Manchester directors consider phasing in property tax hike

Mar. 25—MANCHESTER — The Board of Directors is considering phasing in new property assessments to avoid a big jump in some residential tax bills.

Town staff have recommended against the phase-in because it is very complicated.

General Manager Steve Stephanou recently presented his proposed budget of $203.49 million for the 2022-23 fiscal year, an increase of about $5.49 million, or 2.77%, over the current year.

The large drop-off in the proposed tax rate — 32.18 compared to the current rate of 36.52 — results from last year's revaluation, which, because of soaring residential property values, caused Manchester's 2021 grand list to grow by 17.99%.

Residential property assessments increased about 27% on the latest grand list as home values skyrocketed during the pandemic, while the value of commercial property fell 1.56%.

On Tuesday, Director of Assessment and Collection John Rainaldi explained to the board about how a phase-in would work. The most common method, Rainaldi said, is an equal-step phase-in, which would spread the increase in a property's assessment equally over a two-, three-, or four-year period.

"What's critical to note, whether the town does a phase-in or not ... the amount of money you're raising from taxpayers won't change," Rainaldi said.

Rainaldi cautioned board members that by spreading out property assessment increases, the increase in the grand list would be smaller, which could cause the tax rate to increase. A higher tax rate would increase what residents pay for motor vehicle and personal property taxes, because those are not eligible for a phase-in.

Motor vehicle values nationwide soared over the last year, increasing by about 25% on Manchester's 2021 grand list.

"I've worked for the town for 23 years — no-one has ever seen motor vehicles like this," Rainaldi said. "My 2018 Jeep book value right now is more than what it was when I bought it new 3 1/2 years ago."

Rainaldi gave the following example of how motor vehicle taxes would be affected by the phase-in:

A vehicle valued at $18,000 would have carried a July 2021 tax bill of $460. It would be about $507 this year as a result of the increased motor vehicle assessments. If the board were to adopt a two-year phase in, that same motor vehicle's tax bill would jump to $545. For a three-year phase-in, the tax bill would jump to $559, and with a four-year phase-in it would be $566.

With a phase-in, most of the money that residents would save on their real estate taxes could possibly get put toward their motor vehicle tax bills, Rainaldi said. Town staff also stressed that a phase-in would disproportionately affect properties that didn't increase much in value, such as many businesses.

"It's not like those taxes go away when you phase in, someone else has to pay it," Rainaldi said.

Mayor Jay Moran said the board will consider the staff's recommendation, and try to come up with a budget that adequately provides for the town without putting all the stress on the taxpayer.

"Earlier in (Tuesday's) meeting, we were talking about how we need to provide more services, but that costs money," Moran said. "How do we pay for it?"

Republican Director Zachary Reichelt said a phase-in is a more complicated approach because "you're touching taxed assets all across the board to try to make the bottom line work." Reichelt said.

But right now, he said the board is focused on addressing the town's needs in education, and the fire and police departments, without overburdening certain segments of the population.

"I think it's really important that we try to meet these needs while also being cautious with everyone's financial situation," Reichelt said.

Austin Mirmina covers Manchester and Bolton.