Weston Tax Increases Accelerating

Weston Town Crier, March 18, 2021
The following was submitted by John Sallay

A few weeks ago, the Town Crier published my article “Weston Town Manager Proposes 5% Tax Increase”. That article and its accompanying chart attempted to explain in simple terms how key aspects of town spending ultimately determine your annual property taxes. It also provided a somewhat detailed breakdown of the proposed FY22 spending increases, compared to the current FY21 budget, and 5 and 10 years ago, leading to a typical Weston property tax bill being up about 5% next year.

This article and accompanying chart provide some additional perspective on the primary drivers of recent Weston spending and property tax growth. The chart also shows typical Weston tax bills projected forward based on a detailed analysis of recent spending trends for our schools and town departments, using fact-based assumptions about town population growth, school enrollment, property value appreciation, inflation, and so forth. Of course, different assumptions could result in higher or lower projections.

The intent is to provide a reasonable estimate of how your Weston Property taxes are likely to grow, and that growth accelerate, over the next 10 years if current town spending policies and trends continue.

As shown in the chart, the Weston property tax bill on a specific home valued today at, say, $1,500,000 have increased about 17% over the last 10 years, from $17,215 in FY11 to $20,054 now. Over the entire period, this growth rate is not far from the Boston area inflation rate.

It is important to note, however, that while the growth of town spending lagged new growth 5-10 years ago, spending growth now exceeds the rate of town new growth. As such, recent property tax increases exceed the current low rate of inflation. In other words, our spending is growing at such a rate that we have to keep ratcheting up our taxes to pay for it, well beyond inflation.

Assuming a continuation of current trends, in ten years’ time, that same Weston home valued today at $1,500,00 would get an annual tax bill of about $27,600. A more modest home now valued at $1,000,000 would see a roughly $18,400 tax bill. A home valued at $5 million, would get a property tax bill of, well, 5 times that amount, or about $92,000 per year.

School spending will continue to be the main driver of property tax growth. Weston’s public schools represent about 60% of the total town budget. School spending has grown consistently at 2-4% annually, despite enrollment declining 2-3% per year due to low birth rates, transfers to private schools, and other factors. As such, Weston per-pupil school spending has increased about 65% over the last 10 years, and is now about 27% higher than comparable affluent towns. The FY22 school budget is again proposed to be up over 2%, while the enrollment decline is projected to continue.

Debt service represents about 10% of Weston’s budget and has grown by about a third over the last 10 years, even though existing debt has been refinanced at lower rates, and new debt for the Town Center and other projects was funded at a 1.2% rate. Contrary to the misconception that we are at the end of a long investment cycle and our debt will soon be paid off, this tax projection assumes a continuation of long experienced growth in Weston projects and total debt levels.

The town has perennially approved new projects, so our debt burden has grown continually for many years. Indeed, this year’s Warrant includes articles to begin funding additional large projects recommended by the new Recreation Master Plan. These include a major renovation of the Memorial Pool (despite declining attendance), and a new pool with a separate diving well on the High/Middle School campus.

Roughly 80% of town spending relates to employees. Across town departments and particularly in the schools, relative to comparable towns, we have more employees, who are more highly compensated, and who are provided more valuable healthcare and other benefits. Most of these employees are covered by collective bargaining agreements, but so are the employees of other towns. Weston recently negotiated a new Public Employee Committee agreement covering healthcare benefits. The cost-sharing terms improved only modestly, at a rate that would get Weston’s healthcare benefit costs in line with comparable towns in about 15-20 years. These trends are also reflected in the chart projections.

All told, inflation is assumed to average 2% over the next 10 years, consistent with current bond market spreads on inflation protected U.S. Treasury securities. Inflation accounts for a bit over half of the total projected Weston property tax increase, with new growth consistent with recent trends, and the appreciation of Weston property values assumed at a slightly higher level.

The real, inflation-adjusted growth in Weston tax bills, however, is significant, and raises the question – is it sustainable? Will young families who want to send their children to the Weston public schools be able to afford to live here? And will we want to stay in Weston and pay it, as our children graduate and move away?

There is still time to register your opinion with the Select Board, and then attend the Annual Town Meeting in May, where you can vote to approve this budget and proposed tax increases, or not.