Tuesday, June 30, 2015

Dutchess County Gov't Tax Rate Keeps Climbing

On October 4, 2012, I predicted in this space that the 2013 Dutchess County Government property tax rate would probably be the highest it had ever been in this millennium. This prediction turned out to be correct. Furthermore, it turns out that Dutchess County's 2014 tax rate is higher that its 2013 rate, and its 2015 tax rate is even higher than that. This post examines the history of Dutchess County Government's tax rate.

Since true value tax rate is simply the tax levy divided by the taxable market value, let's start by looking at taxable market value, then tax levy, and finally the true value tax rate. Dutchess County's taxable market value and tax levy for each year from 2001 through 2015 (yellow columns in the table below) are derived from the tax rate pamphlets published by the Dutchess County Real Property Tax Service Agency (RPTSA).

Dutchess County
Year of
Tax Bill
Taxable Market Value Tax LevyTax Rate
Market ValuePercent
Tax LevyPercent
Tax Rate
per $K of
2001$15,147,440,406$50,863,720 $3.36

I've calculated the Percent Increase and Tax Rate columns from the Market Value and Tax Levy columns in the obvious way.

Taxable Market Value

It is helpful to visualize each column as a chart. Here is a chart for the second column:

Note that taxable market value is a net value, including both the value of new construction and improvements, and the current value of existing construction. Dutchess County's taxable market value surged in the first part of the last decade. In 2008 it was 2.5 times larger than in 2001. But in 2008 the economic meltdown hit. From 2008 to 2015 Dutchess County's taxable market value fell steadily a total of 24 percent. Once again, this 24 percent includes the effects of both the value of new construction and the current value of existing construction. Since there has been some new construction, the value of existing construction must have dropped more than 24 percent since 2008. This loss of value has had a profound effect on tax rates, as we will see.

The above chart is consistent with the chart on page 8 of County Executive Marc Molinaro's 2015 Tentative Budget Overview. Since Molinaro's chart does not begin with zero dollars on the Y-axis, his chart tends to visually exaggerate the effect of the meltdown.

Year to year increases in the taxable market value (third column in above table) are shown  below:

The above chart is qualitatively similar to the chart on page 9 of Molinaro's report, except that Molinaro's scale uses dollar decreases rather than percentage decreases.

It should be noted that all these market values lag tax bills by a year and a half. For example, for tax bills to be paid in February 2015, the corresponding market values are as of July 1, 2013.

Tax Levy

Dutchess County's tax levy — the amount billed to property taxpayers (fourth column in above table) — can be visualized as follows:

At first glance, the above chart seems to show the tax levy increasing every year of the millennium. But actually, there were small decreases in 2011 and 2015 (less than half a percent), as shown below (fifth column of above table):

Molinaro's report does not show any charts related to tax levy or tax rate.

Tax Rate

As I have written many times before in this space, tax rate, that is, true value tax rate expressed in dollars per thousand dollars of market value, is a useful way of comparing taxes among jurisdictions, among years, and even among different kinds of property taxes. For a given year, tax rate is simply tax levy (third chart) divided by taxable market value (first chart). The following chart (column 6 of the above table) compares Dutchess County Government property taxes for all years of this millennium. 

True value tax rate measures how steeply your personal wealth, as measured by the taxable market value of your property, is being taxed. The above chart shows that your wealth has been taxed more steeply every year since 2008 — the year of the economic meltdown. In 2013, your wealth was taxed at a steeper rate than ever before in this millennium. Since then, the tax rate has just become steeper. The following chart (column 7 of the above table) shows the tax rate changes in more detail:

Admittedly, the tax rate increase for 2015 is just under 1 percent, the smallest increase by far since the meltdown. This small increase can be attributed to the small (0.3 percent) decrease in tax levy for 2015, which almost, but not quite, compensates for the 1.2 percent decrease in taxable market value. 

If the current trend continues, it seems within the realm of possibility that Dutchess County Government tax rate could start to decrease beginning next year. That would be some long-awaited good news. High tax rates are burdensome to taxpayers.

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