SPRINGFIELD — The expected increase in real estate taxes may be a little less with Mayor Domenic J. Sarno pledging to use more free cash than expected to reduce the amount needed to balance the budget.
Tuesday, the city’s Tax Advisory Committee voted to recommend the City Council set the tax rate at $15.62 per $1,000 of valuation of residences and $34.72 for businesses. That would raise this year’s taxes on the average home, valued at $275,200 this year, by $288 to $4,299.
The committee also voted to ask Sarno to consider adding $2 million from the $18 million of free cash released by the state also on Tuesday to reduce that increase to about $258 for the average home.
But City Councilor Timothy Allen, who chairs the tax group and the council’s Finance Committee, said he discussed the city’s priorities for the free cash with Cathy Buono, chief administrative and financial officer, Wednesday. The two agreed a total of $3 million could be put toward tax relief and still meet city needs.
“It is something I believe would be good for the residents and keep the increase under $250,” Allen said. “This will be good for everybody.”
A lower tax rate will also make it easier to get City Council approval, he said.
The mayor had already pledged to put aside nearly $2 million earned in interest from an investment into treasury bills and an additional $2 million set aside last year for a reserve pension account that was not needed.
“Our residents are feeling the effects of inflation and the increases in prices such as the cost of buying groceries,” Sarno said in writing. “I strongly believe that these lower rates will continue to provide much-needed relief for our residents.”
Under the original proposal, the city would have to raise the average residential tax bill by $348 to balance the budget and with the $4 million he committed earlier it would raise the average bill by $288. The additional $3 million will lower the increase to $244, he said.
Commercial and business properties will also benefit. Although it is difficult to give an average because those properties range from small retail shops to large manufacturing plants, the proposed assessment per $1,000 value of property has dropped to $34.35.
Although the tax rate per $1,000 has dropped for both and is the lowest residential rate in 20 years, the average value of homes and businesses has continued to skyrocket so bills have not decreased, Sarno said.
Allen, who has been negotiating with the mayor over tax issues for a number of years, said the meeting was cordial and an agreement was reached after a discussion about balancing the needs of the city and the taxpayer.
The City Council is now scheduled to meet Monday at 5 p.m. to vote on the rate. The public will have a chance to speak at 4:30 p.m. in the City Council Chambers of City Hall.
The city also offers at least six different types of property tax relief which help the elderly, the blind, veterans and low-income residents. There is also a new work-off program that will give residents 65 and older a chance to reduce their taxes by $1,000 through volunteer work.
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