Only a couple of no-name pirates ever ever crossed Marblehead’s waters. Contrary to myths, pirates generally spent their loot quickly. So there was no buried treasure here. But Marblehead did have privateers — John Manley, John Selman, James Mugford, Samuel Tucker and Nathaniel Lindsey. During the Revolution, privateers were commissioned by the government to raid enemy ships. Any cargo captured had to be accounted for, with a portion paid to the government. Somewhat analogous to our ever-imposing state government today?
Given our dire fiscal situation that I recapped in my last column, Town Administrator Kezer has continuously beat the drum for capturing “new recurring revenue streams.”
But what are they? Are there any that make a difference? Everyone should know that the town can’t piss or poop without approval from Beacon Hill. They control everything the town can and cannot do. So progressive local income taxes that shield property-rich, income-poor residents, local sales taxes, roadway tolls, downtown traffic congestion fees, higher excise taxes on vehicles and boats and more are not allowed. Consequently, the town needs to be relentless in pursuing and protecting each and every revenue source available.
New growth taxes — where’s the beef?
“New growth” is additional tax revenue resulting from the valuation of new construction and property improvements. These valuations are added to the assessed property tax base and are developed from building permits and site visits. Some town leaders believe there is a significant overlooked revenue opportunity here. There has been a lot of talk — including an Oct. 4, 2024, Marblehead Current article — but no action.
In the calculation of fiscal year 2025 taxes, Marblehead’s new growth tax was only $324,000. (Note: This represents an assessed property value increase of $42 million on a total tax base of $9.32 billion.)
This $324,000 is the lowest absolute dollar number over the last 24 years. A better statistic is a percentage. It represents only 0.45% of the overall tax levy of $71.4 million in the year before, fiscal year 2024. Yes, that’s less than one half of 1%.
And it has been this low for the last eight years — average of 0.56%, median of 0.54%. The high over the last 24 years was 1.77% in 2006.
While comparisons to other towns are difficult, the percentages for four other built-out, seaside towns with FY 25 tax levies between $59 million and $75 million are: Scituate, 1.11%; Duxbury, 0.98%; Marshfield, 0.98%; Swampscott, 0.68%.
Why is new growth so low? In the article cited above, the Select Board and its employees cite staffing issues, technology limitations and the impact of COVID. These are piss-poor excuses for lack of management by the Select Board and town administrator. I worked in an era using green-colored, 130-column accounting pads and hiring temp workers, even college and high school students, to get critical but simple jobs done. It’s not rocket science or expensive to pull data manually from building permits into a spreadsheet that could be used by the assessor to target site visits on high-value new growth properties.
In the article cited above, Todd Laramie, town assessor, boasted, “We’d be hitting the streets pretty hard. You can look at 10 properties a day.”
What are the results over the last 10 months? How many properties have been looked at? What’s the assessed value of new construction and improvements?
So, maybe if the stars were perfectly aligned, we could double or triple the new growth tax revenue to 1.2%. On a tax levy of $80 million supporting an operating budget of $100 million, that would only add $1.2 million. But every revenue dollar will help.
Short-term rentals — only a little money left on the table
There are a lot of people who love short-term rentals — the owner or operator, the renter and our restaurants and shops. But there are also people who hate them, especially their neighbors.
Short-term rentals remove housing units for long-term rentals that build neighborhood and community involvement. According to AirDNA, a firm providing short-term-rental data, Marblehead short-term rentals have exploded to 231 listings in 2024, an increase of 131% since 2021. Annual revenue per unit was $56,800.
Whether you love short-term rentals or hate them, we should tax them at the highest rates allowed by the state. This tax is paid by the renter, not the owner or operator.
At our 2024 Town Meeting, a local occupancy tax of 6% was approved. However, we left on the table an additional state-allowed local impact tax of 3%. This applies to rental units managed by operators with more than one rental property in the same town and owners renting out an owner-occupied two- or three-family home on a short-term basis.
The state has also allowed a Cape Cod and Islands water protection fund excise tax of 2.75%. Why shouldn’t Marblehead and communities in the South Essex Sewer District petition the state to allow a Salem Sound water protection fund excise of 2.75%? A back-of-the-envelope calculation reveals nearly $1.25 million in potential taxes.
3A compliance — protecting and increasing funding sources
It is becoming very clear that 3A non-compliance will jeopardize not only future grants for capital infrastructure projects but also previously awarded capital grants and grants for operating expenses. The loss of $50,000 for the “Sails & Stories – Marblehead 250” program is the first example of revoked operating expense funds.
On Aug. 15, Brendan Callahan, director of community development and planning, provided this list of nearly $20M in project funding at risk.
In the FY 25 town operating budget (FY 26 budget not available on new website), the state provided $8.1 million in funding. This included $6.6 million in Chapter 70 education funding and $1.4 million in Unrestricted General Government Aid. What if this funding completely disappeared?
Given the magnitude of losses, the Select Board was wise to develop a three-part strategy to deal with 3A non-compliance: 1. Negotiate with the state for compromise, 2. Revise 3A compliant zoning for 2026 Town Meeting and 3. Mitigate consequences of non-compliance. I hold little hope for the state to compromise with the town. And who believes just revising the Pleasant Street zoning district will appease the No 3Aers?
In conclusion, there is no buried treasure in Marblehead that will add significant money to the town coffers. Compliance with 3A is a necessary evil to protect our state and federal funding. Otherwise, we will be looking at even higher overrides, debt exclusions and user fees, or major staff and service reductions.
With respect to grant revocation and eligibility, Massachusetts’ Democratic leadership on Beacon Hill is nearly as evil as the menacing King Trump in his gilded White Palace.
