Westport's Tax Rate to Jump [Update]

Westport’s tax rate will jump to 17.43 mills from 14.85 starting July 1, the Board of Finance decided Wednesday.

Board members said the increase was required because of a real estate revaluation which shrunk the value of the grand list, or the taxable property pool. It also cited the larger town budget for 2011-2012 and the board's commitment to funding retiree benefits.

Board Chair Helen Garten said the effective tax increase is 2.95 percent. This is because if the shrunken grand list was in effect last year, the mill rate would have been 16.93. 

Real estate declined 13.2 percent in last year’s revaluation, contributing to a 12.4 percent decline in the grand list.

The property tax rate is expressed in mills or thousandths of a dollar. Westport’s new rate of 17.43 mills is equivalent to $17.43 of taxes per $1,000 of assessed value.

The owner of a $1,000,000 assessed property would have paid $14,850 in taxes in the last fiscal year. If the property was assessed 13 percent lower in the revaluation, to $870,000, the owner will pay $15,164 per year under the new mill rate.

At its meeting Wednesday evening, the Board of Finance also said it would apply $3.45 million of reserves to fund its obligations for other post employee benefits, or “OPEB.” The town will also find $500,000 in cost savings.

The new mill rate “is a compromise,” Garten said at the meeting. The decision “allows us to address our huge OPEB obligation, or at least begin to, without putting the entire burden on next year’s taxpayers.”

The Board said it would make a total contribution of at least $4.25 million to the OPEB trust in the next fiscal year, which is $2 million more than the current year’s sum.

The decision on the tax rate is later than usual because the Board of Finance had been waiting for key data on the town’s OPEB obligation and its annual required contribution. The actuarial firm compiling the benefits report said June 8 that the figures wouldn’t be ready until July, prompting the board to make the decision without the data.

“We’re almost running blind on the amount of the OPEB liability,” said board member Avi Kaner.

The report from Pentegra Retirement Services has been delayed by the discovery that the previous estimate from 2008 of $50 million undercounted the number of relevant employees. Since the estimate was made, the figure has appeared in two town annual financial reports and three bond offering documents.

Moody’s, in its most recent report of November 2010, pointed to the town’s “proactive funding” of its post retirement benefits liability as one reason for giving the town debt its highest AAA rating. The rationale also described the town’s tax base, wealth indices and modest debt levels.

A spokesperson for Moody’s said Wednesday that if a mistake had been made in the data provided to the agency, the town should tell the agency what the error is so that it can issue a correction or an amended update.

As well as frustrations about the undetermined OPEB obligation, board members expressed their dissatisfaction with the budget process, lack of consolidation by the town and current unsustainable benefits plans.

“The town tax increase is the blank check every year,” board member Brian Stern said. “The current (budgetary) process is fundamentally flawed. The town must step up to our problems and solve them.”

Garten said that Westport is “funding no new town or educational programs with this money.”

“We missed an opportunity this year to achieve savings” during the budget, she said.

The Representative Town Meeting, the town’s legislative body, last month formally approved a $179 million budget for 2011-2012. It’s the largest in town history and represents a 2.1 percent increase.

(Editor's Note: Article was updated to include tax increase expressed as a percentage, additional quotes from board members and additional information about retiree benefits.)