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Without Intervention, Taxes Will Spike Further, Report Finds

Without Intervention, Taxes Will Spike Further, Report Finds

The Connecticut Economic Resource Center, CERC, a public-private economic development consultant for municipalities, last year took a look at the town’s economic conditions and presented its findings in a report that is now available online at http://www.woodbridgect.org/DocumentCenter/View/2238/CERC_Report_Woodbridge_Fiscal_Health_Analysis.

The CERC report comes to the conclusion that continued lukewarm property values, coupled with increasing education costs, based mainly on increasing enrollment, will lead to an increase of the mill rate from the current 39.83 to 49.55 ten years from now.  “On a home valued at $380,000, this ‘status quo’ scenario results in a 9.72 mill increase, or an additional $2,586 per year in property taxes by 2028,” it states.  The outlook is even bleaker when potential cuts in state education funding are taken into account.

Analysts looked at the town’s Grand List and compared it to towns of similar size; similarly it looked at the demographics and services and how they compare to the other towns.  The comparison towns are Bethany, Middlebury, Beacon Falls; also, Essex, Madison, Marlborough, Old Lyme, Redding and Sherman.  Other towns they looked at, but which share fewer similarities with Woodbridge are Orange (which is larger and has a larger commercial stock), also Westbrook, Newtown, Ridgefield, Simsbury, Westport and West Hartford.

It is a well-known fact that the majority of taxes in Woodbridge are borne by homeowners.  In fact, 81% of the Grand List is residential properties, only 7% are from commercial, industrial or Public Utilities (CIP) sources.  Yet the value of residential properties fell by 14% from 2008 to 2016; even commercial properties saw their value drop by 18%.  For residential properties, Woodbridge ranked in the middle of the eight comparison towns, for commercial property toward the bottom.

Some surprising facts bubbled up when looking at the sales data for single-family homes since 2008.  Home sales were divided into quartiles, based on size, with the smallest 25% of homes (1,920 square feet or less); those consisting of 1,921 to 2,624 square feet; those 2,625 to 3,418 square feet; and lastly homes over 3,422 square feet.  Analysis found that the smallest quartile of homes had held their value the best over time, followed by the largest quartile of homes.  The mid-sized homes on the other hand, saw a decrease in sales price over time.

“In examining the data by number of bedrooms, similar trends emerge; the smallest homes have held their value over time better than larger homes,” it states.  “In considering future development in Woodbridge, these trends help identify the types of housing currently in demand.  These findings may also be indicative of larger trends the Town should consider as it examines its fiscal future, as declining home values in large segments of the market could reduce revenue, or result in a mill rate increase if expenditures are not reduced in conjunction with home values.”

School Regionalization:  By comparing per pupil expenditures, the report comes to the conclusion that Woodbridge taxpayers pay more for the education of their children than the other towns in its group of comparable towns.  That may be a disincentive to regionalize, the report cautions.

However, School Supt. Robert Gilbert pointed out that the numbers used were those of the 2015-16 school year.  With increased enrollment, the Woodbridge per pupil expenditure has decreased significantly, he pointed out.  In fact, it is now lower than any of the sister BOWA districts.  [Bethany $18,432; Orange $18,227; Amity $18,143; Woodbridge $17,498.]

To estimate potential cost savings of regionalization, the CERC team compared the enrollment and expenditures of the combined BOWA school districts to the expenditures of similarly-sized school districts (enrollment of 4,200-5,100), namely Cheshire, Ridgefield, Darien and Newtown.  Per-student expenditures for these comparison districts averaged $17,488.

The hypothetical consolidated BOWA district had a total enrollment of 4,607 and total expenditures of $84.1 million, or $18,252 per student.  Add to that the average administrative spending, which was $1,764 for districts of that size, while the BOWA towns together spent $2,561 per student on administrative costs.  As a result, the report finds that the hypothetical savings of full integration of the BOWA district for Woodbridge would be $1.6 million annually, or about 1.33 mills.  This represents an annual property tax savings of $354 on a $380,000 home.

Growing the commercial base:  Tepid growth of the commercial/industrial portion of the grand list will not significantly ease the tax burden for Woodbridge homeowners.  However, robust 4% annual growth could reduce annual property taxes on a $380,000 home by $261 annually by 2028.  “It is important to note, however, that such growth would not likely happen organically; the town would likely need to implement specific economic development policies and plans to encourage such expansion.”

That does not necessarily imply an expansion of the portion of land zoned for commercial/industrial use, the report states.  The town could also adopt policies to encourage greater density, redevelopment of underutilized parcels, and other approaches while maintaining the fundamental character and feel of the residential portions of the town.  “Thoughtful planning to determine the approaches most suitable to Woodbridge would be needed to achieve these results,” it concluded.

Selectmen’s reaction:  The Board of Selectmen accepted the report at a special meeting February 19 to discuss its 2020 budget recommendation.  Although CERC representatives had provided them with updates of their work at certain intervals, the board has not discussed the final report or its recommendations.  Even so, the board voted to try and keep the mill rate to under 40.  Its recommendation to the Board of Finance is to achieve an additional 3% cut across the board.  First Selectman Beth Heller voted against.

“I am in favor of further cuts to the proposed budget,” she wrote in an email after the vote, “but I did not agree that those cuts should be restricted to 3%.  I believe additional cuts to the budget are necessary in order to provide relief to our taxpayers who are experiencing rising costs in all areas of their lives.”

By Bettina Thiel – Woodbridge Town News Correspondent

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