Monday, June 25, 2007

What I Learned From a Stone Wall

It happens every spring; my stone wall shows the ravages of the winter – stones out of place or on the ground, looking like my grandson's smile with his missing front teeth. But unlike my grandson, whose teeth will grow back, my wall needs attention, removing loose debris, and carefully refitting the fallen stones. I do this each year. And each year the stones fall out again.

A New England winter is hard on stone walls. Ice forms between the stones, acting like crowbars prying them loose. The ground itself heaves as the frost descends into the soil with advancing winter, and heaves again as frost retreats with spring.

I completed the wall myself after the workman who started it left unexpectedly. I assumed my inexperience that was the main reason for the annual repair ritual as I'm no wall expert. Is the wall doomed to endless repair?

This year I was determined to find out if I could do better and I removed all of the stones in the worst areas. I found that there wasn't a proper footing under the first course of stones; they were placed on uneven, slanted soil. A stone wall, or for that matter any structure, even a government, needs a proper foundation. Without one, whatever follows, no matter how pretty on the surface, is bound to deteriorate with time. Though a poor foundation is unseen, its effect is not if only we are willing to see.

The parallel to my stone wall is obvious.

Laws should benefit society as a whole. With time, new challenges arise and we have little choice but to respond to them with new legislation, and the 'wall' gets bigger (not necessarily better). The number and variety of laws, regulations, ordinances and rules has become staggering.

Yet no one seems to question whether the foundation itself might no longer be right for the task.

Perhaps the most common and stubborn issue confronting us is money. Cities and towns perennially either don't have enough or they spend too much, often both. Rhode Island isn't unique in this, although we are pretty near the top in property taxes nationwide.

Most other states today have surpluses which can be used to help municipalities pay bills and reduce property taxes, but not Rhode Island. This year threatens to be painful for both our communities and our state. The discrepancy between expenses and revenues is critical and needs to be addressed, like "stones" that need to be replaced immediately.

The General Assembly has made significant progress over the years, limiting tax levy growth. In 1986 a 5.5% limit was instituted and in 2006 that limit was modified such that it shall decrease .25% annually until it reaches 4% in 2012. A 4% limit is certainly not unreasonable considering Massachusetts has had a 2.5% growth limit since 1980 and has done reasonably well. Remember when Massachusetts was called "Taxachusetts?"

But in Massachusetts or Rhode Island, no matter how low a tax levy limit is, even at 0%, there is no limit on the growth of any individual's tax bill. This may sound like a contradiction, a paradox, but it is a fact. The reason is Revaluation.

Can the very foundation of our property tax system - Property owners pay taxes according to the most recent market value of their property - be contributing to the problem?

Imagine a community where the town council and management, with the assistance of dedicated and committed public employees, create a budget with a 4% increase in the tax levy. With no revaluation, everyone will pay 4% more taxes than the year before and the bills would get paid. A 4% levy increase will increase everyone’s taxes by 4%.

Revaluations are necessary however, to insure that new owners pay their fair share using a tax rate that does not discriminate against them. Therefore someone who’s assessed into a $500, 000 home must pay the same taxes as someone able to pay $500, 000 for a similar home, often producing incredible tax increases for current owners.

With revaluations, property values change; some homes might increase a great deal in value, some homes or businesses might increase very little in value. Because of this, after a typical revaluation, 2/3 of property owners will get tax increases. But since the remaining one third will pay lower taxes, the amount of anyone’s increase over 4% will not be paid to the town but is used to make up for those lower tax bills.

In other words, the 4% limit imposed by the General Assembly applies to everyone together but to no one individually. Some people have seen their tax bills DOUBLE.

Can we tax new owners fairly, as we do now, and at the same time, avoid those huge increases for the majority of property owners? Can the foundation of our property tax structure be fixed? Yes and Yes.

There is a way to create a foundation for a more fair distribution of property taxes for everyone, new owners and existing owners alike, a way that provides the revenue required by the budget, and limits growth in property taxes, not only for the town as a whole but for every individual taxpayer as well, both residential and commercial. Visit to learn more.

By limiting the growth in the tax levy alone we've merely replaced some “stones in a wall” with a faulty foundation. Such a wall will need repairs again and again. By the way, it's not just property taxes that get superficial or cosmetic fixes. It's the way most things seem to get done.

I'm rebuilding my stone wall this year, starting with a proper foundation, finally. It will be a lot of work but it's the RIGHT thing to do.