When Pawling School District taxpayers examined their tax bills in September, 2014, a few of them were surprised to find that their true value tax rates had increased a whopping 18.6 percent since 2013. But most others found that their true value tax rates had only increased a more modest 4.4 percent. Both these increases were mistakes. Although the District's total tax levy of $29,799,211 is as intended by the school board, the distribution of this tax among taxpayers was incorrect for all taxpayers. All taxpayers should have seen a true value tax rate increase of 5.3 percent. This post describes in detail the effect of this mistake on taxpayers.
Municipal Segments
The first thing to understand is that, like most school districts in Dutchess County, the Pawling School District comprises portions of more than one town. In addition to most of the Town of Pawling, the Pawling School District includes small portions of the Towns of Beekman, Dover, East Fishkill, and even the Town of Patterson in Putnam County. One might think that all of the Town of Pawling is included in the Pawling School District, but even that isn't true. Fully $6.3 million of taxable market value in the Town of Pawling (as of the July 1, 2014 assessments) is in the Arlington School District — not the Pawling School District. For taxing purposes, the various portions of Towns within a school district are sometimes referred to as municipal segments.
Tax Levy Should Be Proportional to Taxable Market Value
The second thing to understand is that New York State Real Property Tax Law requires the Pawling School District to distribute or apportion its tax levy (the amount it bills property taxpayers) among its municipal segments in such a way that all taxpayers are billed at the same true value tax rate. True value tax rate is simply the tax levy divided by the taxable market value of the property (not the taxable assessed value). Another way of saying this is that all taxpayers are to be billed in proportion to the value of their property on the open market (after accounting for STAR and other similar exemptions), with the same proportion being used everywhere in the District.
Town of Pawling Versus Other Towns
The following table shows what happened in 2014 with apportionment in the Pawling School District. Most of the data for Columns 2, 3, and 5 was derived from the tax rate pamphlets provided by Dutchess County's Real Property Tax Service Agency. However, data for the Patterson municipal segment is not available from this source. Pawling School District Assistant Superintendent for Finance Neysa Sensenig graciously provided me with the Patterson assessed value and tax levy data needed for these columns.
| 2014 Pawling School District Tax Levy Apportionment | |||||||
|---|---|---|---|---|---|---|---|
| Municipal Segments | Percent Taxable Market Value | Percent Tax Levy | Tax Rate Per $K of Market Value | Percent Tax Rate Increase | Excess Tax Rate Per $K of Market Value | Excess Tax Levy | Percent Excess Tax |
| Pawling | 93.3% | 92.4% | $23.65 | 4.4% | -$0.22 | -$253,697 | -0.9% |
| all others | 6.7% | 7.6% | $26.88 | 18.6% | $3.02 | $253,697 | 12.6% |
| All | 100% | 100% | $23.86 | 5.3% | $0 | $0 | 0% |
As might be expected, most of the Pawling School District's tax base — in fact 93.3 percent — is in the Town of Pawling, with the remainder — 6.7 percent — divided among the 4 other municipal segments, as shown in Column 2 of the above table. If the Pawling School District's apportionment had been figured correctly, the percentages of tax levy billed to the Town of Pawling versus the other municipal segments (Column 3) would have been the same as in Column 2, namely 93.3 percent and 6.7 percent, respectively.
Tax Levy Mismatch With Taxable Market Value Shows Apportionment Mistake
But Column 3 is not the same as Column 2, indicating an apportionment mistake in violation of New York State Real Property Tax Law. Only 92.4 percent of the tax levy was distributed to the Pawling municipal segment, with the remaining 7.6 percent distributed to the other municipal segments. It turns out that within these other municipal segments, all taxpayers were billed at the same true value tax rate — they just weren't billed at the same tax rate as the Town of Pawling's taxpayers.
When a Dog Wags Its Tail ...
So instead of all taxpayers being billed at the aggregate $23.86 rate (last row of Column 4), the Pawling taxpayers were billed at only $23.65, while all others were billed at $26.88 (Column 4). Column 5 shows that instead of all taxpayers seeing a 5.3 percent tax rate increase, Pawling taxpayers saw only a 4.4 percent tax rate increase, while all others saw a whopping 18.6 percent increase. Why this disproportionate effect? When a dog wags its tail, the dog shakes a little bit, but the tail shakes a whole lot. The Town of Pawling is the dog; the other municipal segments are the tail.
Excess Tax Rate
Another way to look at the disproportionate effect of the apportionment mistake is to compare the true value tax rates of the municipal segments to what they should have been. Column 6 shows that Town of Pawling taxpayers got a small break of $0.22 off their tax rate, whereas all the other municipal segments saw an extra tax based on a rate of $3.02 per thousand dollars of market value. This extra tax can be compared with the 2014 $3.65 tax rate for the Dutchess County Government, which all these property taxpayers paid the previous spring. So it's as if these taxpayers had to pay the equivalent of 83 percent of a second Dutchess County Government tax in the same year.
Excess Tax Levy
Column 7 shows yet another way to measure the mistake: $253,697 — fully a quarter million dollars of tax — was mistakenly shifted from the many (Town of Pawling) to the few (other municipal segments). This shift represents only 0.9 percent of the tax in the Town of Pawling, but 12.6 percent of the tax in the other municipal segments, as shown in Column 8. Just more manifestations of the dog wagging its tail.
What would correct apportionment have looked like?
Had it not been for the apportionment mistake, that is, if Column 3 were equal to Column 2, then all the entries in Columns 4 through 8 for “Pawling” and “all others” would have been the same as in the last row (“All”) of those columns.
OK, so how did this mistake come about in the first place? That is the subject of a forthcoming post.
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