuk
Good analysis. But I’m not sure how these two sentences fit together:
“ We don’t want to force residents into selling because they can’t afford to pay their taxes. Property values are already spiraling out of control in Medford”
Property values going up on average don’t increase taxes. (If your house went up much more than your neighbors than maybe)
Steve Ross
My reply ended up higher in the string of comments.
Dan Kennedy
You’re right. I was mixing up a couple of different ideas and didn’t express them very well.
Steve Ross
Well, look at the reporting on last quarter’s GDP:
1. Most common number was 0.9% drop, year-over-year. But actual drop from 1st quarter was 0.2%. Both numbers relevant, and the 0.2 can be doubled or wiped out by data corrections in next few months, mainly as the GDP deflator (inflation) is refined.
2. Many major news outlets said it was despite gasoline price drops, but most of those took place in July, after the second quarter was over. Retail is also weird in Q2 and increases as kids go back to school and then xmas happens. So there is a seasonal adjustment. The real unadjusted retail figures were healthy… thus squaring with job growth.
3. Hence stock market also doing fine, or fine-ish.