Last year, I compared Shutesbury’s tax rate, average single-family tax bill, and cash reserves with those of other Franklin County towns with similar populations. I found that our tax rate was lower than Wendell’s though our average tax bill was higher. I also discovered that Leverett was much wealthier than Shutesbury, with Leverett taxpayers dedicating a mere 13.4% of household income to the payment of property tax bills compared to Shutesbury’s 21.1%.
How does Shutesbury’s affordability compare to the rest of the state? To find out, I compared our town’s fiscal year 2021 and 2022 tax rates, average tax bills, tax burden, and level of Free Cash to all 351 Massachusetts municipalities to see how we stack up. Here are the results.
Tax Rate
Shutesbury’s tax rate of $21.83 is the fourth-highest in Massachusetts–only the Western Massachusetts municipalities of Greenfield ($22.32), Wendell ($23.24), and Longmeadow ($24.64) have steeper rates. Last year, we were in sixth place, with Adams and Wilbraham joining the small group of communities with a higher tax rate than Shutesbury.
Note that this tax rate comparison reflects only the municipalities’ residential tax rate (and, in some cases, open space) and doesn’t include other classes such as commercial, industrial, and personal property. For communities with a split tax rate, some of the tax levy is shifted from residential to commercial properties, which usually pay a higher rate. Like many small towns in the state, Shutesbury has a single tax rate.
Average Tax Bill
Shutesbury’s average single-family tax bill edged up to $5,876 in FY2022 from the prior year’s $5,662. Our ranking changed as well: Shutesbury placed at No. 167 out of 351 communities for the highest average tax bill in FY 2022, a drop from its 2021 rank of 153.
How did that happen? Pandemic-induced real estate sales boosted values across Massachusetts, pushing the median home sale price statewide to an all-time high of $510,000. Cities and towns adjusted their total single-family values to reflect this change, which lowered tax rates. For Shutesbury, the value of all single-family properties rose from $187,324,770 in FY2021 to $201,594,118 in 2022, which produced a tax rate of $21.83 compared to the previous year’s $22.61.
This is a perfect example of how a lower tax rate does not necessarily reflect a reduced tax burden, as evidenced by the uptick in the average single-family tax bill. The average single-family value rose to $269,151 in FY2022 from $250,434, a value that produced a higher average tax bill despite a drop in the tax rate:
269,151 ✕ 21.83 /1,000 = $5,875.56
Some bills will be higher and some will be lower; on average, however, the tax burden increases.
Shutesbury ranks fourth in the state when it comes to the percentage of a property’s value our tax bills represent. For FY2022, the average tax bill of $5,876 represents 2.18% of the average single-family value of $269,151. Compare this to Leverett, where households pay, on average, 1.88% of value in taxes ($6,515 average bill on $345,831 average value).
In 2021, Shutesbury ranked sixth (2.26%) for this metric, with Adams and Wilbraham again showing a higher or equal (in the case of Adams) percentage of property value reflected in residents’ tax bills.
Wealth Indicators
An important metric to consider is the wealth of a community’s residents and how much of the average household’s income is needed to satisfy the annual tax burden.
With 20.49% of the average household’s income dedicated to paying property taxes, Shutesbury’s FY2022 ranking stands at No.19–meaning that only 18 other communities in Massachusetts pay a higher percentage. That’s a small improvement over our 2021 ranking of 16 and 21.10%.
Per capita income for Shutesbury was reported as $26,831 last year, compared to $28,682 for this fiscal year, a decrease from last year.
Comparing per capita income with the Massachusetts average, Shutesbury falls short. According to the U.S. Census, Massachusetts's per capita income is $45,555 (in 2020 dollars).
Shutesbury households do better when it comes to median annual income, which the U.S. Census reports as $85,000–slightly higher than the state-wide value of $84,385.
Free Cash
Shutesbury’s Free Cash levels have dropped over the past fiscal year, from 19.73% of the operating budget in 2021 to 14.58% in 2022. The fund itself has decreased only slightly, however, from $1.4 million in FY2021 to $1.2 million in FY2022.
Tying it All Together
Compared to all municipalities, Shutesbury gets low marks for affordability based on its exceptionally high tax rate and single-family tax bills. Our town also requires taxpayers to fork over a larger percentage of their income than most other communities to satisfy their local tax obligations. Lastly, our high tax rate results in residents paying a higher percentage of their property’s value, resulting in a heftier tax bill.
Why is Shutesbury such an expensive place to live? As this Shutesbury.org document shows, the annual budget has slowly crept upwards over the past two decades, as has the tax rate. Property values have not kept pace, however, which means comparably less value is funding higher budgets. Beginning around 2010, values began to languish while annual budgets did not. It was around that time that the tax rate began to rise in earnest as stagnant property values struggled to prop up budgets that continued to climb.
The town has developed some financial policies that have seriously exacerbated this problem. One, which I have written about before, concerns the tendency to stockpile cash with no clear goal in sight. Over the years, Shutesbury has postponed work on the town’s infrastructure despite having more than adequate reserves. This practice increases taxpayer costs due to inflation and a worsening of the issues affecting the neglected structures.
Instead of using reserves as necessary and creating a plan to replenish those reserves over time, relatively small amounts of the town’s savings are applied to various capital outlays, with the balance being borrowed, incurring unnecessary interest costs. In addition, there are line items built into the budget specifically to pad reserve accounts, resulting in overcharging taxpayers without benefit to them. These items include previously paid-off debts and funds set aside for a specific building project, which may or may not occur.
Shutesbury officials often lament that we need additional revenue to lower residents’ tax burden and make the town more affordable. That scenario seems absurd since the town has no business presence to lighten the tax load. A more reasonable approach would be to limit Shutesbury’s spending within the parameters of a town with slow-growing property values and a dwindling population.
Weekly Factoids:
How Did You Fare During 2021?
Profits Soar as U.S. Corporations Have Best Year Since 1950
Source: Bloomberg Quint
Corporate Tax Rates on Taxable Income, Then and Now
1950: First $25,000 = 23%
Over $25,000 = 42%
2021: All Taxable Income: 21%
Source: The Tax Foundation
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