Law allows Chatham to implement land bank excise tax to fund OPEB

On Jan. 9, Gov. Charlie Baker signed legislation enabling the town of Chatham to levy a 1.5 percent surcharge on property tax bills to address its long-term liability for other post-employment benefits.

The law, which was filed as a home rule petition, authorizes the town to begin the levy in 2021, immediately after a 3 percent Cape Cod Land Bank excise tax expires.

The town estimates that the plan will provide $5.8 million for its OPEB Trust Fund over 10 years. The program will expire after 10 years, although Town Meeting could approve an extension.

Chatham established an OPEB Liability Trust Fund in 2012 and has funded it at a rate of $150,000 per year since 2015, but the appropriations were not enough to significantly draw down an estimated $17 million liability for OPEB (mainly health insurance costs for retirees). Chatham officials identified a dedicated funding source as a solution.

The funding plan was developed as part of a menu of options considered by the OPEB Trust. Two options were presented to voters at the 2018 Annual Town Meeting. Voters turned down a 0.5 percent excise tax on transfers of real property over $425,000, but approved the plan to divert a portion of expiring land bank excise funds by a substantial majority.

Sen. Julian Cyr and Rep. Sarah Peake filed the home rule petition in June.

Chatham Town Manager Jill Goldsmith said the town continues to discuss OPEB funding and will hold a public forum in February to engage voters on the funding obligation and efforts to address it.

Chatham voters must still authorize the redirection of the excise tax before the plan can take effect.

Asked about local reaction to the plan, Goldsmith said, “There was an understanding among voters of our priority to address the town’s long-term OPEB obligations in an equitable manner for all taxpayers, and this was the responsible way to do so.”