TAX NEWS - June 2010

Lincoln Council finds budget relief in auto excise tax

LINCOLN — The Town Council voted unanimously on Tuesday night to pass a resolution that would bolster residents' motor vehicle excise tax exemptions by an additional $2,500 for Fiscal Year 2011, which begins July 1.

The move came in response to the General Assembly, at the end of its session, taking away $2.9 million in state aid (from its general fund) so as to attempt to balance its own mammoth budget deficit.

"This is the only way to do it without whacking the taxpayers with a property tax increase, or cutting services," said Town Council member Keith Macksoud. "We have to make up that $2.9 million somehow, and we have to stay within the tax cap dictated by S3050, which is at 4.5 percent. In the process, we're also reducing the Fiscal Year 2011 local appropriation to the school department budget by $800,000.

"That represents a reasonable share of the elimination of (approximately) $3 million in state aid," he added. "The main purpose of this is so that we don't increase Lincoln residents' property taxes … Certain taxpayers will have to pay a small additional amount on their vehicle if it's valued over $3,000, but it won't be an exorbitant amount."

Macksoud called it a very prudent, measured approach to this massive cut in state aid, and claims the reduction in school department funding by $800,000 is covered under the Town Charter.

It reads, "If at any time during the budget year the Town Administrator shall ascertain that the remaining unexpected balance of appropriations of the school department … for the year will be insufficient to cover proposed work programs for the school department … he shall advise the school department to reconsider its work programs and allotments, and to reuse its allotments so as to forestall the making by them of expenditures in excess of appropriations."

Simply put, that means Town Administrator T. Joseph Almond has placed the school department on notice that it will receive $800,000 less than originally passed at the Financial Town Meeting on May 10, Macksoud stated.

Town Council President Ronald Macksoud and Councilors Macksoud, John Flynn and James Jahnz all voiced their backing for the resolution, inked by Almond, on Tuesday night.

"This will protect those who can least afford to pay additional taxes," Jahnz said. "People should know this was something that was handed down to all municipalities by the General Assembly. We had no choice in the matter. I consider this proposal a solid reaction to protect those at the lower end of the economic spectrum.

"The bottom line is we had to recoup $2.9 million in lost revenue, and we didn't dig into our surplus – as other towns and cities are doing – in order to do this," he continued. "They didn't have a choice. Obviously, we did. I want to make it clear this wasn't a decision made by the Town Council, the Town Administrator or the FTM to reduce, almost eliminate, the car excise tax exemption; the state legislature voted at the end of its session to slice the exemption from $6,000 down to $500.

"It was, however, our choice to raise that exemption by an additional $2,500 for motor vehicles in the 2010 tax roll. This cushions the blow. At least now (Lincolnites) will have a total of $3,000 in exemptions."

Also, by passing the resolution, the council approved a 2010 tax rate of $21.65 (per thousand) for residential property; $24.75 commercial property; $34 tangible; and $30.66 motor vehicles.

During dialogue about the measure, Almond indicated the town would recoup approximately $1.6 million of the state aid cut, and Jahnz claimed being disappointed by the General Assembly's actions.

"I think it's a very good plan," Flynn noted. "There's no property tax increase, and the state cut, we could've made that up by passing it all onto people who own vehicles. Instead, we're helping residents in that they will only be taxed on half the amount. Say, for instance, one lives in town and owns a vehicle worth $6,000; he or she would only be taxed on $3,000.

"The reduction to the school department by $800,000, it could've been a lot more, and it has a surplus to dip into anyway. That comes from it not using its entire alloted funds in previous years," he added. "I believe it has a surplus of about $2 million."