Dominion to pay more taxes; city sets tax rate set and negotiates union contracts
From the Salem Gazette By Lisa Guerriero/salem@cnc.com Thu Dec 20, 2007, 11:28 PM EST Salem - Salem’s largest taxpayer will pay more money than it has in the last three years, following a new agreement with the city. Meanwhile, officials set the city's tax rate this week and included money for the pending teachers contract. Dominion, the parent company of Salem Harbor Power Station, will pay $4.75 million for property taxes in Fiscal Year 2008. The figure is $250,000 more than the plant’s owners paid from FY04 to FY07. “It’s really good news: One to have it done, and two, to have it done in time to set the tax rate,” said Mayor Kim Driscoll. The city needs the extra revenue, Driscoll said. “This is the first time in 10 years they’ve paid more money [than the previous year],” she said. Even before negotiations got going, officials were saying that the city needs the Virginia-based Dominion to pay more. Payments on behalf of the power plant have dwindled over the years, while Salem’s budget problems have mounted. The decline was part of an eight-year-old tax agreement, inherited by both the city and by Dominion, which expired at the end of the last fiscal year. An eight-year contract, Driscoll noted, might not be the wisest idea with such a large taxpayer and revenue source. In FY97, when the plant was still owned by New England Power, the tax payment was $8.9 million. By FY02 it was down to $7.7 million. In FY04 the payment dropped to $4.5 million, where it has remained ever since. Dominion took ownership in calendar year 2005. The recent negotiations developed as both sides were dealing with unexpected financial problems. On the city side, officials recently encountered a deficit in the school budget they estimate at $1.8 million or more. Dominion, on the other hand, faces caps on emissions because of the Regional Greenhouse Gas Initiative. In addition, the plant has been shut down since a steam explosion killed three workers last month, and while it is not operational, it is also not creating revenue for itself. Negotiations were postponed due to the tragedy. Tax rate set The Dominion agreement came just in time for the City Council to set the tax rate in a meeting this week. “The DOR certified it late [Tuesday], so that’s good news,” said Driscoll. The city’s new tax rate allows for the recent contract settled with the American Federation of State, County and Municipal Employees (AFSCME) union, as well as some money toward the collective bargaining with the teachers union. The annual bill for the average single-family home will increase by $227, to $4,054, although officials not many Salem residents pay that much — the average is raised by a small number of top-valued homes in the city. “Well more than half of taxpayers pay less than the average,” Council President Matt Veno told the Gazette this week. Veno said the council’s main decision when it comes to the tax rate is deciding how to shift the rate between commercial and residential property to raise the money needed. The city could shift more onto the commercial side, he said, but it would cost the businesses plenty while creating only a minimal benefit to residents. The average condo owner will pay $3,202, while the average two-family homeowner will pay $4,446. The average commercial assessment will be $11,680. The city isn’t alone. Communities like Gloucester and Beverly saw similar increases, while those in Marblehead and Swampscott were even larger. Contract update Meanwhile, the teachers are a few weeks from approving the contract deal tentatively agreed upon recently. The members plan to vote on Jan. 3. “I recommended a favorable vote on this contract,” said union president Joyce Harrington. Negotiations are pending for contracts for the school paraprofessionals union, the schools, AFSCME union and the police patrolmen’s and officers unions.
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