Saturday, August 5, 2017

25% tax increase likely under Davidson Board spending plans

That is the takeaway from the financial analysis slide to be presented this coming Tuesday.

At the meeting, Davidson Commissioners are set to vote on new public facilities spending including a new Town Hall as well as set a bond referendum for additional spending on bike paths, greenways, parks, and a tiny bit on roads.  Check the agenda here.

The financial analysis included in the facilities presentation lays out what these will mean to taxpayers if all these plans come to fruition.  Fortunately, for once the Town puts it all in one slide so we don't have to.  The below analysis is based on an example starting home value of $400,000.  Davidson's current tax rate is .35 or 35 cents per $100 in value.

What the above slide means is this.

If Davidson pursues the public facilities plan it is proposing and if voters pass all 3 of the GO bond votes that will be on the ballot this November, then Davidson will need a 25% property tax increase by FY2023 to pay for all of it.  That increase will come by the town keeping the tax rate roughly the same (between 34.42 and 35.82 cents) when the next property revaluation hits in 2019 and values are expected to rise.   According to the chart, property tax values are expected to go up 25%. So, if the property tax rate remains the same, your property taxes paid also goes up 25%.

Rates, values, and revenue work in conjunction with each other.  So conversely, if Davidson did neither of these spending plans, the tax rate could fall significantly.  The expected revenue neutral rate after the 2019 revaluation is 28 cents.  Meaning, if Davidson didn't need more revenue to pay for this spending, it could let rates drop while bringing in the same dollars based on the higher tax values.

Taxes and tax policy can be a bit complex, but there is nothing hard to understand about a spending plan that requires jacking up the taxpayer to this degree.

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