The following is the sixth in a series of articles about the Town of Westport’s finances. Written by ex-Board of Finance Chairman Brian Stern, this piece looks at how the town determines how much you pay in tax.

Westport Journal presents these pieces of news and analysis to help readers better understand town finance: the dynamics that create the town’s revenue, how that revenue is spent, the major drivers of town budget increases and how the town manages capital and infrastructure expenses. We plan to also put the decisions made by the Board of Finance and the Finance Department into the larger context of continuing to secure a safe and predictable long-term future for the town.

WESTPORT–Town taxpayers will receive their bills in late June, and it’s a good bet that some folks will be disappointed.

With the adopted $266 million budget, the annual bill for an average house will be $20,562, up from $18,835 this year. That’s an increase of $1,272, or 9%, a larger percentage than the 5.36% increase in town spending. 

The difference is largely due to a shift in the mix of residential versus commercial property in town.

Does that mean your particular tax bill is going up? Not necessarily.

This article will take a look at how we got here, and what goes into calculating your share of the obligation for fiscal year (FY) 2027, which begins July 1.

In the first quarter of this year the heads of town departments, the school superintendent’s office and the selectmen’s office developed their draft operational plans, and the attendant financials for FY 2027.

In the second quarter, the Board of Education, Board of Finance, The Representative Town Meeting and its subcommittees provided guidance which helped revise the spending plan into the $266 million budget that was formally approved in April. The spending represents a 5.36% increase over the current budget, FY 2026.

During the same period, Westport wrapped up the townwide revaluation of all taxable property, (residential, commercial, and other assets), as required by law. Appeals were held and the individual taxable bases were confirmed.

In this article we will explain how the town calculates your share of the expenses. We thank Director of Finance Gary Conrad, and Board of Finance member Jeff Hammer for their cooperation, counsel and support.

The Total Budget

The FY 2027 budget of $266 million will fund Town operations and the Westport School District, pension contributions, debt service and other smaller items. But that’s not all. The Town budget team added another $600,000 to cover raises and other expenses for employees whose union contracts were not finalized before the budget was approved. That brings the total to $266.6 million.

Most of the money, by far, comes from property taxes. But the town does have a few ways to ease that burden.

Where the money comes from

1. Non-tax Revenues: The Town receives non-tax revenues from fees, grants and other sources. For the coming year, the Town projects that these sources will bring in $28.7 million. The largest single source of that, $7.7 million, is expected from the Parks and Recreation Department. Another $19.5 million comes from smaller sources, including real estate conveyance fees, building permit fees, state grants, the lease of town property and interest. Finally, the finance department forecasts further miscellaneous revenues of $1.5 million from state motor vehicle tax supplement, post-retirement benefit fund surpluses and Westport’s share of the recently approved $100 million state municipal aid fund.

2. Reserve Adjustments: Each year, at its February meeting, the Board of Finance (BOF), assesses the state of the Town’s reserve funds. The vast majority of the reserves are earmarked for known obligations – pensions and post-retirement benefits – and are based on detailed actuarial calculations. Thanks to the recent strength of financial markets, these reserves are very robust. 

The Town also holds an “unencumbered fund balance” for other risks and unforeseen needs. These can include damage to Town property not covered by insurance, liability claims, sudden loss of tax revenues and so on. Town policy dictates that the unencumbered fund balance remain in the range of 9% to 11% of annual spending – or approximately $30 million. 

Why 9% to 11%? This range represents a conservative view of unexpected issues. Other Towns maintain unencumbered balances are higher rates. But given Westport’s insurance coverage and high relative funding of other reserve positions, the town’s financial experts have deemed the range to be adequate.

Excess balances can be used to fund the annual budget. 

For the last financial year, the Board of Finance determined that a $9.2 million draw down from the unencumbered fund balance was prudent. This year, the board accepted an extra draw of $2.7 million, applying a total of $11.9 million from the reserve.

This may seem to be a large reserve adjustment, but there is positive news. The real grand list has increased as old houses have been replaced by new homes with higher assessments, budget expense performance has exceeded what was budgeted and the tax collection rate exceeded projections.

3. The balance for the taxpayer: After all those factors and added in, the taxpayers are responsible for providing $226.7 million. That is the $266.6 million in spending, minus $28.7 million in non-tax revenue and $11.9 million for the Board of Finance reserve adjustment, plus a small allowance – $700,000 – for elderly and veterans tax relief.

How your tax bill is determined

To determine your tax bill, first a mill rate must be set. The mill rate is the town’s total tax burden – in this case, $226.7 million – divided by the total value of all taxable properties – the net grand list – which is $17.176 million.

The resulting mill rate is 13.2%. 

(The gross grand list is $17.455 million, including both taxable and tax-exempt property. It is adjusted for the plan tax collection rate of 98.4% to arrive at the net grand list.)

When the town calculates the impact of all this on the estimated unencumbered year-end reserve levels, the result is $31.6 million or 11.45% of plan budget spending. That is a little above the 9% to 11% range. The Town is happy that it will have enough to pay for services and the BOF is happy that they have sufficient reserves. 

How does all this impact you? If your assessment is up and the mill rate is down, where does that leave your tax bill?

That depends on your property’s assessment. The average assessment of a residence in Westport under the old valuation was $998,697. That has risen to $1,557,757, a 55% increase. But keep in mind: each property is unique, and their valuations have not changed uniformly. A house assessed at the town average last year may be either higher or lower than the average now.

At the same time, the mill rate – the amount of taxes you owe per $1,000 of property value – has fallen to 13.2 from 18.86. That’s a 30.1% reduction.

To determine your share of the tax burden, divide your property’s valuation by $1,000 and multiply by $13.20.

Or wait for the bill coming in another month.