Wednesday, February 17, 2010

Ranking of Town Tax Rates

A recent post displayed the ranking of town tax rate increases in Dutchess County.  This post ranks the town tax rates themselves. The tax rate measures how steeply your wealth — as measured by the value of your property — is taxed.  Do you know how your town compares with other towns in Dutchess County?  Here's the ranking for 2010:

Town of Poughkeepsie

The Town of Poughkeepsie is in first place.  Its 2010 tax rate of $3.39 per thousand dollars of market value (for homesteads outside the City of Poughkeepsie) is the highest of all 20 towns in Dutchess County.  This means that if you own a home in the Town of Poughkeepsie, your wealth — as measured by the market value of your property — is taxed by the town at a higher rate than if your home were in any other town in Dutchess County.  The Town of Poughkeepsie had a tax rate increase of 3.5 percent in 2010, which is  lower than for most towns in the county.  But already in 2009, Poughkeepsie was safely ahead of the pack.  Not only was the Town of Poughkeepsie's 2009 tax rate higher than any other town's 2009 tax rate, but the Town of Poughkeepsie's 2009 tax rate is higher than any other town's 2010 tax rate.  In other words, no other town has “achieved” as high a tax rate in 2010 as the Town of Poughkeepsie did in 2009.

Towns of Pine Plains and North East

In 2009, the Town of North East had the second highest tax rate in Dutchess County, just edging out the Town of Pine Plains.  But North East is one of only two towns in Dutchess County which did not increase its tax rate this year, while Pine Plains' tax rate went up 9 percent — more than most towns in the county. The Pine Plains “surge” allowed it to “advance” to second place, leaving North East in third position.

Town of Pawling

The Town of Pawling, thanks to having the largest surge of all towns in Dutchess County, has pulled away from a tight cluster of moderately-high-tax-rate towns in 2009, to solidly secure fourth place, with fifth place Hyde Park a distant $0.33 lower.

Towns of Washington, Wappinger, and Fishkill

The towns of Washington, Wappinger, and Fishkill have held the prizes for lowest three town tax rates for at least the last two years.  The tax rate in the Town of Poughkeepsie is 3.2 times higher than the lowest tax rate, in the Town of Washington.  For the town tax you pay on one property in Poughkeepsie, you could pay the town tax on more than three same-valued properties in the Town of Washington.

Other Towns

Do you know how your town ranks relative to other Dutchess County towns in the tax rate sweepstakes?



Now you do.

Data:  The data for this post are from a table I compiled based on tax rate information from the county government's Real Property Tax Service Agency, as explained here.  For towns containing villages, I've compiled only the tax rates for outside the villages, marked with suffix “- o”.  For towns containing separate homestead and non-homestead (commercial) rates, I've compiled only the homestead rates, marked with suffix “- h”. 

For the record, here are the corresponding 2009 town tax rates:

Tuesday, February 16, 2010

Town of Pawling Tax Rate Increases 28.4 Percent

The Town of Pawling's 2010 property tax rate increased a whopping 28.4 percent over Pawling's 2009 tax rate.  Although all but two towns in Dutchess County increased their tax rates in 2010, Pawling's tax rate increase is by far the largest.  The second largest tax rate increase of 19.0 percent, in the Town of Milan, is 9.4 percent lower. Yesterday's post to this blog gives a complete ranking of 2010 town tax rate increases in Dutchess County.

Pawling is adversely affected by a downward trend in property values.  Pawling's taxable market value is down 5.1 percent for 2010 property tax bills.  But this fact does nothing to explain why Pawling's tax rate increase is higher than in other towns, because every town in Dutchess County has this problem.  Indeed, all of Dutchess County's taxable market value is down 5 percent.

The Three Causes of Pawling's Problem

I spoke with Town of Pawling Supervisor David Kelly to learn why Pawling's tax rate has increased so much more than other towns'. My understanding of our conversation is that Pawling's tax rate increase has three causes:
  1. Library Referendum:  Voters in the Town of Pawling approved a library referendum last November — before Kelly took office — resulting in an additional tax levy for the town of $270,000 in 2010 (and similar amounts in future years).
  2. 2009 Appropriated Fund Balance:   At the end of 2008, Pawling had an extra $200,000 unspent.  This appropriated fund balance was used to lower the 2009 tax rate.  This fortunate circumstance in 2009 has the effect of making the 2010 tax rate increase larger than it would otherwise have been.
  3. Budget Items:  The Town of Pawling budgeted various items as needed to support town services.
One way to understand what all this means is with the following bar chart:


If Pawling taxpayers had the same tax rate as last year (no rate increase), the tax levy outside the Village of Pawling would have been $2,669,726, as shown by the bar on left.  The actual tax levy of $3,428,060, resulting in a 28.4 percent tax rate increase, is shown by the bar on right.  The green and orange portions of the bar on right represent the library referendum and 2009 appropriated fund balance contributions, prorated to exclude the 15.1 percent of these contributions that presumably would be paid by taxpayers in the Village of Pawling.

The Components of Pawling's Tax Rate Increase

The difference between the left and right bars can be seen more clearly in the following pie chart:


The percentages for each component show the contributions to the 28.4 percent tax rate increase.  (Rounding causes a small error in the sum.)  Comparing the above figures with the chart of 2010 town tax rate increases in my last post allows one to make the following observations:
  1. Even if the library referendum had been rejected by voters, Pawling's tax rate increase would have been 19.9 percent — still the highest of any town in Dutchess County. So one cannot blame the library referendum alone for Pawling's top ranking in the tax increase contest.
  2. If the library referendum had been rejected and the 2009 appropriated fund balance did not exist, Pawling's tax rate increase from budget items alone would have been 13.5 percent — the fifth highest tax rate increase of all 20 towns in Dutchess County.  So the budget items alone put Pawling in the top quarter of towns for tax increases.
  3. If Town of Pawling officials had limited 2010 budgetary spending so as to avoid increasing the tax rate; that is, if the above “excess” budget items were zero instead of 13.5 percent, then the remaining library referendum and 2009 appropriated fund balance would still increase Pawling's tax rate by 15.0 percent.  In this case, Pawling would still have the fourth highest tax rate increase for towns in Dutchess County, placing Pawling in the top fifth.
To sum up, each of these three pieces of pie is so big that even one of them contributes a significant increase to Pawling's tax rate.  Pawling must now eat all three pieces. Property taxpayers will have a stomach ache.

Library Referendum Was a Bad Idea

I'm grateful to Supervisor Kelly for generously sharing his perspective on Pawling's property tax situation with me.  Kelly has argued, correctly in my view, that submitting the library proposal to a referendum was a bad idea, because voters approved a large expenditure without seeing the whole fiscal picture. Now the town is stuck with a tax rate increase which is way out of line — probably not what the voters intended.  The limited foresight of voters is a general problem with referenda, and a good reason to prefer the more comprehensive vision of the budget process.  Indeed, there are numerous reasons to avoid referenda.  An extreme case of tax referenda gone wild is the State of California, which has been brought to its knees by Proposition 13 and other unwise ballot initiatives.

Monday, February 15, 2010

Towns Increase Tax Rates

All but two of the twenty towns in Dutchess County have increased their tax rates in 2010, compared with 2009 rates.  This fact is Bad News for property taxpayers, because the tax rate measures how steeply your wealth — as measured by the value of your property — is taxed.  Do you know how much your town's tax rate has increased?  And do you know how your town stands relative to other towns in Dutchess County?  This post compares the town tax rate increases for Dutchess County.

First the Good News:  Two towns in Ductchess County held the line on taxes, or even decreased them:  The Town of North East has maintained essentially the same tax rate as last year, and the Town of Rhinebeck managed a small (0.4 percent) tax decrease.  Well, that's the end of the good news.

Data:  Most data for this post are from a table I compiled based on tax rate information from the county government's Real Property Tax Service Agency, as explained here.  For towns containing villages, I've compiled only the tax rates for outside the villages, marked with suffix “- o”.  For towns containing separate homestead and non-homestead (commercial) rates, I've compiled only the homestead rates, marked with suffix “- h”.  For the Towns of Beekman and Red Hook, I've augmented the official tax rate increases to more fairly indicate the effective tax rate increase, as described in detail below.

Now the bad, worse, and worst news:  The towns of Wappinger, Red Hook, Stanford, Poughkeepsie, Clinton, and Fishkill have tax rate increases of between 2 and 4 percent.  Not too bad.  The towns of Dover, Washington, East Fishkill, and Pine Plains have tax rate increases of between 5 and 10 percent.  Bad.  The towns of Amenia, LaGrange, Hyde Park, and Beekman have tax rate increases of between 12 and 15 percent.  Really bad.  The towns of Union Vale, Pleasant Valley, and Milan have tax rate increases of between 16 and 20 percent.  Worse than bad.  But the worst news of all is the Town of Pawling, which wins the bad-news contest with a whopping 28.4 percent tax rate increase.  I'll post separately about Pawling's situation.  Here are the results in chart form:


Town of Beekman's Cost Shifting 

Technically, the Town of Beekman's tax rate has decreased by 0.7 percent, as shown here.  However, this figure is misleading from a taxpayer's viewpoint, because beginning in 2010, Beekman has shifted the $319,800 cost of its ambulance service from the Town to the Beekman Fire District.  This means that the same taxpayers who paid for the ambulance service through Town taxes in 2009 now pay this cost through fire district taxes.  To determine the effective tax rate increase for Beekman's taxpayers, we need to add the $319,800 back into the Town's tax levy.  The result is an effective tax rate increase for the Town of Beekman of 14.6 percent, as shown in orange in the above chart.

If I were analyzing tax rate increases for fire districts (which I should probably do, considering the name of this blog), I'd observe that technically, the Beekman Fire District's tax rate has increased by 42.0 percent.  However, this figure is misleading from a taxpayer's viewpoint, because the same taxpayers who paid the “extra” $319,800 fire taxes in 2010 paid a similar cost in 2009 through their Town taxes.  So to be fair to the Beekman Fire District, the effective fire tax rate change is actually a small (0.7 percent) decrease.

Town of Red Hook's Cost Shifting 

Technically, the Town of Red Hook's tax rate has decreased by 10.5 percent, as shown here.  However, this figure is misleading from a taxpayer's viewpoint, because beginning in 2010, Red Hook has shifted the $145,000 cost of the Red Hook Library and the $125,00 cost of the Tivoli Library from the Town to two new library line items on the tax bill.  All property taxpayers in the Town of Red Hook pay both of these new library line items in addition to the Town line item, regardless of where in the Town they live.  You read that right.  (Just to confuse things further, these two new library line items are in addition to yet another Red Hook Library line item associated with the Rhinebeck School District. The Rhinebeck school district library line item has been paid by all Red Hook property taxpayers since 2005, along with their school taxes.)

This cost shifting means that the same taxpayers who paid for the Red Hook and Tivoli libraries through Town taxes in 2009 now pay this cost through separate line items on their tax bills.  To determine the effective tax rate increase for Town of Red Hook taxpayers, we need to add the two new library tax levies back into the Town's tax levy (after prorating to account for the villages).  The result is an effective tax rate increase for the Town of Red Hook of 2.4 percent, as shown in orange in the above chart.

Other Misleading Tax Rate Increases?

It's entirely possible that towns other than Beekman and Red Hook have their own cost shifting stories which make their nominal tax rate increases misleading.  I have not examined the situations in most towns.  Readers are encouraged to bring such situations to my attention.

Poughkeepsie Journal's Tax Rate Increase Table Is Flawed

To the Poughkeepsie Journal's credit, it published a feature story on January 11-th tabulating the tax rate increases of all Dutchess County towns.  Unfortunately, numerous mistakes in this tabulation, documented here, here, and here, make the Journal's tabulation unreliable.  This post attempts to correct the record.

Why are property taxes going up?

Thoughtful observers will probably not even be asking this question.  The 2008 economic meltdown was global and comprehensive.  It has worsened economic life in 97 different ways for taxpayers, workers, businesses, and, yes, local governments.  As I see it, local governments are just additional victims of the 2008 economic meltdown.