.

Fairfield Taxpayers, How Much Subsidy Do You Receive or Pay?

Information provided by Bud Morten, a citizen, property owner, and taxpayer dedicated to a well informed and thoughtful debate about Fairfield’s future.

Fairfield’s fiscal 2013 budget is $272 million: $123 million for town services (e.g., debt service, police, fire, roads, beaches, parks), and $149 million for operating our schools. 

After subtracting commercial and industrial taxes, residents pay ~$90 million for town services, which works out to ~$4,500 for each of the ~20,000 households in town, and since there are ~10,000 students, the cost per student in our schools is ~$15,000.

The average home is valued at ~$650,000 and pays ~$10,600 in taxes, which is obviously less than the cost of even one student, so the 70 percent of households with no children in our schools pay the additional cost.  Homes valued at less than ~$300,000 also receive subsidies to cover the full per-household cost of town services. Homes valued at less than ~$1 million with 1 pupil, at less than ~$2 million with 2 pupils, and at less than ~$3 million with 3 pupils do not pay enough taxes to cover the full cost of their children’s education. 

The table below quantifies the subsidies received and paid.  For example, a family in a $750,000 home with three pupils receives a subsidy of almost $40,000 from their neighbors, and therefore obtains almost $5 in services for every after-tax dollar it pays in property taxes. The stability of this system rests on the willingness of the 70 percent -- perhaps because they plan to or previously did benefit by sending their own children to our schools -- to continue to pay for more services than they are currently using. Many of these people will leave if the cost of living in Fairfield becomes too high relative to other states and other CT towns, and property values will decline.

 

TABLE*

Home Taxes Net Subsidy Received or (Paid) Cost-Benefit Ratio Value Paid Taxes 0 Pupils 1 Pupil 2 Pupils 3 Pupils 0 Pupils 1 Pupil 2 Pupils 3 Pupils 100K $1,636 $1,391 $3,364 $18,364 $33,364 $48,364 3.23 14 24.8 35.59 200K 3,272 2,781 1,228 16,228 31,228 46,228 1.62 7.01 12.41 17.8 300K 4,908 4,172 92 15,092 30,092 45,092 1.08 4.67 8.27 11.86 400K 6,544 5,562 -2,044 12,956 27,956 42,956 0.81 3.51 6.2 8.9 500K 8,180 6,953 -3,680 11,320 26,320 41,320 0.65 2.8 4.96 7.12 750K 12,269 10,429 -7,769 7,231 22,231 37,321 0.43 1.87 3.31 4.75 1 M 16,359 13,905 -11,859 3,141 18,141 33,141 0.32 1.4 2.48 3.56 1.5 M 24,539 20,858 -20,039 -5,039 9,961 24,961 0.22 0.93 1.65 2.37 2 M 32,718 27,810 -28,218 -13,218 1,782 16,782 0.16 0.7 1.24 1.78 3 M 49,077 41,715 -44,577 -29,577 -14,577 423 0.11 0.47 0.83 1.19 4 M 65,436 55,621 -60,936 -45,936 -30,936 -15,936 0.08 0.35 0.62 0.89 5 M 81,795 69,526 -77,295 -62,295 -47,295 -32,295 0.06 0.28 0.5 0.71 6 M 98,154 83,431 -93,654 -78,654 -63,654 -48,654 0.05 0.23 0.41 0.59 8 M 130,872 111,241 -126,372 -111,372 -96,372 -81,372 0.04 0.18 0.31 0.44

*Assumes a 15 percent effective tax benefit from property taxes paid, $4,500 per household for Town services, and $15,000 per student.

 

Paid for by Bud Morten, a citizen, property owner and taxpayer dedicated to a well-informed and thoughtful debate about Fairfield’s future.

Dawn Llewellyn December 27, 2012 at 01:08 PM
On a mathematical basis, your computations intuitively make sense. Unfortunately, like most of government the Fairfield School District is part of a wider social welfare program; we have inflated central office( with superintendent at the top of his pay range ) and an education that is continually having services and programs cut to students. In the private sector, money would be spent on teachers and children rather than overhead and buildings. There are many towns with lower cost per pupil and significantly better outcomes. Too bad our administration continually “tests” new teaching methods that always prove unsuccessful for our students. You are correct when you say "Many of these people will leave if the cost of living in Fairfield becomes too high relative to other states and other CT towns", but you forgot to mention that people will move out of Fairfield because they cannot afford to pay the high taxes and send their children to private schools. Our school system is not as competitive as the surrounding towns, so why stay around to pay these high taxes? As a result, property values will decline in Fairfield.
Jim Eastwood December 27, 2012 at 07:02 PM
Concerned and All You are CORRECT !!!!!!! As a Life Long resident and Taxpayer I agree 100% You put in the fact that almost 90% of the tax base is residential and our Income is way above average, the average guy has a problem. The schools are one thing, How about the mis management eveident in the Penfield pavilon fiasco(Soon to break) How about the Railroad station fiasco where we don't see any money back for years and years yet we (as a Taxpayer) have to pay the cost of maintance ?? How about the "Stonewalling" of contract settlements with Loyal hardworking Town employees??? Yes there are some Lifer's" in this Town who are fed up with the 3 to 5 set who Blow into Town, Demand Services and then leave when the Taxes get to high. Great Article, Great Comments and How about we get soem real Taxpaying Propertys(Industry??? Oh My Cann't have That!!!!) back into Twon Have a Great Day (and Continue to Pay and Pay)
something to think about December 27, 2012 at 08:51 PM
I may be getting a "subsidy" for my 2 children now, but for the 20 years I rented an apartment or owned a home before my children went to school and for the (hopefully) many years I will own a home after my children are finished with public school, I have and will happily pay for other people's children to go to public school. I live in an "average priced" home in Fairfield, and if I live an average lifespan, by the time I'm six feet under, I will have paid more than what it costs to educate my children, and keep the roads paved, and the police and fire departments staffed, etc. It's how the system works.
Jim Eastwood December 27, 2012 at 09:40 PM
To All And One other thing The More State and Federal aid the Town accepts the MORE we MUST OPEN Our Beachs to Everyone without a fee !!!!!! Have a Great Day (and Pay and Pay)
Carl Giles December 27, 2012 at 10:13 PM
Hold on. Is this Stanley "Bud" Morten from Citigroup? Mr. "independent research" who was paid millions of dollars by one of the biggest takers of public money ever? Weren't your millions subsidized by the taxpayers of this great country of our? Is this the Bud Morten who was Chief Operating Officer at Punk Ziegel, the investment bank that was telling everyone to buy bank stocks right before the 2008 crash? Punk Ziegel Quote: "The last time an opportunity of this nature existed to buy bank stocks this cheap was in 1990," "The next time will be in 20 years. This is a once in a generation opportunity." (Dick Bove- Punk Ziegel in 2008). Mr. Bud Morten- "takers" come in many forms. Your subsidies were larger, and hurt more people, than any neighborhood in Fairfield where parents hope to get a decent education for their kids. Society foot the bill for your huge net worth, earned by working for insanely leveraged institutions that blew up after your millions were safe and sound in your bank account. Your ego keeps you from seeing it that way, I am very sure. The rest of us see right through you and the rest of your hypocritical, multimillion dollar, me first, me only friends. The harder you push against a good education for Fairfield children, the harder the people of this town will dig into how you made your money and whether it is fitting for you to speak about subsidies.
John R. December 28, 2012 at 12:52 AM
Carl, A better reply would be one that focuses on the merits of Bud's argument rather character assasination. Bud's private and professional life have nothing to do with his opinions about education reform in Fairfield. It is your type of approach to debate -- as evidenced by your response to Bud's letter -- that makes others not want to participate in the process.
FFLDRESIDENT December 28, 2012 at 03:59 AM
There is very little that property taxes fund that are shared and used equally by all taxpayers. If you want to single out families with school children, then do we also single out those with who utilize the Senior Center or the public libraries? What if I’ve never had to use the fire department, or I don’t use Fairfield beaches? What about the renters that utilize the schools, but don’t pay property taxes? We need to reign in excessive spending on both sides of the budget, but also remember the words of Derek Bok-“if you think education is expensive, try ignorance”. FYI – I no longer have children in the school system and still pay my property taxes.
RMLNNTs December 28, 2012 at 01:07 PM
Interesting the author used a 15 percent effective tax benefit (carried interest tax rate) from property taxes paid. 15% is for income $17,400-$70,700 but in the case of author a wall street baron has the ability to take advantage to tax shelters through tax loop holes, off shore shelters, deductions, credits and living off investment income (which is taxed at 15%).
Jim & Louise Baldwin December 28, 2012 at 08:05 PM
Bud: Happy New Year! I find your premise surprisingly naïve – you don’t say it, but the implication is that people should not pay taxes for services they don’t use themselves. That is truly absurd. Think of police, fire etc… and the analogy leads to absurdity. The issue is whether the money is well spent such as to increase desirability among prospective home-buyers. I think the table below is interesting and worth talking about – but to suggest some sort of pay as you go system for any traditional town (vis a vis a Florida retirement community) is ludicrous. Spending per student: Ansonia $10,520 Oxford $11,240 Shelton $11,669 Seymour $11.694 Derby $11,772 Danbury $11,812 Stratford $12,473 Trumbull $12,599 Monroe $12,813 Bridgeport $13,125 Milford $14,332 Fairfield $14,458 Easton $14,674 Westport $16,974 Hartford $17,524 New Haven $17,899 Greenwich $17,675 Easton/Redding $18,426 It’s fairly obvious that the anomalies of our three biggest cities is explained by the huge government waste associated with those who've been entrenched in power there for the past half-century but the correlation between the desirability to live in the other towns is directly related to the amount spent per student. With no disrespect to you or those towns spending less money per pupil than Fairfield, perhaps you want to move there or perhaps to a place where no education is supported – like Taliban strongholds in Afghanistan. Best, Jim Baldwin
Bud Morten December 28, 2012 at 08:13 PM
You are right, “It’s how the system works” – until it stops working. The people of Fairfield (or any other town) can agree that they are willing to pay higher and higher taxes to support whatever public services they want. However, no one is compelled to stay in Fairfield, and the higher taxes go, the more people who are paying for services they are not using (perhaps even you at some point in the future) will decide that the cost has simply become too high and will sell their homes and leave. The people most likely to buy their homes are those who will use more of the services, particularly people with school-age children, which drives school enrollment and costs still higher. At some point, even with great services, taxes become too high for everyone, and property values begin to decline. It is very difficult to say exactly where that affordability “tipping point” is, but the continued weakness in the market for higher-end homes in Fairfield is, I believe, an important early warning sign. Executives transferring into Fairfield County looking for a community with great services and excellent schools can find homes of equal value in, for example, fine towns like Westport, Darien and Greenwich, and pay 23%, 46% and 56%, respectively, lower taxes than they would pay in Fairfield. It is also important for everyone to remember that as higher-end home values decline, more and more of the tax burden is shifted onto lower-end home owners.
Bud Morten December 28, 2012 at 09:02 PM
As you point out, the premise you are attacking as “naïve, absurd and ludicrous” is not mine, but your own straw man, so feel free to beat it vigorously. Like you, I do not believe that “people should not pay taxes for services they don’t use themselves.” Instead, I believe that paying for any amount of public services is fine up to a point, and that point comes when the town’s affordability is undermined relative to other towns, and property values begin to decline as the supply of homes for sale exceeds the demand for them (the same standard you seem to advocate). As noted above in an earlier response, it is very difficult to say exactly where that “tipping point” is, but the continued weakness in the market for higher-end homes in Fairfield is, I believe, an important early warning sign. Still wrestling with your own straw man, you then shift to a comparison of spending per student, and assert that perhaps I (even though I never raised the issue) should move to a town that spends less per student or even to Taliban strongholds in Afghanistan. Unfortunately, the increasingly scary problem for Fairfield is that instead of having to move to “lesser towns” let alone to Afghanistan, people can choose to live in fine Fairfield County communities like Westport, Darien and Greenwich with their higher spending per student and pay 23%, 46% and 56%, respectively, lower property taxes on a home of comparable value. Happy New Year to the Baldwins.
John Jameson December 28, 2012 at 09:51 PM
Welll, they may pay lower property taxes, but spend more to buy the same house. A house valued at $300,000 in Fairfield is probably a bit larger than that same $300,000 will get you in, say, Greenwich. Of course, you can probably get a much larger house in Bridgeport for that $300,000, but pay a much larger tax bill AND get fewer quality services, for example. Someone breaks into your car in Fairfield, and the cops will come out, take a report, and actually do some investigating and looking for patterns, hopefully leading to an arrest. Now, have your car broken into in Bridgeport (and it's happened to me), you call the police and they'll take your information--and its understandable since they have a bit more to deal with in the city.
Todd Thomson December 28, 2012 at 10:24 PM
Bud Morten wrote a really nice piece in Motley Fool in November 2008 in which he admits that "even the largest and most resourceful participants in the financial services industry, like Bear Stearns, Goldman Sachs (NYSE: GS ), Wachovia, Bank of America, (NYSE: BAC ), Merrill Lynch, and JPMorgan Chase (NYSE: JPM ), have learned [about risk, problems, and challenges in the financial markets] the hard way". For some reason, Bud leaves out Citigroup, the company that paid his salary for so many years. Yes, EVEN these esteemed banks that Bud clearly worshiped, had learned something! That's rich! Well, Bud is rich too! Clever Bud. From this one statement, we can see the lens through which Bud sees the world. The world was created for the clever Buds to leverage and have their way with. Middle class families with children getting a public education are takers, receiving subsidies from all the Buds out there who made their money from leverage. The world according to Bud. Keep it up all you Buds and you won't have a Republican party left to hang out with. You'll just have a bunch of sour old white guys sitting around bemoaning the good ole days. Maybe all the Buds will move the China where they can sip scotch and admire the moral steadfastness of Foxcon's owners as its workers jump out of windows. The Republican party needs people who ACTUALLY WANT TO RAISE LIVING STANDARDS FOR EVERYONE, not just pay lip service to some concept of "opportunity" that doesn't cost money.
maryHelen Melnick December 31, 2012 at 10:44 PM
It is very clear that we as residents need to come together and voice our opinion at how we feel there should be managing of how we are taxed. we also need to look at the administrative saleries and cap them too. when people are struggling to put food on the table how fair is it to see an administrative staff recieving a increase in pay at the struggling sweat of the rest of the other residents.If these administrative staff can not live in what they are making now then its time to look for employment else where.
mark January 01, 2013 at 04:33 PM
Bud Morten it's all about the numbers, when considering population and ameneties each of these towns or cities have to offer Fairfields mil rate still compares or does better vs Oxford ,Shelton Easton/Redding,Monroe,Trumbull,Derby,Ansonia,Seymour,Danbury,Stratford

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