So, what’s up with my property taxes this year? That is the most frequently asked question around the city the last few weeks after residents began receiving their fiscal year 2024-25 tax bills.

The tax bills are based on the October 2023 grand list that reflects a dramatic rise in real estate property values based on the recently completed, state-mandated revaluation process. For some — mostly businesses — there is gratitude and a pleasant surprise as their property values increased on average 20-25% but their taxes decreased significantly due to the mill rate dropping from 37.24 to 27.47%. For others — mostly residential homeowners — whose properties increased in value by a whopping average of 60%, there is shock and dismay at the first increase in their tax bills in eight years. It was not possible to drop the mill rate low enough to offset the entire tax impact of that 60% increase in residential property values.

Last year’s revaluation process (increasing residential housing values by 60%, while only increasing the commercial and industrial properties by 25% or less) effectively transferred more of the burden of funding local government onto households. Despite lowering the tax rate by nearly 10 mills, taxes went up on many homeowners and landlords in our city because of the disproportionately high increase in housing values. To put it simply, the culprit is not government spending but the skyrocketing housing market, something municipal government does not control.

Since property taxes (real estate, personal and motor vehicle) are a principal source of city revenue, the budget process is dramatically impacted by the mandatory five-year property revaluation cycle. As defined by the state Office of Legislative Research, revaluation is the process for measuring and capturing changes in property values. The value is a property’s resale or fair market value, which changes over time. Whether your tax bill this fiscal year went up or down, it is the direct result of the new value placed on your property. It is not related to any dramatic change in city spending. Indeed, the city’s general government spending effectively remained level, increasing by less than 1%, or roughly $500,000. This minimal increase was a budgetary achievement considering that employee wages and benefits increased by more than 3% and all other costs increased because of inflation. (Ironically, the school budget wasn’t petitioned, though the local taxpayer portion increased by approximately 8%, or approximately $1.9 million).

The city has been able to hold the line on tax increases for the past eight years by attracting investment in the city. This economic growth is especially visible in the new housing developments all around the city with hundreds of new units available across all income levels. Under my administration, the city’s strategy has been to increase the number of taxpayers, not taxes, to fund the ordinary rise in the cost of government. Eight years of hard work to grow our tax base is especially paying dividends this fiscal year as the tax base growth, while not completely offsetting the tax increase experienced by most of the residential sector, has softened the negative impacts of this year’s property revaluation by spreading the tax increase over a larger residential tax base.

While the pain of higher taxes is very real this year for many households, the prospect for future relief is also very real because the economy in the city continues to grow and investment is strong. This will translate into lower taxes for all over time. Notably, for most whose tax bills increased this year, taxes are still lower than they were at their peak in 2016. My administration has proven over eight years that it can stabilize and lower taxes while covering increased city costs and improving municipal services. We have done it for the past eight years and we will continue to do it in the years to come.

Michael Passero, a Democrat, is the Mayor of New London.