Selectmen resume narrowing residential/commercial tax factor

by | Nov 14, 2018

The Board of Selectmen Tuesday night voted to reduce the residential/commercial property tax split from 1.2 to 1.17. This resumes an effort begun in 2007 to reduce and eventually eliminate Auburn’s dual tax rate. Webster, Worcester and Auburn are currently the only three municipalities in the immediate area with a dual tax rate, and Webster selectmen recently voted to eliminate the split in that town.

The dual tax rate establishes a factor by which commercial/industrial property owners typically pay a higher percentage of a

Assistant Assessor Seth Woolard presents on tax classification at the November 13, 2018 Board of Selectmen Annual Tax Classification hearing [Jeff LaBonte Photo]

community’s total tax levy than residential property owners. The dual tax system increased in popularity after the enactment of Proposition 2 ½ in 1982. It has since become less desirable, causing challenges for communities seeking to reduce this gap while not overly burdening residential property owners.

In 2007, Auburn began what was to be a 10-year plan to slowly eliminate the dual tax rate, meaning residential property tax rates and commercial/industrial tax rates would be identical. As of 2006, the CIP factor in Auburn was 1.62; residential rates were $10.48 per thousand dollars in property valuation, while commercial/industrial rates were $21.60. Note that the CIP factor is not simply 1.62 times the residential rate; it is figured based on total tax levy and apportioned to residential, commercial and industrial properties using the CIP factor.

At the urging of the Auburn Chamber of Commerce, Auburn Selectboards have steadily reduced this factor to the present 1.17 split. There was no change in the split in 2008, 2015, 2016 or 2018, as the economic environment pressured the Town to take a more conservative approach the split reduction than initially planned.

During the meeting, seven representatives from the Auburn Chamber spoke of the importance to their businesses of

Auburn Board of Selectmen, from left, Tristan LaLiberte, Lionel Berthiaume, Dan Carpenter, Ken Holstrom and Doreen Goodrich [Jeff LaBonte Photo]

eliminating the dual tax rate. Only one resident was present to speak opposing the reduction in the CIP factor. Several of the business owners are also Auburn residents and indicated that the shift was as much about the message being sent to prospective businesses in town as it was about actual tax savings.

While several Chamber members pushed for a reduction from 1.2 to 1.1, ultimately the Board opted for a more conservative approach, voting for the 1.17 CIP for fiscal year 2019. This means the residential rate will stay at $18.44, but due to changes in assessment, property owners can expect an increase in their tax bills. The commercial/industrial rate will drop to $23.23.