Budget Terms Explained

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In the discussion of the budget, there are many terms used that may need explanation. Let us know if there are other questions or terms that are unclear.

Tax Revenue Collected: This is the total amount the town collects from all taxpayers. This is the money used to pay the Chariho school system, maintain public roads, provide recreation, pay police, town staff and other expenses. Last year this amount was $22.9 Million. In this year’s budget it is proposed to be about $23 Million. The amount collected to fund the operating budget works out to an increase of $70,000.00 or a 0.31% change, which is much lower than the 2019 inflation rate of 2.3%. Charlestown has grown in the last year, but the total revenue collected is remaining almost unchanged.

Grand List: This is the total value of all property in town. This is currently estimated at $2.84 Billion. Last year’s figure was $2.57 Billion. The increase in property value for the whole town is about $271 Million. This increase is made up of new buildings, additions to existing buildings, and increasing building and land values throughout the town. This increase in Grand List value is up about 11% over last year.

Tax Rate: Because the Grand List has increased while the Tax Revenue Collected is proposed to stay the same, the tax rate will go down. The tax rate will go from $9.23 to $8.20 per thousand of assessed value. This represents a reduction of 11.6% in the tax rate. Charlestown has the 4th lowest real estate tax rate in the state and the third lowest vehicle tax rate. The tax rate has also been reduced by paying $1.3 million of the town’s operating expenses with the surplus account. That was also done last year.

Revaluation: State law mandates that towns have a property tax revaluation every three years. Charlestown hired a consultant company that concluded a statistical revaluation in December of 2019. The valuations are based on nearby property sales and other data to adjust existing assessed values to reflect market trends since the last revaluation. Because of historically low interest rates, buyers are able to finance higher sales prices and that has been driving up values into the end of 2019. All property owners received a letter with their new property value and an opportunity to provide evidence to change the estimated value.

Tax Bill: If your property value went up less than 11.6%, then you will have a decrease in your tax bill. If your property value increase is greater than 11.6%, then you will have an increased tax bill. To estimate your tax bill for the coming year, multiply $8.20 times the number of thousands in your home value. For example, if your home value is $400K, then 400 X $8.20 = $3,280 = estimated tax.

Unassigned Fund Balance: This is the town’s surplus or savings account. It is projected in this budget, after paying debt and a payment to reduce the tax rate, to be approximately 25% of the total budget, which is slightly above the recommended amount to have enough to keep our bond rate low and be prepared for disasters, like a major hurricane or a pandemic!

Debt: A generation ago, town councils made promises to pay pensions to the police force. Eventually the promises must be kept. Charlestown is ahead of other Rhode Island towns in paying down its debt to the Police Pension Fund, but we still owe significant funds. The proposed budget contains an almost $1 million payment to Charlestown’s account in the police pension fund and other debt. This is not new spending; it is a partial payment of this debt.