In his recent op-ed piece (What You Haven’t Been Told: We Don’t Have a Revenue Problem, We Have a Spending Problem, February 19), William G. Shipman argues that Manchester has a spending problem.
Given Mr. Shipman’s 48-year perspective and his past service to this community, his opinions and proposals merit consideration. After evaluating Mr. Shipman’s analysis, I offer a different perspective – one from the point of view of a more recent Manchester property owner who, prior to moving to Manchester, spent 48 years in a different state and watched how that state’s quest for ever-lower government spending turned out.
Mr. Shipman’s opinions are based on several propositions, both stated and implied. He states, “Manchester is one of the most expensive towns in Massachusetts.”He asserts that Manchester’s spending is too high. He assumes there may be significant wasteful or unnecessary spending in Manchester. He asserts that comparisons of “per capita spending” across North Shore towns provide a meaningful way to evaluate Manchester’s cost of living. He says, “if we were to learn from the leadership of other towns, we could achieve a substantial saving …”. Thus, he assumes a correlation between lower average per capita spending and lower real property taxes. In my opinion, some of Mr. Shipman’s statements are incorrect and his analysis and conclusions are questionable.
Mr. Shipman’s analysis is predicated on a per capita, cost-per-resident, comparison of aspects of Manchester’s spending in comparison to that of 13 other NorthShore towns. Mr. Shipman presents those expenditures in a table, using 10 different categories, and computes averages of those expenditures for each of the 13 towns.In my opinion, such an analysis is not an “apples to apples” comparison. It does not take into consideration, or statistically control for, the numerous, substantial differences between the towns’ respective population size, age distribution of the population, number of school-age children, the relative age and condition of town infrastructure, spending priorities established by town meeting, and other demographic and geographic differences that impact a particular town’s spending.
In my opinion,Mr. Shipman’s focus on spending on a per capita basis is misplaced. Real property taxes are not calculated or paid on a per capita basis.Rather, as required by law, real property taxes are calculated on a property-by-property basis by multiplying a tax rate (expressed in dollars and cents per each $1,000 of assessed value) by the assessed value of the property, which, by law, must be the fair market value.
For example, if Ms. Jones owns a home in Manchester with an assessed value of $650,000, and the appliable tax rate is $11 per $1000 of assessed value, then Ms. Jones’s annual property tax bill is $7,150 ($11/$1000 x $650,000 = $7,150). Thus, the tax rate applied to the assessed value of a taxpayer’s real property, not a per capita distribution of town spending, is a real cost of living in Manchester. So, instead of comparing total per capita spending by town to an “average,”I looked at the comparative real property tax cost of living on the North Shore. As I show below, there does not appears to be any correlation between a town having lower total per capita spending and the town having a lower real property tax rate.
Using data from the same source cited by Mr. Shipman, I compared the real property tax rates from 2016 through 2021 for each of the 14 towns in Mr. Shipman’s table plus those for Newburyport. I computed a six-year average for each of those 15 towns as well as a total average of all 15 towns’ tax rates. Using the data from Mr. Shipman’s table, I computed the amount by which each town’s total per capita spending exceeded or fell below average total per capita spending. That information appears in the accompanying table together with US NEWS & WORLD REPORT’s ranking for each town’s public school system. I explain below why I included the school rankings in my comparisons.
HOW MANCHESTER COMPARES
6 Year Average
Amount Above or Below Total Average Per Capita Spending
High School Rank
Sources: Tax Rates: Mass. Dept. Revenue
School Rankings: US News & World Report – Best High Schools*
Mr. Shipman says, “Manchester is one of the most expensive towns in Massachusetts.” Expensive in what way? If he means expensive in terms of the real property tax rates residents pay, then I believe he is mistaken. The data shows that, ranked from lowest to highest tax rate, Manchester is in fourth place on both the six-year and current year comparisons. Eleven North Shore towns have real property tax rates higher than Manchester’s. Only Newbury, Marblehead and Rockport have lower tax rates.
Additionally, my analysis indicates no correlation between having,
(1) lower-than-average total percapita spending, and,
(2) a lower-than-Manchester’s real property tax rate.
As the table shows, eight North Shore towns had lower-than-average total per capita spending but higher-than-Manchester tax rates.Two had higher-than-average total per capita spending and higher-than-Manchester tax rates. Two had higher-than-average total per capita spending and lower-than-Manchester tax rates.
Only one town had both lower-than-average total per capita spending and a lower-than-Manchester tax rate.
According to Mr. Shipman’s table,the average total per capita spending is $3,291.03. Similarly, the total per capita spending for Manchester is $5,103.65. According to Mr. Shipman, Manchester’s total per capita spending was $1,812.62 higher than his average of total per capita spending. Of that, Manchester’s per capita spending on Education was $1,205 (66%) above the average per capita spending on Education. If we were to accept Mr. Shipman’s premise that Manchester’s per capita spending is too high, then the bulk of any meaningful cuts would have to come out of Education.
The question is—are we getting value for our spending on Education?
In my opinion, the answer is YES!
Manchester’s spending on Education has resulted in the best public high school on the North Shore! That’s real value for money. Real estate agents say that top-quality public schools are a key driver of higher property values, and that nothing depresses property values like mediocre public schools. We all can agree that we want increasing home values. Most of us assign a very high importance to quality public schools. Maintaining Manchester’s excellent public schools is crucial to maintaining and increasing home values. High-quality public schools attract families to a town with an otherwise aging population. That influx of new familiesis crucial to the continued growth and vitality of a strong local economy withgood local services.
When cost-cutting becomes the Number One goal of government fiscal responsibility, a race to the bottom usually follows. I know because I saw it happen during my 48 years in Texas. In my opinion, any short-run savings from cuts to spending on public education would be too high a price to pay in terms of the long-term wellbeing of this wonderful town. But Mr. Shipman does make an important point – we must keep an eye on spending so that we get good value for our tax dollars.
It is a difficult and delicate question of balance. In my opinion, Manchester is doing a good job.