WVN #438: Two chances to cut taxes/School funds conundrum
- Dear Wayland Voter,
Here are two ways to cut your property tax bill if you are eligible. Also in this newsletter:
-- The School Committee gets legal advice on what to do about a lot of money resulting from overcharges for services.
-- Wayland begins a year-long celebration of its 375th anniversary in June 2013. It's not too early to get involved.
Various types of tax breaks and payment reductions are available to Wayland residents. Some have restrictions according to age, income, assets, value of home or various combinations. It is worth investigating the exemptions, because you may find you qualify. And Wayland is the only town in the state that matches, dollar for dollar, the state Circuit Breaker tax reduction. The take can be up to $1,960.
Deadlines vary. The assessors' office handles all the applications for exemptions. Information is at http://www.wayland.ma.us/Pages/WaylandMA_Assessor/pers
WVN outlines two of the offerings below: the CPA exemption, which has no age restriction and relatively generous income criteria, and the Circuit Breaker for households with at least one person over 65 years of age.
Community Preservation Exemption
The requirements are less stringent for exemption from the Community Preservation Act (CPA) surcharge, which is 1.5% calculated on each resident's property tax. The fund is designated for three purposes: open space, historic preservation, and affordable housing. The state matches to a declining degree the amount raised by each town through the CPA.
The CPA exemption filing deadline is Friday, March 30 at 12:30 p.m. (Town Hall closes early on Fridays.)
To qualify for an exemption:
No age or asset limitations.
The income limit varies for seniors and non-seniors
For households owned by seniors (age 60 and above) the household size and annual income limits are:
It scales up to 8 people, $127,380.
For households owned by non-seniors: the household size and annual income limits are:
It scales up to 8 people, $101,904.
For the CPA exemption, a senior is 60 or older. A copy of a signed and dated 2010 Federal Income Tax form must accompany the exemption application. If no Federal form was filed, include a signed and dated copy of your 2010 Massachusetts Income Tax form. If no taxes were filed, one may complete an affidavit form and include it with the application.
The Council on Aging recently hosted a well attended session featuring a speaker from the Department of Revenue outlining a large tax credit, the Circuit Breaker.
Wayland residents who qualify can receive up to $980 from the state, and a matching amount from the town. Wayland is the only town that matches the state.
Your principal residence is assessed at $729,000 or less. Residents of subsidized housing are not eligible for the circuit breaker.
In one year if the total paid for property tax and half of your water payment exceeds 10% of your total income or if 25% of annual rent exceeds 10% of total income.
There are limits on the total income noted on your Massachusetts return. The limits are: single, $52,000; head of household, $65,000; married and filing jointly, $78,000. Those married and filing separately are not eligible for the credit.
The property tax is calculated on the building(s) and the first acre.
The age criterion begins when someone turns 65 anytime during the year, and only one spouse needs to be 65.
To qualify, residents must file Massachusetts tax returns, even if they owe nothing, along with the Schedule CB. The Council on Aging http://www.wayland.ma.us/Pages/WaylandMA_COA/index
will make appointments with AARP volunteers to help residents fill out forms for both taxes and the circuit breaker. To apply for the local match, submit a copy of your Masschusetts tax form and the CB application to the Assessors' office before the end of the year.
Eligible seniors receive from the state a dollar credit on Massachusetts taxes for every dollar that the total of their property tax, and half the water bill and sewer bills, exceed 10% of their income, up to the $980 maximum.
The DOR speaker noted that if a person's Circuit Breaker credit is larger than what is owed to the state, the state issues a check to the recipient.
Those who missed filing circuit breaker applications in the past may file retroactively to 2008 with the state, but you would need to file by April 15 of this year with the state. However, the town's match is paid for the current year only.
Last year, more than 130 residents received the town's Circuit Breaker match, down from more than 150 residents in fiscal 2010.
At the session, attended by state Rep. Tom Conroy and Sen. Richard Ross, there was discussion of the interest rate charged for property tax payment deferral, which is now 3.5%. Conroy said he had filed a bill that would enable those deferring their taxes to also receive the Circuit Breaker.
DOR information sessions this month include one in Natick on February 22:
Additional information about this tax break is posted on the state's website:
SCHOOL COMMITTEE STRUGGLES WITH FUNDS
"The law is a ass." That line from "Oliver Twist" must have occurred to many at Monday night's School Committee meeting.
The subject was revolving funds for a number of school programs with large surpluses. Such funds come in two flavors: those for fee-supported programs, like high school athletics and parking, are meant to partially pay the costs of services which are otherwise taxpayer-funded. Other funds support fee-based programs, like Full Day Kindergarten (FDK) and BASE (Before and After School Extension), which are paid for entirely by fees with no taxpayer support.
Fee-supported program accounts have built up surpluses because of improper accounting, an issue identified in 2011 by the Abrahams Group consultants. The fees were never actually taken out of the accounts to support the programs, so the programs were paid for out of the taxpayer funded general budget and the revolving accounts simply grew. Abrahams recommended, and many citizens commenting Monday night supported, simply returning the excess money to the town's Free Cash account. That would effectively return it to the taxpayer.
Fee-based program accounts have built up in part because of overestimation of the costs of the programs, and consequent excessively high fees. When Full Day Kindergarten was established, for example, costs were deliberately conservatively estimated to avoid any risk of not having enough money to run the program. After two years of experience it became obvious that the original estimates were much too conservative and amounted to overcharging for the service. Most people seem to agree that the fair resolution for those accounts would be to simply refund the excess charges to the parents who paid them. The School Committee and Superintendent Paul Stein think so, and some refunds have already been made.
But the law isn't necessarily about what's fair, or reasonable, or commonsensical.
Attorney Jim Toomey, who specializes in municipal law especially as it pertains to schools, told the School Committee Monday night that there are very special rules for revolving accounts. Fees must be spent for activities beyond legally required basic services. They must be for a specific program, and the fee must relate to the cost of the service. The Department of Revenue (DOR) says fees can cover both direct and indirect costs. (Whether indirect costs were properly accounted for is one of the substantive issues complicating the situation.)
Nothing in the law regulates surpluses in revolving accounts. Nothing in the law allows returning surpluses to the General Fund, and in many other statutes there are specific provisions that provide for that. DOR says monies can't be returned to the General Fund, and they must be spent for the purposes of the fund. Monies also can't be returned to parents, because accounts are closed at the end of each Fiscal Year and Fiscal Year boundaries can't be crossed.
One option that is clearly open is to use surpluses to provide increased support for the program in the future. So a greater portion of parking costs in the future , for example, could come out of the Parking Fee Revolving Account rather than out of the general budget. Effectively that returns money to the taxpayer. But that doesn't address the parents who overpaid in fee-based programs, who, nearly everyone agrees, deserve individual refunds.
But there are no specific cases on point, Toomey said. Other school districts don't seem to have the problem of having excess money, so no one has brought this precise issue to court. At the Dec. 21, 2011 meeting of the Operational Review Committee (available on WayCAM's Video on Demand archive), the Abrahams Group recommended returning the surplus to the General Fund in order to avoid potential litigation from aggrieved taxpayers. But again, Toomey believes that this is simply not legal.
In response to pushing from the School Committee, Toomey agreed to explore the question of rebates further. But in response to a direct question pointing out a discrepancy between his opinion and that of Town Counsel Mark Lanza, who opined that money could indeed be returned to the general fund, Toomey was direct: he disagreed.
It remains to be seen what solutions will emerge to adequately respond to those who have been asking town officials to please "do the right thing" by returning to taxpayers the almost $700,000 surplus found during the Fiscal 2011 restatement. That report is posted on the town website:
Abrahams reported the total balance in the school revolving accounts at the close of FY11 was over $3 million (see page 121).
As a result of the questionable FY11 practices found by the Abrahams Group, including journal entry irregularities and illegal bank accounts, there is now a petitioners' resolution filed for the April 2012 annual town meeting supporting a state audit of Wayland's school fee-based programs since FY2007 if a majority of the School Committee votes to request it.
Superintendent Stein said he very much supports such audits because these issues are tearing the community apart and need to be resolved.
-- Tom Sciacca
375TH ANNIVERSARY HELP NEEDED
Wayland will celebrate an important anniversary over the course of a year, beginning in June 2013. There are many ways to contribute. To learn more and to stay abreast of progress, see:
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Wayland Voters Network
Michael Short, Editor