Tax Proposal Considerations

The April 1, 2019 Town Council discussion of the proposed adjustments to the Senior Exemptions and the institution of a Homestead Exemption was complicated by the reminder that the Town is waiting for a RIPEC study of the 2018 proposal to completely change the way taxes are assessed in Middletown.

In October, 2018, I reviewed the tax rolls and compared the taxes paid by every town resident for the past 4 tax years, including the years of re-evaluation. In early May, I addressed my concerns to the Middletown Town Council as follows:

Following observations based on comparative study of actual data, I determined that Seniors who own property in close proximity to the beach will see increases in their property taxes, and Seniors who live more centrally or on the west side will see decreases in their property taxes.

These observations led to the conclusion that statements that suggest that seniors are being forced out of their homes by taxes are misleading or at least disingenuous.

Actual personal experience with two houses of different values reflected minimal increases of an average $115 per year over a 17 year period and $66 per year over a 12 year period, including 5 re-evaluations, which did not seem excessive.

This experience led to the conclusion that the system that is being proposed seems to be aimed at those property owners who seem to need relief the least rather than those who are in the most need. It seemed clear that the existing exemptions seemed to be providing necessary relief.

There appeared to be a number of major concerns going forward.

Making revolutionary changes to the tax system in a single town needs to be based on more research as it would apply to the local economy and its relation to the state economy than on experiences in another state. 

The listed owners of many Middletown properties are legal trusts, which would facilitate property value stagnation, effectively protecting the properties from tax increases in perpetuity.

The burden in Middletown would shift to the average property owner who might see a drop in value but an increase in taxes

We do not know what the impact will be on the Town’s revenue and expenditures.

We do not know the possible impact on sales of property – both residential and commercial. For example, could a hotel evaluated a $6 mil be harder to sell if its value increased to $13 mil with concurrent tax increases?

I concluded my remarks by saying that the TC had been reluctant to spend resources on many projects that are pending.  Furthermore, rushing to institute a revolutionary tax system without complete information provided by an unbiased source suggests a reluctance to hear about potential issues that could negatively affect the town for decades.

Before the end of 2018, Middletown contracted for a RIPEC study.