Please review this information. We hope it answers your questions and helps you make an informed decision as you consider voting for a budget proposal for the Town of Tiverton.
Will my taxes go up if I vote for Option 1?
Your taxes will go up very little. Option 1 calls for very small increase of only 1.29% (Portsmouth voters recently approved a 2.4% increase). This is one of the lowest tax increases in recent history. In fact, the annual property tax bill on a home assessed at $300,000 will increase by only $74. That’s right, only $74 a year to ensure we maintain our schools and services, while strengthening our position with investors.
Find out what's happening in Tiverton-Little Comptonwith free, real-time updates from Patch.
Why should I not vote for the “0.0% tax increase” promised by Option 2?
The budget proposed in Option 2 is the latest attempt by a small group with an extreme political agenda to cripple the town financially. Having failed in previous years to decimate funding to our school and community services, their strategy now is to strip the Unrestricted General Fund and claim the result is a “0.0% tax increase” that won’t cut services. Based on how finances actually work, this view is either woefully uninformed or intentionally deceptive. They even foolishly refer to the town's General Fund, the guide of a town's financial health, as a "slush fund." As is usually the case, when something sounds too good to be true, it is.
Find out what's happening in Tiverton-Little Comptonwith free, real-time updates from Patch.
What is the purpose of the Unrestricted General Fund?
The unrestricted general fund balance provides for stable tax rates, investment income and greater long-term planning capability. In addition, it ensures short-term cash availability when unanticipated expenditures occur. The unrestricted general fund balance has a significant impact on the town’s bond rating and its ability to borrow money for long-term investments in the community. Higher bond ratings result in lower interest rates on the town’s financial obligations. That’s why it must be maintained at sufficient levels.
How much should the town allocate to the Unrestricted General Fund?
How much do other Rhode Island towns allocate to the Unrestricted General Fund?
Our immediate neighbors, Portsmouth and Middletown, require a minimum of 8%, and 30 of the 39 other communities had a higher combined fund balance than Tiverton, as indicated in a 2012 State of RI report designed to measure fiscal stress on communities. Neighboring Little Compton’s Budget Committee is even advocating a 12% balance in order to maintain maximum financial flexibility and the only AAA (highest) credit rating in the state.
Does the balance in the Unrestricted General Fund really drive bond ratings?
Yes. In fact, Moody’s bond rating agency cautioned the town that building its reserves instead of drawing them down will “remain an important rating factor” for future borrowing (like next year’s library bond.) Tiverton’s town treasurer also warned regarding our rating in a May 1, 2014 letter to residents, “Moody’s has developed a new rating methodology … review of our general fund balance accounts for 50% of the Finance Review – that is a hefty portion.” She further cautioned, “Tapping into our UGF could cost us down the road. I urge you to protect your investment in the town.”
What is the real financial impact – in dollars and cents – of a higher bond rating?
Again, we need only look next door at Little Compton to find the answer. The benefits of the strategy to maintain the highest possible credit rating have already been proven because the town will save close to $1 million in interest on the school bond, according to their budget committee.
Is Tiverton the highest taxed town in the highest taxed state?
No. These are falsehoods put forth by the proponents of Option 2. First, Rhode Island’s highest personal income tax rate is not the highest in the country. Furthermore, Tiverton is not the highest taxed town. Tiverton’s residential property tax rate is actually closer to the median of Rhode Island cities and towns.
Have taxes in Tiverton more than doubled in the past decade?
No. This is another misrepresentation by the proponents of Option 2. “More than doubled” implies a greater than 100% increase to your property tax bill. Taxes have gone up, but they have gone up for all towns – as have assessments. Increases are driven by town expenditures, the increase in the value of property, improvements made to property, zoning changes, etc. An analysis was conducted on a significant sample, which concluded taxes have increased at a pace with inflation and with other towns. The claim by the proponents of Option 2 actually overstates the increase by more than two-thirds.
Do elected official have plans for the amount allocated to the Unrestricted General Fund?
No. The proponents of Option 2 mislead again. Their concern is that the UGF, or “slush fund” as they refer to it, will be raided to fund a contract with the teachers. However, this is simply not true. The proponents of Option 2 oppose anything to do with the schools, despite the fact that Tiverton’s teachers are the lowest paid in the state and the schools continue to perform very well. Nevertheless, any expenditure out of the UGF requires a vote of the citizens in the form of a referendum. The Town Council cannot just spend it.
