The Board of Selectmen last night voted to approve a 9% increase in property taxes for fiscal year 2009 (07/01/08 – 06/30/09). That works out to an average increase of $648 per family.
Property taxes are based on real estate valuations. In Southborough, the average valuation for a single family home decreased from $576,600 in FY2008 to $556,400 in FY2009, a decrease of 3.5%. The amount of money the town needs to collect in the fiscal year stays the same regardless of what happens in the real estate market. That means as valuations decrease, the property tax rate increases.
Southborough has a budget of approximately $45 million. Local and state sources cover $14 million of that, which leaves $31 million that needs to be covered by property taxes. In his presentation to the Selectmen, Principal Assessor Paul Cibelli explained that in order to raise $31 million based on current valuations, the property tax rate was set at $14.16 per $1,000 assessed valuation (as compared to $12.54 last year).
Your tax bill is determined by dividing the assessed value of your home by $1,000 and then multiplying by the tax rate. So, a house assessed at $500K would pay $7,080 annually ($500,000/$1,000 * $14.16). Property tax is paid on a quarterly basis.
The increase this year seems particularly steep in part because of a decision made at Town Meeting last year to use the Free Cash fund to offset property taxes for 2008. The one-time payout meant property taxes actually decreased slightly in 2008.