Here’s Why MA Single-Family Tax Bills Keep Rising

Photo by Towfiqu barbhuiya on Unsplash

The March 21 issue of City & Town, the Massachusetts Division of Local Services (DLS) bimonthly newsletter, noted that the average single-family tax bill for fiscal year* (FY) 2024 is $7,403, up 5% from $7,056 for FY2023. The state’s average single-family home value is $665,864.

While rising property tax bills are not unusual in the Bay State, the rate at which these bills are increasing is notable. For example, the average yearly percentage by which single-family tax bills increased for fiscal years 2019, 2020, and 2021 was 3.3%; for fiscal years 2022, 2023, and 2024, the average percentage increase was 5.1%. 

A big reason for the increase in single-family tax bills can be traced to the rise in the value of the total number of Massachusetts parcels, which grew to $957,687,668,022 in FY2024 from $605,611,068,931 in FY2021–an increase of 58%. By comparison, values increased by 13% from FY 2017 to FY2020.

Another factor is that the number of parcels included in the calculations grew to 1,433,549 in FY2022 from 1,295,067 in FY2021. This change may have occurred because communities with a residential exemption or senior means-tested exemption in place were excluded from the formula until 2022.

What fueled this surge in property values? Blame the COVID-19 pandemic.

Pandemic-Induced Migration Changed the Housing Market

The COVID-19 pandemic initiated several changes that impacted the housing market: 

1. Employees gained the ability to work remotely;

2. The Federal Reserve cut interest rates in March 2020, causing mortgage rates to drop;

3. Homebuyers’ yearning for more space and a lower cost of living.

As people moved to smaller cities, suburbs, and rural areas, home prices in these places began to climb. The interactive map embedded in this article from August 2021 shows that many small towns in western Massachusetts saw single-family home prices skyrocket between 2019 and 2021. While Shutesbury’s median price did not rise significantly, neighboring towns of similar population size saw their prices jump.

                        Median Home Prices by Town

Town	2019	2020	2021	Percent Increase
Shutesbury	$330,750	$315,000	$347,500	5%
Leverett	$292,500	$325,000	$494,000	69%
Pelham	$310,000	$370,000	$441,000	42%
Erving	$210,000	$186,700	$275,000	31%

Source: WBUR.org: Hot Housing Market Shows No Sign of Cooling Down in Massachusetts

While some areas have seen bigger sales price increases than others, the result is an upward trend in prices statewide. The Massachusetts Association of Realtors produces monthly market reports that highlight the change in the median single-family price since 2019. Here are the year-over-year reports for the past five years.

	2019	2020	2021	2022	2023	2024
Number of Sales Statewide	3,293	3,233	3,153	2,547	2198	2598
Median Price	$379,900	$405,000	$465,000	$525,000	$525,000	$577,000
% Change Year over Year		6.61%	14.81%	12.9%	0%	9.9%

There is some evidence that home prices are moderating in our state’s most expensive cities and towns, though that is not the case in other, formerly more affordable, communities.

The Effect of Rising Real Estate Values on Tax Rates

An increase in property values doesn’t necessarily translate into a higher tax bill since tax rates fall when values rise. Over time property tax bills tend to trend upwards, though not in lockstep with increasing values. 

In Massachusetts, Proposition 2 ½ restricts the amount municipalities can tax property owners each year. Communities take the total value of real and personal property and multiply it by 2 ½ % to produce the levy ceiling, the maximum tax that can be levied that year. Municipalities usually do not tax property owners up to the levy ceiling. The annual levy limit is calculated by adding together the previous year’s levy limit, the product of multiplying said prior year's levy limit by 2 ½ %, new growth, and any applicable overrides. The actual levy can be equal to or less than the levy limit; it cannot exceed the levy limit.

Tax rates are set based on the expense budget approved by the community. The amount needed to fund the budget is divided by the total property value to determine the tax rate. When property values go up, the tax rate goes down, and vice versa.

When city and town budgets go up, tax bills increase. The inflation brought on by the pandemic increased costs for household and government budgets alike. Though annual inflation rates have dropped from their highs of 7% and 6.5% in 2021 and 2022, respectively, cumulative inflation from early 2021 to January 2024 is estimated at 18%.

For communities that rely heavily on property taxes to fund local government, there is little doubt that the average tax bill will continue to climb. For communities like Shutesbury, Annual Town Meeting (April 27) offers a chance to weigh in and vote on the town’s budget. I hope to see you there!

* In this case, a fiscal year starts July 1 of the prior year and ends June 30 of the year referenced after the abbreviation FY.  Therefore, FY2024 refers to the time from July 1, 2023 through June 30, 2024.

Sunshine Week 2024 Wrap-Up: How Massachusetts Fared

 

Sunshine Week has concluded its annual review of government transparency, noting which states score highly in government accessibility and which do not. 

Some Massachusetts state agencies, like the Office of the Comptroller and the Secretary of State’s Public Records Division, showcase their transparency efforts and, in the latter’s case, share their data. Other areas of Massachusetts state government are less open, inviting criticism and calls for reform. 

Sunshine Doesn’t Reach the Statehouse

A frequent complaint is that elected lawmakers can vote in secret, leaving voters uninformed about where their Representatives and Senators stand on particular issues. An article in the Eagle Tribune (paywalled) pointed out that legislative roll call votes have been decreasing since the 2017 - 2018 legislative session while unrecorded voice votes have increased.

Other criticism notes that the Public Records Law does not apply to the Judiciary, the Legislature, or the Governor’s Office, though Governor Healey has vowed to “follow the public records law and provide more transparency to the Governor’s Office than ever before.”

Similarly, the Open Meeting Law exempts “the Legislature, its committees,  bodies of the judicial branch, and bodies appointed by a constitutional officer solely for the purpose of advising a constitutional officer.” It is notable that any state resident (or out-of-state resident, for that matter) may attend public meetings in any of the state’s 351 municipalities, but are limited by House and Senate rules regarding meetings of their state legislature or its committees.

The surreptitious state Legislature has also put the kibosh on State Auditor Diane DiZoglio’s plan to audit their performance. In her letter to the Massachusetts Attorney General’s Office, Auditor DiZoglio noted the refusal of both the House Speaker and Senate President to comply with the March 2023 audit announcement and asked for the Attorney General’s support in the matter. Last November, the Office of the Attorney General replied that the law does not require the Legislature to submit to an audit. 

In their response letter, the Attorney General’s Office noted that past State Auditors have also been forced to acknowledge the restriction on their power to audit the Legislature. In particular, the letter notes that the Legislature is not considered a “department” of the commonwealth as described in the statute that enables the State Auditor to conduct audits. The letter also notes that the State Auditor’s annual financial reporting duties were transferred to the (then) newly created Office of the Comptroller in 1922, which explains why the last audit of the Legislature occurred in that year.

Lifting the Veil of Secrecy

There has been pushback to the exempt status regarding transparency and accountability enjoyed by the three branches of state government.  Three bills active in the current legislative session could make all branches of state government more accountable to the public. Letting our legislators know we support these efforts will help move these bills closer to a vote (see details at the end of this post).

Bill S.1963, also known as the “Sunlight Act”, would require public testimony at legislative committees to be made available to the public and require the recorded votes of legislative committees to be posted online within 48 hours of the votes. It would also subject the Governor’s Office to the Public Records Law.

Bill H.3121 would remove the Legislature’s exemption from the Open Meeting Law, allowing citizens to attend all legislative proceedings.

Bill S.2064 would subject the Legislature and the Governor’s Office to the Public Records Law.

Auditor DiZoglio’s initiative petition to add language to state law that would allow her office to audit the Legislature was certified by the Attorney General’s Office last September. The measure collected over 100,000 signatures by November; 74,574 valid signatures are needed for the question to be placed on the ballot this November.

Public Records Division Statistics for 2023 

Since reforms to the Public Records Law took effect in 2017, public records requests are submitted to Records Access Officers (RAOs), such as the Town Clerk, who face time and fee-charging restrictions. RAOs are also required to keep a log of the number and type of each request.

Each year during Sunshine Week the Public Records Division publishes its work record for the previous year. This year’s report features some nice graphics explaining what the Division has accomplished in 2023. I’ve reproduced some of them here.

Appeal Cases closed in 2023, by type

Fee petitions and Time petitions are filed by RAOs requesting permission to charge extra fees to process requests or for extra time to respond to record requests; 

Reconsiderations are filed by requestors who wish the Supervisor of Records to revisit their prior determination;

In-camera reviews occur when requestors believe they have been denied records in violation of the law and petition the Supervisor of Records to inspect such records and render a determination.

Appeal Cases Opened Annually 2013 - 2023

Appeals by Type: Substantive v. Non-Responses

Substantive appeals are those where the requestor finds the response to their unsatisfactory in whole or part;

Non-response means the requestor received no response from the RAO during the statutory period of 10 business days.

Total Number of Records Requests Filed Between 2017 - 2023

These numbers represent Massachusetts agencies (not municipalities) only.

The Public Records Law and Open Meeting Law are used by individuals and organizations to shed light on the workings of local and state government and should apply to all branches of government. Let your legislators know you expect them to respect your right to know and to support bills S.1963, H.3121, and S.2064.