Sales tax on pace to reach early sunset

When Andover's governing body decided to take advantage of low construction bids to build a new City Hall, they created a funding mechanism using property taxes.

The new facility adjacent to the library in Central Park was going to cost the city about $4.35 million or an additional 3 mills per year over 20 years.

But the City Council decided to give Andover voters a choice. A 1-cent sales tax would pay for the project much more quickly and let people who shop in Andover from outside the city limits contribute to funding the project.

Voters saw the benefits of the sales tax plan and passed the ballot measure easily. Soon, the benefits of that decision will be realized.

Information from Andover tax collections since this new tax was put into place show that receipts have exceeded expectations consistently.

Because of how the ballot measure was worded, the sales tax was to remain in place through December 2014 or until the project was paid off.

If receipts continue on the current trajectory, the city will have collected enough to pay off the new facility in September 2013 – about 15 months ahead of projections and almost 17 years before the property tax option would have retired the debt.

"By utilizing the revenue from an increase in sales tax the benefits have been twofold," Mayor Ben Lawrence said. "Personal property taxes for our residents were not increased to pay for a much needed project and a disproportionate share of the sales tax collections have been and still are being born from others not living within our city limits. Sunsetting the 1 percent sales tax approximately 15 months early is just a bonus."

According to information provided by City Manager Sasha Stiles, the current trend shows the city expects to have enough money to retire the debt with more than $35,000 left over by the end of September 2013.

The city averaged about $145,000 per month for the 10 months the tax was collected in 2011. For the first eight months of 2012, the average is more than $151,000 per month. In 18 months, the 1-cent tax has produced $2.67 million.

Even conservative estimates leave the payoff date in September 2013.

Mayor Lawrence said this project was a good example of how the Andover City Council operates.

"I think it is fair to say that the governing body, while dipping into this well now and again for special projects, have always made good on their promises to our residents and utilized the funds from sales tax as promised and only as needed," he said.