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Taxes, abatements highlight of Civic Association meeting

Date: 10/4/2010

By Debbie Gardner

Assistant Managing Editor

SPRINGFIELD Members of the city's Finance Department attended the 16 Acres Civic Association's Sept. 21 meeting to give members an update on the status of the city's budgeting process and tax rate.

This visit was a follow up to the department's initial financial update, which was presented to the civic association in the spring.

Saying the representatives had come to "clean up some of the myths of [the city's] finances," Chief Administrative and Financial Officer Lee Erdmann introduced the members of his office, who included finance director Timothy J. Plante, budget director LeeAnne Pasquini, Chairman of the Board of Assessors Richard J. Allen and Deputy City Solicitor Kathleen Breck.

Pasquini and Plante gave a brief overview of the city's budgeting cycle, which runs from July 1 to June 30 annually, as a process with "no stop or start."

"In July and August, we begin asking the departments what they are looking for," Pasquini said. "And we work with the departments to ensure they stay on track [processing their requests]."

These requests, she said, come to the finance department at the begining for the year, at which time they are examined for redundancies. By April, the department is ready to present the proposed budget to the mayor and City Council for examination and approval.

"Hopefully, by the end of June we have a budget in place," she said in closing.

Plante explained that there are many state laws governing how the department does its job, especially in the area of School Department budgeting.

"It's highly regulated," he said. "The School Department is a large chunk of the budget . that leaves very little to our discretion."

According to Plante, 60 percent of the city's budget monies come through state aid, with 30 percent funded by property taxes.

"The 2.5 million state deficit has had a real impact on us," he said.

To offset these reductions, Plante said the city has been working "very. very hard over the past few years to build up it's 'rainy day' fund."

Eridmann reported that preliminary reports indicated the city closed Fiscal Year (FY) 2010 with a $15.2 million operating surplus, $10 million of which would be redeposited into the rainy day fund to replace monies borrowed to balance the budget at the beginning of the cycle.

This was the sixth year in a row that the city was able to close its books with a budget surplus, Erdmann said.

"Prior to the control board coming in, the city went 17 years with an operating deficit," he added. "Those days are gone. We're here to ensure that."

He said starting in November; the finance department will be providing the city council with quarterly financial report and performance updates.

"That's never been done before in the city of Springfield," he said.

In discussing the upcoming setting of property tax rates, Board of Assessors Chairman Richard Allen said his office spent three months earlier this year driving city streets to perform visual assessments of the 33,651 one, two and three-family homes in the city. This was done, he told Reminder Publications, to ensure the city's information on all homes was as accurate as possible going into this year's tax cycle.

However, Allen told the audience, the third quarter tax bills, which should arrive shortly, will still be based upon "last year's [tax] amount, divided by four."

The actual January, 2011, bill, which he said would be mailed in late December, will be based upon what was happening with house values in January of this year.

"A lot can happen in 12 months; market can go up, market can decline," he said, explaining how, in many cases, house valuations seem to lag behind current sale prices.

To determine the valuation of an individual home, Allen said the Assessors Office compares a property to "five or six homes of similar style, age, and condition" using actual home sale prices as a guide.

The final valuations must be approved by the state Department of Revenue before the City Council can determine the tax rate.

The current tax rate for residential properties in Springfield is $19.50 per thousand, which, by law, the council can raise by no more than 2 1/2 percent per year. The rate for commercial properties is $33.25 per thousand.

Springfield is one of only a handful of municipalities in the state that taxes residential and commercial properties at different rates, Allen said.

He also said the City Council recently adopted a more liberal interpretation of property tax relief for the city's elders, raising the maximum amount of assets allowed for a $500 deduction from $35,000 to $40,000 for married couples age 70 and over . The asset limit is $34,000 for single homeowners in the same age bracket. There are still limits on annual income to qualify for the deduction. Married couples cannot have an income over $21,000 after a $6,237 deduction for Social Security, and single elders cannot have an income above $17,000 after a $4,150 deduction.

Assets are defined as the total amount of monies in all bank accounts, the book value of a vehicle, face value of any stocks or bonds and value of any real estate other than the primary residence. An individual's home does not apply to the asset value.

There is also a $40,000 asset limit for the $175 deduction for individuals age 70 and over, and widows or widowers of any age, but no income limit.

Allen said "Applicants must meet all requirements to qualify for the exemption, [and] we require documentation of all financial record in order to qualify."

"We've been increasing [elder tax relief] annually, this is year two of a five year plan," he continued. "We will offer it as long as we are able."

For complete details on the elder tax relief programs, visit the city's Web site at and scroll down the home page to the section titled property tax valuations.

Allen said individuals with additional questions about the tax abatements should call the Assessors Office at 787-6164.

In addition to the day-to-day financial operations of the city, Erdmann said the finance department is working on a four-year strategic action plan designed to make improvements in the fiscal efficiency of city departments and incorporate Mayor Sarno's five priorities for the city, public safety, education, economic development and job creation, neighborhood redevelopment and financial management.

He said the plan is due to be published in January so citizens can "see how we plan to improve.