City of Pittsfield no longer under the restraints of levy ceiling

PITTSFIELD, Mass. (Nov. 8, 2021) – Fiscal year 2022, which began on July 1, is the first year since fiscal year 2015 that the City of Pittsfield will no longer be under the restraints of its levy ceiling, which limited the city’s access to its full levy capacity under Proposition 2 ½. 

“We’ve reached a significant milestone in the city’s situation. This is especially noteworthy because we’ve had many years of fiscal challenges because of that levy ceiling limit,” said Mayor Linda Tyer at a press conference Monday afternoon. “When we took office in January 2016, it was hard for a couple years. We are now in a position to have access to our full levy capacity.”

This is a direct result of the $254,625,346 increase in total real and personal property values over fiscal year 2021.  The primary contributor for this increase are single family homes which saw a 9 percent increase in total value over the fiscal year 2021 amount of $207,030,940.

This good news is part of a proposal that will be submitted to the City Council for the Tax Classification Hearing during the Nov. 9 meeting. The council is expected to take a vote on the shift factor of 1.726 which sets the tax rate for commercial and residential sectors.

Proposition 2 ½  mandates a levy ceiling equal to 2.5 percent of the current fiscal year’s total assessed full and fair cash value for real and personal property. The levy limit is incremental; it allows permanent but controlled annual increases to the tax levy equal to 2.5 percent of the prior year's levy plus credit for new growth. When a community’s levy limit collides with, or hits its levy ceiling, it lacks the capability to realize levy growth, both from 2.5 percent increments and from new growth, until excess levy capacity is regained.

Thanks to the expanding residential sector, Pittsfield is now back in a position to benefit from this levy growth.  

The average single family value is up 8.91 percent from a 2021 value of $203,901 to this year’s average single family value of $222,073.

“For most people, the single largest investment for most people is their home and, as the property values increase, homeowners gain more equity in their home. This year’s 8 percent increase is very good news for the city and the property owners.  We have closely monitored the impact COVID-19 has had on the city’s commercial properties and have found through our sales as well as Income and Expense analysis, the majority of values continue to remain constant, said Chief Assessor Paula King.

“As an assessor, I have a responsibility to assess fairly and equitably. The state’s Department of Revenue has reviewed and approved our values, so I am thrilled that we are able to report that the overall values of the city have continued to increase,” she said.

Finance Director Matthew Kerwood expounded on the significance.

“No longer being constrained by the levy ceiling is a huge step forward for the city.  While we wouldn’t ever raise taxes equal to the levy limit, having access to the capacity enhances the city liquidity positon which is what bond rating agencies and those seeking to purchase our bonds are looking for,” Kerwood said. “That excess capacity, between what we need to raise in taxes and the levy limit, is considered another revenue reserve like free cash and our stabilization accounts.  All of which are indicators of the city’s overall positive fiscal position.” 

While there’s an increase in value the residential sector, the commercial and industrial properties remain fairly constant.  The proposed commercial tax rate will see a decrease from the FY21 rate of $39.99 to $39.90.  Since the majority of property owners in this sector will see little or no change in their value, over 90 percent will see some nominal or minor reduction in taxes.

If the shift factor is approved, the residential tax rate will go down from $19.25 to $18.56 (.69 cents per $1,000). Meanwhile, the commercial tax rate will go down from $39.99 to 39.90 (.09 cents per $1,000). 

In the City of Pittsfield, there are over 19,000 taxable properties, this includes real estate, commercial, industrial, and personal properties. Of this number, 11,314 are single-family homes in the city.

The total valuation of taxable property has exceed four billion dollars this fiscal year, an overall increase of 6.6 percent.