tag:blogger.com,1999:blog-83859419705779612492024-03-13T03:39:28.808-04:00Property Tax in Dutchess CountyInformation and commentary on property taxes in Dutchess County, New York, with special focus on the Fairview Fire District.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.comBlogger107125tag:blogger.com,1999:blog-8385941970577961249.post-24195825685547289562015-09-10T13:46:00.000-04:002015-09-10T13:46:44.206-04:00Pawling School District Promulgates Misleading Tax Information — AgainOn August 24, 2015, Pawling School District Assistant Superintendent for Finance Neysa Sensenig presented <a href="https://eboard.eboardsolutions.com/Meetings/Attachment.aspx?S=170005&AID=15756&MID=784">2015-2016 Tax Rates</a> to the school board, after which the Board approved a resolution to set the 2015-16 tax levy to the same amount as last year's tax levy. In other words,<i> this year's tax levy <b>increase</b> is zero.</i> This sounds like good news. However, Sensenig's presentation omitted the bad news about this year's Pawling School District tax:<br />
<ul>
<li><i>The 2015 aggregate tax rate is $26.77 per thousand dollars of market value, <b>the highest for the District in this century</b>.</i></li>
<li><i>This tax rate will most likely be <b>the second highest 2015 tax rate of any school district in Dutchess County</b></i> (after Spackenkill).</li>
<li><i>The 2015 tax rate <b>increase</b> is 12.17 percent, <b>the second highest tax rate increase for the District in the last decade</b></i><b>.</b> (The 2010 tax rate increase was 19.0 percent.) </li>
</ul>
In my view, the public is mislead by the omission of this crucial bad news. It's especially ironic that a presentation entitled <b>2015-2016 Tax Rates</b> didn't actually include the aggregate tax rate or its increase. But it's worse than that. Sensenig's presentation also commits mistakes in representing changes in tax rates for municipal segments (towns), and it presents data that makes no sense. These mistakes indicate that Sensenig does not understand how to properly manipulate property tax data in the presence of fractional value assessing — even though the issue had already been explained in one of my recent blog posts. It would not surprise me if Pawling's Board of Education also does not understand this issue.<br />
<br />
<b>Aggregate Tax Rate — Missing</b><br />
<b><br /></b>Let's start with the most basic of questions: How steeply is the Pawling School District taxing its tax base for the 2015-2016 year? That is, what is the District's aggregate tax rate — the District's tax levy divided by the District's taxable market value? (In case you don't know why this tax rate is so important, see <a href="http://taxblog.billrubin.info/2009/09/tax-rate-is-all-that-matters.html">The Tax Rate Is All That Matters</a>.)<br />
<br />
In fairness, the <b>2015-2016 Tax Rates</b> presentation actually <i>does</i> contain the District's aggregate tax rate, but it is so obscured that, for all practical purposes, it's not accessible. You won't find the aggregate tax rate in the main PowerPoint part of the presentation (the first 9 pages of the PDF), where the most important information is expected. You'll only find the aggregate tax rate immersed in a tax calculation chart comprising 6 rows and 11 columns of numbers, on page 13 of the PDF. It's shown in the last row of column 9 as 26.76701, and rounded just below it as 26.77. The chart does not clearly identify what this number represents, nor does it clearly indicate the units of measure, but it's actually $26.77 <i>dollars per thousand dollars of market value</i> (what Sensenig calls “full value assessment”). A glance at the <a href="http://taxblog.billrubin.info/2015/08/pawling-school-district-tax-history.html">Pawling School District Tax History</a> shows that this is the highest tax rate for the District in over a decade. In fact, <i>it's actually the highest tax rate for the Pawling School District in this century.</i><br />
<br />
<b>Aggregate Tax Rate Increase — Missing</b><br />
<br />
Next question: How does the Pawling School District's 2015 tax rate of $26.77 compare with that of last year? That is, <i>what is the percent increase in the tax rate?</i> The <b>2015-2016 Tax Rates</b> presentation does not answer this question.<br />
<br />
One could calculate the percent increase from the presentation if the presentation contained last year's tax rate. One might think that one could get last year's tax rate from the same tax calculation sheet (page 13 of the PDF). That's because Column 10 on that sheet — the very next column after the 2015 rates — claims to contain the 2014 rates. And indeed it does, except that <i>the given 2014 aggregate tax rate</i> (the TOTALS line of column 10) <i>is the wrong value.</i> It is given as 26.882174, and rounded just below it as 26.88. The correct value — the 2014 tax levy divided by the 2014 taxable market value — is $23.86, as can be seen from the <a href="http://taxblog.billrubin.info/2015/08/pawling-school-district-tax-history.html">Pawling School District Tax History</a>. Comparing the correct tax rates shows that the <i>Pawling School tax rate has increased a whopping 12.17 percent for the 2015-2016 year.</i> This is the second greatest tax rate increase in the history of the Pawling School District since 2000. It is also a far greater increase than that of <i>any</i> school district in Dutchess County last year. (Spackenkill had the greatest tax rate increase last year, at “only” 6.9 percent.) See <a href="http://billrubin.info/PropertyTax/SchoolDistricts2014.pdf">2014 School District Tax Rate Rankings</a>.<br />
<br />
Wait a minute, you might say. How can the Pawling School District's tax rate increase 12.17 percent, when the tax levy increased zero percent? Well, the tax rate measures how steeply taxpayers' wealth is taxed, and <i>taxpayers' wealth</i> — measured by the taxable market value of property — <i>decreased 10.85 percent in the last year. The biggest component of this market value decrease is in the Town of Pawling, where the taxable market value dropped 11.51 percent.</i><br />
<br />
But how could it be that Pawling's taxable market value dropped 11.51 percent since last year? The Pawling municipal segment's taxable assessed value is $522 million, a value that has hardly budged at all in the last 5 years. Right, but <i>the Town of Pawling's equalization rate</i> has been steadily increasing since 2009, and it <i>incurred a dramatic increase this year, from 44.86 percent to 50.69 percent.</i> Market value is assessed value divided by equalization rate.<br />
<br />
One must understand that <i>property tax in New York State</i> (and in most other states) <i>is based on market value, not on assessed value</i>, despite what many property owners — and apparently many government officials — seem to believe. Fractional value assessing, that is, assessing property at an equalization rate other than 100 percent, is a Really Bad Idea, exactly because of its confounding effect on the public, and even on public officials. For more on this, see <a href="http://taxblog.billrubin.info/2012/11/full-value-versus-fractional-value.html">Full Value versus Fractional Value Assessing — A Comparison</a>. Unfortunately, the Town of Pawling is still one of the few remaining towns in Dutchess County which practices fractional value assessing.<br />
<i><br /></i>The presentation's tax calculation chart's stated tax rate increase (last row of column 11 on page 13 of the PDF) of -0.43 percent — essentially a small <i>decrease</i> — makes no sense. When the tax levy remains constant and the taxable market value decreases, the tax rate must <i>increase</i>.<br />
<br />
Pawling School officials may have intentionally avoided reporting the aggregate tax rate and its increase, since these parameters are the ones that show how bad the situation really is for taxpayers. The officials can get away with this because the public has such a poor understanding of property taxes. For more on this, see <a href="http://taxblog.billrubin.info/2009/09/dirty-little-secret-of-property-taxes.html">The Dirty Little Secret of Property Taxes</a>.<br />
<br />
<b>Municipal Segment Tax Rate Increases Are Wrong</b><br />
<br />
Under ordinary circumstances, the Pawling School District's aggregate tax rate is also the rate at which each taxpayer will be billed, and the aggregate tax rate <i>increase</i> is also the tax rate <i>increase</i> each taxpayer will see. This is how property taxes work under ordinary circumstances for a school district like Pawling which utilizes neither the homestead tax option nor the apportionment option. (For detailed discussion of these options, see page 4 of <a href="http://billrubin.info/PropertyTax/SchoolDistricts2014.pdf">2014 School District Tax Rate Rankings.</a>)<br />
<br />
However, the circumstances in the Pawling School District were not ordinary last year, and they aren't ordinary this year either. Last year, the District committed an apportionment mistake, underbilling taxpayers in the Town of Pawling and overbilling taxpayers in the four other municipal segments. Pawling taxpayers paid at a low-ball rate, while all other taxpayers paid at a high-ball rate. Thus, Pawling taxpayers saw a low-ball tax rate <i>increase</i>, while all other taxpayers saw a high-ball tax rate <i>increase</i>. All this is explained in detail <a href="http://taxblog.billrubin.info/2015/08/pawling-school-districts-2014-tax.html">here</a>.<br />
<br />
The good news is that the <b>2015-2016 Tax Rates</b> presentation correctly compensates this year for last year's apportionment mistake. That is, the extra quarter million dollars mistakenly billed to municipal segments other than the Town of Pawling last year have been correctly apportioned back to Town of Pawling taxpayers this year, thus overbilling Town of Pawling taxpayers this year by the same amount they were underbilled last year. Because of last year's mistake and this year's compensation for last year's mistake, the aggregate tax rate and aggregate tax rate increase once again will not describe what any taxpayers will experience.<br />
<br />
<i>The bad news is that the <b>2015-2016 Tax Rates</b> presentation for municipal segments' tax rates </i>(table on page 6)<i> is misleading, and its tax rate increases are just plain wrong. </i>(Same with the table on page 5.) The problem is that the tax rates in columns 2 and 3 of the presentation are the rates per thousand dollars of <i>assessed</i> value, which makes no sense in this context. Tax rates per thousand dollars of assessed value cannot be compared when they have different equalization rates, for the same reason that assessed values cannot be added when they have different equalization rates. Comparison can only be made when tax rates are equalized — converted to a market value basis — as in the following table:<br />
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<br />
<table class="increase"><tbody>
<tr><th colspan="5">Pawling School District Tax Rate Increases</th></tr>
<tr><th rowspan="2">Municipal<br />
Segment</th><th colspan="2">Tax Rate per $K<br />
of Market Value</th><th colspan="2">Percent Tax<br />
Rate Increase</th></tr>
<tr><th>2014</th><th>2015</th><th>Correct<br />
Value</th><th>Presentation</th></tr>
<tr><td>Beekman</td><td>$26.88</td><td>$23.68</td><td>-11.93%</td><td class="right">-11.93%</td></tr>
<tr><td>Dover</td><td>$26.88</td><td>$23.75</td><td>-11.66%</td><td class="wrong">-11.27%</td></tr>
<tr><td>East Fishkill</td><td>$26.88</td><td>$23.66</td><td>-11.97%</td><td class="right">-11.97%</td></tr>
<tr><td>Pawling</td><td>$23.65</td><td>$27.01</td><td>14.24%</td><td class="wrong">1.10%</td></tr>
<tr><td>Patterson</td><td>$26.88</td><td>$23.67</td><td>-11.93%</td><td class="wrong">-11.07%</td></tr>
<tr><th>Aggregate</th><th>$23.86</th><th>$26.77</th><th>12.17%</th><th class="wrong">-0.43%</th></tr>
</tbody></table>
<br />
Notice that Sensenig's calculation of percent tax rate increase (last column) gives the correct value (green background) for Beekman and East Fishkill. That's because Beekman and East Fishkill have the same equalization rate (100%) for 2014 and 2015. Dover and Pawling's equalization rates changed from 2014 to 2015, which is why the presentation's results are incorrect (red background). The more the equalization rate changes, the more difference it makes. Pawling's equalization rate changed dramatically, as already noted, so the presentation's result is way off. Taxpayers in the Pawling municipal segment will see a 14.24 percent tax rate increase this year, not the 1.10 percent increase shown in the presentation. (Regarding Patterson, which has been at 100% equalization rate for many years, it's not clear why the presentation shows its 2014 tax rate as $26.62 rather than $26.88, thereby getting an incorrect tax rate increase.)<br />
<br />
<b>Overconfident Officials Unintentionally Mislead a Gullible Public</b><br />
<br />
On August 21, 2015, I emailed Pawling School District Assistant Superintendent for Finance Neysa Sensenig, copying the Pawling School Board, saying that she, and possible the Board, misunderstands some property tax concepts. I included a link to my recent <a href="http://taxblog.billrubin.info/2015/08/pawling-school-districts-2014-tax_21.html">blog post</a>, which provides evidence of this misunderstanding. Part of this evidence is that she added assessed values with different equalization rates, producing a garbage result. My email seems to have had no effect, since Ms. Sensenig repeated the same mistake on page 13 of the presentation PDF (bottom of first column). The mistake was compounded with the presentation's incorrect municipal segment tax rate increases. <i>The public interest is not well served by the Pawling School District's <a href="https://eboard.eboardsolutions.com/Meetings/Attachment.aspx?S=170005&AID=15756&MID=784">2015-2016 Tax Rates</a> presentation, which omits the aggregate tax rate and its increase, which promulgates incorrect municipal segment tax rate increases, and which repeats easily-omitted calculations that produce garbage results.</i><br />
<br />
I wish I could report that the Pawling School District is the only local taxing jurisdiction in Dutchess County to misunderstand <a href="http://taxblog.billrubin.info/2012/11/full-value-versus-fractional-value.html">fractional value assessing</a>, resulting in the promulgation of misleading tax information. Unfortunately, the <a href="http://taxblog.billrubin.info/2012/10/hyde-park-school-district-promulgates.html">Hyde Park School District</a>, the <a href="http://taxblog.billrubin.info/2010/11/town-of-hyde-park-misunderstands.html">Town of Hyde Park</a>, the <a href="http://taxblog.billrubin.info/2010/11/town-of-pleasant-valleys-tax-rate.html">Town of Pleasant Valley</a>, the <a href="http://taxblog.billrubin.info/2011/09/fairview-fire-district-treasurer.html">Fairview Fire District</a>, and even the <a href="http://taxblog.billrubin.info/2010/11/poughkeepsie-journal-still-reports.html">Poughkeepsie Journal</a> have made similar mistakes. The officials responsible for these mistakes include at least three CPAs, none of whom seemed able to grasp that they had made a mistake even when confronted with the evidence. The officials responsible for these past mistakes have generally been so confident of their basic <a href="https://en.wikipedia.org/wiki/Numeracy">numeracy</a> skills that they saw no need to check their work — or my critique of their work — with an authoritative third party, such as the good folks at the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm">Dutchess County Real Property Tax Service Agency</a> or the <a href="http://www.tax.ny.gov/">New York State Department of Taxation and Finance</a>. Now overconfident officials at the Pawling School District have joined this list of errant number crunchers.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-89809515671703256962015-08-21T16:33:00.000-04:002015-08-21T16:33:36.052-04:00Pawling School District's 2014 Tax Apportionment Mistake — School District Viewpoint<i>This third of three posts on the <a href="http://www.pawlingschools.org/" target="_blank">Pawling School District</a> describes the immediate cause of the 2014 tax apportionment mistake by the Pawling School District</i><i>. But looking deeper, the Pawling School Board's <a href="http://billrubin.info/PropertyTax/PawlingSchool/TaxResolution2014-15.pdf" target="_blank">8/29/2014 Resolution to confirm tax rolls and authorize tax levy</a> provides evidence that the District's Assistant Superintendent for Finance and possibly also the School Board </i><i>misunderstands some property tax concepts. Suggestions to improve the Resolution for this year are provided at the end of this post. The</i><i> <a href="http://taxblog.billrubin.info/2015/08/pawling-school-district-tax-history.html" target="_blank">first post</a> </i><i>presents the recent history of the Pawling School District's property taxes. The <a href="http://taxblog.billrubin.info/2015/08/pawling-school-districts-2014-tax.html" target="_blank">second post</a> describes in detail how the District's</i><i> mistake affected taxpayers.</i><br />
<i><br /></i>
The previous post showed how property taxpayers in the Beekman, Dover, East Fishkill, and Patterson municipal segments of the Pawling School District saw a whopping 18.6 percent increase in their school taxes in 2014 (compared with 2013), when they should have seen a 5.3 percent increase. Meanwhile, taxpayers in the Pawling municipal segment saw only a 4.4 percent increase, when they should have seen a 5.3 percent increase. This unequal distribution of the tax levy by the Pawling School District violates New York State Real Property Tax Law.<br />
<br />
OK, so how did this mistake come about in the first place? The explanation is very simple. It involves something I'm loathe to mention: the dreaded <i>equalization rate</i>. Not because equalization rate is difficult to understand, but because so few people seem comfortable with the concept. Readers not comfortable with the idea of equalization rate are encouraged to review it, for example by reading my “assessing” blog post <a href="http://taxblog.billrubin.info/2012/11/full-value-versus-fractional-value.html" target="_blank">Full Value versus Fractional Value Assessing — A Comparison</a>, to which I will refer frequently in what follows.<br />
<br />
<b>Equalization Rate Versus Level of Assessment</b><br />
<br />
One detail not fully explored in my assessing post is the relationship between equalization rate and level of assessment. Both terms refer to the ratio of assessed value to market value (also known as full value, true value, etc.). The only difference is who determines this ratio and when. In an assessing unit that practices fractional value assessing, the local assessor sets the level of assessment according to her analysis of market conditions before finalizing and certifying the yearly assessment (generally on July 1 of each year). A few weeks thereafter, the New York State Office of Real Property Services (ORPS) sets the equalization rate for the assessing unit. The State's determination of the equalization rate essentially overrides the local assessor's determination of the level of assessment, if they are different. This fact encourages local assessors to coordinate with the State before setting their level of assessment, so that it will not be changed by the State. That way, property owners won't be jerked around by the government, being told by their local assessor on July 1 that the market value of their property is a certain amount, and then effectively being told a few weeks later by the State that, no, the market value of their property is really a different amount. More to the point, this principle applies not just to individual property owners, but to entire towns and municipal segments. Most often, such coordination is successful, and the State essentially just endorses the level of assessment set by the local assessor.<br />
<br />
<b>Pawling's History of Level of Assessment and Equalization Rate</b><br />
<br />
The Town of Pawling is one of the few assessing units in Dutchess County that still practices fractional value assessing. The State has accepted the Pawling Assessor's level of assessment every year since 2004 — <i>except for 2013 and 2014,</i> which are shown in the following table:<br />
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<tr><th colspan="4">Town of Pawling</th></tr>
<tr><th>Year</th><th>Level of Assessment</th><th>Equalization Rate</th><th>Date Established</th></tr>
<tr><th>2013</th><td>48.92%</td><td>43.31%</td><td>7/23/2013</td></tr>
<tr><th>2014</th><td>51.00%</td><td>44.86%</td><td>7/28/2014</td></tr>
</tbody>
</table>
<br />
(Pawling's equalization rate history can be found in the <a href="http://orpts.tax.ny.gov/cfapps/MuniPro/index.cfm" target="_blank">ORPS database</a> by selecting <i>Dutchess</i>, then <i>Town of Pawling</i>, then <i>Current equalization information</i>.) The fact that the State adjusted the Pawling assessor's estimate downward in 2013 and 2014 simply means that the State determined that the market value of the Town of Pawling is greater than what the Pawling Assessor said it was in those years. This in itself is not a problem.<br />
<br />
<b>Pawling School District Apportionment Calculation</b><br />
<br />
Each year, when the Pawling School District's Assistant Superintendent for Finance performs the tax apportionment calculation, she simply uses the State's equalization rate for Pawling (as with all other municipal segments) to compute the market value of each municipal segment. <a href="http://taxblog.billrubin.info/2015/08/pawling-school-district-tax-history.html" target="_blank">My analysis</a> shows that <i>the Pawling School District has had a flawless record in this regard for every year between 2004 and 2013</i>, apportioning the tax levy to each municipal segment correctly down to the dollar. Yes, even in 2013, when the State adjusted Pawling's assessments, the correct calculation was done.<br />
<br />
<b>Equalization Rate Not Used in 2014</b><br />
<br />
My analysis also shows that in 2014, the state equalization rate of 44.86 percent for Pawling was <i>not</i> used, but Pawling's level of assessment of 51.00 percent was mistakenly used instead. Pawling School District Assistant Superintendent for Finance Neysa Sensenig, who prepared the Pawling School District Board of Education's <a href="http://billrubin.info/PropertyTax/PawlingSchool/TaxResolution2014-15.pdf" target="_blank">8/28/2014 Resolution to confirm tax rolls and authorize tax levy</a>, told me she has accepted responsibility for making this mistake, and that the facts of the matter are well known to all interested parties. She is adamant that she will not be making this mistake again. In addition, a plan is in place — coordinated with the State Office of Real Property Services — to adjust the 2015 Pawling School District's tax apportionment to compensate for the 2014 mistake. Presumably this will be done by adding an excess tax levy of $253,697 to the Pawling municipal segment, and subtracting the same amount from the tax levy of the other municipal segments, essentially just the reverse of what happened in 2014, as described in <a href="http://taxblog.billrubin.info/2015/08/pawling-school-districts-2014-tax.html">my previous post</a>.<br />
<br />
<b>8/29/2014 Resolution is Flawed</b><br />
<br />
These remedies are good news — as far as they go. However, the <a href="http://billrubin.info/PropertyTax/PawlingSchool/TaxResolution2014-15.pdf">Pawling School Board's 8/29/2014 Resolution</a> provides evidence that Ms. Sensenig and possibly also the School Board misunderstand some property tax concepts. The remainder of this post describes this evidence, and suggests how improvements can be made.<br />
<br />
<b>Resolution Table Heading Phrase “By Towns” is Gratuitous</b><br />
<br />
Let's start off easy: The headings of the last three columns of the Resolution's table end in the phrase “... by Towns”. This phrase seems gratuitous in the present context, and seems especially inapplicable to the last row called “Total”. More on that last row below. In what follows, I'll assume “by Towns” has been removed.<br />
<br />
<b>Total Assessed Valuations — NOT</b><br />
<br />
The heading for Column 3 is labeled “Total Assessed Valuations”, but that's not what the values are. The values are <i>Taxable</i> Assessed Valuations. Total assessed valuations would be larger values, because they would include tax exempt property such as schools, churches, government buildings, etc., which play no role in property tax apportionment. In what follows, I'll assume this heading is changed to “Taxable Assessed Valuations”.<br />
<br />
<b>Equalized Tax Rate — NOT</b><br />
<br />
The heading for Column 4 is labeled “Equalized Tax Rate”, but that's not what the values are. <i>Equalized tax rate</i> is just another way of saying <i>true value tax rate</i>, <i>full value tax rate</i>, etc. If the values had been equalized tax rates, they would all be equal to $26.88217 per thousand dollars of <i>market</i> value. The values in Column 4 are actually <i>un-equalized</i>, or conventional tax rate, measured in dollars per thousand dollars of <i>assessed</i> value. <i>The difference between market value and assessed value is exactly the difference between equalized tax rate and un-equalized tax rate.</i> For further clarification, see my <a href="http://taxblog.billrubin.info/2012/11/full-value-versus-fractional-value.html">assessing post</a>.<br />
<br />
<b>Total for “Taxable Assessed Valuations” is Garbage</b><br />
<br />
There just isn't a polite way to say this: <i>The value 594,770,851 in the last row of column 3 is garbage</i>, or to borrow a phrase, it's <a href="https://en.wikipedia.org/wiki/Not_even_wrong">not even wrong</a>. Yes, the numbers are added correctly. The problem is that <i>adding these numbers doesn't make any sense.</i> Referring again to my <a href="http://taxblog.billrubin.info/2012/11/full-value-versus-fractional-value.html">assessing post</a>, the “total” of column 3 is like saying you paid 28,000 Indian rupees for an iPad, and you paid 40,000 Japanese yen for another iPad, so you bought two iPads for 68,000 — what?<br />
<br />
You might think, well, all the numbers in Column 3 are dollars, right? Wrong! That's just what's so convoluted about the whole concept of fractional value assessing. Assessed values are conventionally labeled as “dollars”, but they aren't really dollars. They're actually <i>discounted dollars</i> in which the discounts are the equalization rates. Assessed values with different equalization rates (as in Column 3) cannot be added together, any more than prices in Indian rupees and Japanese yen can be added together. It only makes sense to add prices after they have been converted to a common currency. Similarly, it only makes sense to add property values after they have been converted to a “common currency”. The obvious “common currency” for property values is <i>market value</i>, which is assessed value divided by equalization rate.<br />
<br />
<b>Summary of Suggested Changes</b><br />
<br />
The above suggested improvements in the table of the <a href="http://billrubin.info/PropertyTax/PawlingSchool/TaxResolution2014-15.pdf">Pawling School Board's 8/29/2014 Resolution</a> can be summarized as follows:<br />
<ol>
<li>Change the heading for Column 3 to <i>Taxable Assessed Valuations</i>.</li>
<li>Change the heading for Column 4 to <i>Tax Rate</i>, or even better, <i>Tax Rate Per Thousand Dollars of Assessed Value</i>. While you're at it, you might as well get rid of the word “equalized” in the line beginning “Therefore be it resolved ...”.</li>
<li>Simplify the heading for Column 4 as simply <i>Tax Levy</i>.</li>
<li>Get rid of the total value in the last row of Column 3. Just get rid of it. </li>
</ol>
Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-1079506969470608822015-08-20T16:15:00.000-04:002015-08-20T16:15:13.896-04:00Pawling School District's 2014 Tax Apportionment Mistake — Taxpayer Viewpoint<i>This second of three posts on the <a href="http://www.pawlingschools.org/" target="_blank">Pawling School District</a> (I'd originally hoped to complete this topic in two posts) describes how the 2014 tax apportionment mistake by the Pawling School District affects taxpayers</i><i>. Briefly, this mistake caused property tax bills to overstate or understate the amount of tax due, depending upon the town in which the property lies. The</i><i> <a href="http://taxblog.billrubin.info/2015/08/pawling-school-district-tax-history.html" target="_blank">first post</a> </i><i>presented the recent history of the Pawling School District's property taxes. A forthcoming post will discuss the apportionment mistake from the school district's viewpoint.</i><br />
<i><br /></i>
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 <i>total</i> tax levy of $29,799,211 is as intended by the school board, the <i>distribution</i> 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.<br />
<br />
<b>Municipal Segments</b><br />
<br />
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 <i>municipal segments</i>.<br />
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<b>Tax Levy Should Be Proportional to Taxable Market Value</b><br />
<br />
The second thing to understand is that New York State Real Property Tax Law requires the Pawling School District to distribute or <i>apportion</i> 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 <i>taxable market value</i> of the property (not the taxable <i>assessed</i> value). Another way of saying this is that <i>all taxpayers are to be billed in proportion to the value of their property on the open market</i> (after accounting for <a href="http://www.tax.ny.gov/pit/property/star/index.htm" target="_blank">STAR</a> and other similar exemptions), <i>with the same proportion being used everywhere in the District.
</i><br />
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<b>Town of Pawling Versus Other Towns</b><br />
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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 <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/12485.htm" target="_blank">tax rate pamphlets</a> provided by Dutchess County's <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm" target="_blank">Real Property Tax Service Agency</a>. 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.<br />
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<table>
<tbody>
<tr><th colspan="8">2014 Pawling School District Tax Levy Apportionment</th></tr>
<tr><th>Municipal Segments</th><th>Percent Taxable Market Value</th><th>Percent Tax Levy</th>
<th>Tax Rate Per $K of Market Value</th><th>Percent Tax Rate Increase</th>
<th>Excess Tax Rate Per $K of Market Value</th><th>Excess Tax Levy</th><th>Percent Excess Tax</th></tr>
<tr><td>Pawling</td><td>93.3%</td><td>92.4%</td><td>$23.65</td><td>4.4%</td>
<td class="neg">-$0.22</td><td class="neg">-$253,697</td><td class="neg">-0.9%</td></tr>
<tr><td>all others</td><td>6.7%</td><td>7.6%</td><td>$26.88</td><td>18.6%</td>
<td>$3.02</td><td>$253,697</td><td>12.6%</td></tr>
<tr><th>All</th><th>100%</th><th>100%</th><th>$23.86</th><th>5.3%</th>
<th>$0</th><th>$0</th><th>0%</th></tr>
</tbody>
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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.<br />
<br />
<b>Tax Levy Mismatch With Taxable Market Value Shows Apportionment Mistake</b><br />
<br />
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.<br />
<br />
<b>When a Dog Wags Its Tail ...</b><br />
<br />
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.<br />
<br />
<b>Excess Tax Rate</b><br />
<br />
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 <i>second</i> Dutchess County Government tax in the same year.<br />
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<b>Excess Tax Levy</b><br />
<br />
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.<br />
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<b>What would correct apportionment have looked like?</b><br />
<br />
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.<br />
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<i>OK, so how did this mistake come about in the first place? That is the subject of a forthcoming post.</i>Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-27908847478646103252015-08-16T17:11:00.000-04:002015-08-16T17:11:10.958-04:00Pawling School District Tax History<i>This first of two posts on the Pawling School District presents the recent history of the District's property taxes. A subsequent post will describe the 2014 tax apportionment mistake committed by the Pawling School District, in violation of New York State Real Property Tax Law, which caused property tax bills to overstate or understate the amount of tax due, depending upon the town in which the property lies.</i><br />
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The following table summarizes the Pawling School District's recent tax history. Most of the data for this table was derived from the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/12485.htm" target="_blank">tax rate pamphlets</a> provided by Dutchess County's <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm" target="_blank">Real Property Tax Service Agency</a>. However, data for the portion of the Pawling School District in the Town of Patterson (Putnam County) 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 to complete this table.<br />
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<table class="TaxRateTable">
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<tr><th colspan="7">Pawling School District</th></tr>
<tr><th class="year" rowspan="2">Year of<br />
Tax Bill</th><th class="marketValue" colspan="2">Taxable Market Value</th>
<th class="levy" colspan="2">Tax Levy</th><th class="taxRate" colspan="2">Tax Rate</th></tr>
<tr><th class="input">Market Value</th><th class="marketValue">Percent<br />
Increase</th>
<th class="input">Tax Levy</th><th class="levy">Percent<br />
Increase</th>
<th class="taxRate">Tax Rate<br />
per $K of<br />
Market<br />
Value</th><th class="taxRate">Percent<br />
Increase</th></tr>
<tr><td>2004</td><td>$1,217,637,391</td><td class="nullValue"></td><td>$19,689,971</td>
<td class="nullValue"></td><td>$16.17</td><td class="nullValue"></td></tr>
<tr><td>2005</td><td>$1,404,750,438</td><td>15.4%</td><td>$21,805,618</td><td>10.7%</td><td>$15.52</td><td>-4.0%</td></tr>
<tr><td>2006</td><td>$1,556,342,677</td><td>10.8%</td><td>$23,219,196</td><td>6.5%</td><td>$14.92</td><td>-3.9%</td></tr>
<tr><td>2007</td><td>$1,717,266,533</td><td>10.3%</td><td>$24,787,813</td><td>6.8%</td><td>$14.43</td><td>-3.2%</td></tr>
<tr><td>2008</td><td>$1,794,131,769</td><td>4.5%</td><td>$26,262,727</td><td>6.0%</td><td>$14.64</td><td>1.4%</td></tr>
<tr><td>2009</td><td>$1,708,746,526</td><td>-4.8%</td><td>$27,545,191</td><td>4.9%</td><td>$16.12</td><td>10.1%</td></tr>
<tr><td>2010</td><td>$1,457,903,591</td><td>-14.7%</td><td>$27,975,658</td><td>1.6%</td><td>$19.19</td><td>19.0%</td></tr>
<tr><td>2011</td><td>$1,399,836,368</td><td>-4.0%</td><td>$29,338,567</td><td>4.9%</td><td>$20.96</td><td>9.2%</td></tr>
<tr><td>2012</td><td>$1,381,982,151</td><td>-1.3%</td><td>$29,629,238</td><td>1.0%</td><td>$21.44</td><td>2.3%</td></tr>
<tr><td>2013</td><td>$1,289,459,789</td><td>-6.7%</td><td>$29,219,136</td><td>-1.4%</td><td>$22.66</td><td>5.7%</td></tr>
<tr><td>2014</td><td>$1,248,731,004</td><td>-3.2%</td><td>$29,799,211</td><td>2.0%</td><td>$23.86</td><td>5.3%</td></tr>
</tbody></table>
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<b>Taxable Market Value</b><br />
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It is helpful to visualize the Pawling School District's taxable market value (column 2 of the above table) as a chart. The chart below shows clearly the increase in property values through 2008, followed by the economic meltdown which has decreased property values every year since then. The Pawling School District's experience follows that of Dutchess County as a whole (see first chart in my recent post <a href="http://taxblog.billrubin.info/2015/06/dutchess-county-govt-tax-rate-keeps.html" target="_blank">Dutchess County Gov't Tax Rate Keeps Climbing</a>), and indeed that of most of New York State, and even most of the country. Note that the Pawling School District's taxable market value for the 2014 tax is only slightly (2.6%) greater than that for 2004.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhH2f4JV1KP4QavMWPc5ST3p4muAi2KylPqrh8ooa48EuWOsvPeAvG7Q0mfo7iRraRus-oObMlaNYx51-RN4-wulJ5v9rdqpcz6v5AtEXiy91idVKhfX5_45FJ8CSXE_32QeSaf8gynX8C/s1600/MarketValue.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="427" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjhH2f4JV1KP4QavMWPc5ST3p4muAi2KylPqrh8ooa48EuWOsvPeAvG7Q0mfo7iRraRus-oObMlaNYx51-RN4-wulJ5v9rdqpcz6v5AtEXiy91idVKhfX5_45FJ8CSXE_32QeSaf8gynX8C/s640/MarketValue.png" width="640" /></a></div>
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This same data can be visualized in terms of the yearly increase in taxable market value (column 3 of the above table):<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggoo4LDRgqadyKzY08mJeKGGxdjLY6KFMiFojLZ1EyZsGYiG6pt4KdsBgywekl77vcDECVC7crOw4fRjFvlalHRyhEnTW_m6kdMmPfou_feFX5z0wG8hAVXTsF_FRwxmOHfdczEu2DbdCu/s1600/MarketValueIncrease.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="425" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEggoo4LDRgqadyKzY08mJeKGGxdjLY6KFMiFojLZ1EyZsGYiG6pt4KdsBgywekl77vcDECVC7crOw4fRjFvlalHRyhEnTW_m6kdMmPfou_feFX5z0wG8hAVXTsF_FRwxmOHfdczEu2DbdCu/s640/MarketValueIncrease.png" width="640" /></a></div>
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It should be noted that all these market values lag tax bills by a year and three months. For example, for tax bills to be paid on October 2, 2014, the corresponding market values are as of July 1, 2013.</div>
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<b>Tax Levy</b></div>
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The Pawling School District's tax levy — the total amount billed to property taxpayers (column 4 in the above table) — can be visualized as follows:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivSjNCByL0Vy7rDw-WX-1v9sbW_vE4YZKOn4EMl8Lczu1Kp_A__RJpLvwukfpGf_SfecUpHJWrDZ7G8_57ATVIQtzbP2NA3KZjV6LwZ8_lKIXxLTEICSTR5O6JGE_Zj0hwPPMaN5DzamY4/s1600/TaxLevy.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="425" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivSjNCByL0Vy7rDw-WX-1v9sbW_vE4YZKOn4EMl8Lczu1Kp_A__RJpLvwukfpGf_SfecUpHJWrDZ7G8_57ATVIQtzbP2NA3KZjV6LwZ8_lKIXxLTEICSTR5O6JGE_Zj0hwPPMaN5DzamY4/s640/TaxLevy.png" width="640" /></a></div>
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Although the Pawling School District's tax base (taxable market value) increased only 2.6 percent in the last decade, the above chart shows the tax levy increasing 51.3 percent in the same time period. The tax levy has increased every year, except for a 1.4 percent decrease from 2012 to 2013, as shown in the following chart (column 5 of the above table):</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhd1Be9t-ONNwxwjk9eJnbPhAXMnvhe3tXDWAlM4cVyHoyaQJdVABRt_6OHco52j8U0bvnRrEthYA1bifBqJu_qTXE6j8LUdb5xPTMehpU0lVvaIR_i7bxk-bC3sbOSLdHrDc5zCP3uZCNc/s1600/TaxLevyIncrease.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="425" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhd1Be9t-ONNwxwjk9eJnbPhAXMnvhe3tXDWAlM4cVyHoyaQJdVABRt_6OHco52j8U0bvnRrEthYA1bifBqJu_qTXE6j8LUdb5xPTMehpU0lVvaIR_i7bxk-bC3sbOSLdHrDc5zCP3uZCNc/s640/TaxLevyIncrease.png" width="640" /></a></div>
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<b>Tax Rate</b></div>
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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 (column 6 of the above table) is simply tax levy divided by taxable market value. The following chart depicts Pawling School District tax rate for each of the last 11 years: </div>
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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 2007 — just before the economic meltdown. Tax rates for the years 2000 through 2003 (not displayed in this post) are mostly higher than for 2004, but never higher than $17.41. This means that <i>in 2010, your wealth was taxed at a steeper rate than ever before in this millennium. Since then, the tax rate has increased every year.</i> The following chart (column 7 of the above table) shows the tax rate changes in more detail:</div>
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All tax rates in this post describe <i>both</i> how steeply the Pawling School District taxes its tax base <i>and</i> how steeply property owners are taxed (after accounting for <a href="http://www.tax.ny.gov/pit/property/star/index.htm" target="_blank">STAR</a> and other similar exemptions). That's because the Pawling School District utilizes neither the homestead tax option nor the apportionment option (for explanation of these options, see my <a href="http://billrubin.info/PropertyTax/SchoolDistricts2014.pdf" target="_blank">2014 School District Tax Rate Rankings</a>).</div>
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Well, actually, this isn't quite true for 2014. The 2014 tax rate only describes how steeply the Pawling School District taxes its tax base. It does not describe how steeply property owners were taxed in 2014. That's because in 2014, the Pawling School District made a mistake in apportioning the tax levy, which caused property tax bills to overstate or understate the amount of tax due, depending upon the town in which the property lies. This mistake, which violates New York State Real Property Tax Law, will be described in detail in a forthcoming post.</div>
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Careful readers will notice a slight discrepancy between the Pawling School District's aggregate tax rate of $23.86 reported here and the $23.82 rate reported last month in my <a href="http://billrubin.info/PropertyTax/SchoolDistricts2014.pdf" target="_blank">2014 School District Tax Rate Rankings</a>). That's because last month's tax rates did not take into account the Town of Patterson segment of the Pawling School District. Ordinarily, the Town of Patterson's taxes should make no difference in the tax rate. It's only because of Pawling's 2014 apportionment error that the difference appears. This post's aggregate tax rate of $23.86 is correct. Similarly, this post's 2014 tax rate increase of 5.3 percent is correct, not the 5.1 percent reported last month. These small corrections do not affect last month's school district rankings.</div>
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<i>The author is grateful to Pawling School District Assistant Superintendent for Finance Neysa Sensenig for her kindnesses in accommodating my requests for data and other information.</i></div>
Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-74892711480684679142015-07-31T17:36:00.000-04:002015-07-31T17:36:13.386-04:00School District Tax Rate RankingsIn April of 2011, I posted a series of articles comparing the tax rates of all school districts in Dutchess County. On April 28, 2011, I consolidated these articles into an 18-page report called <a href="http://billrubin.info/PropertyTax/SchoolDistricts2010.pdf" target="_blank">School District Tax Rate Comparisons</a>.<br />
<br />
In 2012, the New York State property tax cap went into effect. The tax cap, which was intended to limit the increases in property taxes by local governments, was supported by taxpayers, but opposed by local governments, especially by school districts.<br />
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My new 19-page report, <a href="http://billrubin.info/PropertyTax/SchoolDistricts2014.pdf" target="_blank">2014 School District Tax Rate Rankings</a>, updates the tax rate comparisons of four years ago with the most recent school tax information. Main results:<br />
<ul>
<li>School tax rates have dramatically increased since four years ago, due to both tax levy increases and property value decreases.</li>
<li>Relative rankings of school tax rates have hardly changed since four years ago.</li>
<li>Year-to-year school tax rate increases are dramatically lower than four years ago. This slowed growth may be due to the property tax cap.</li>
</ul>
Like the earlier report, the 2014 report provides detailed tax rate information for every school district in Dutchess County in both tabular and chart form, in a format allowing easy comparisons to be made. The report explains how the homestead tax option, the apportionment option, and STAR exemptions complicate school district tax rate comparisons. Separate comparisons are provided from the viewpoint of school districts and taxpayers — both homes and businesses.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-6950489259608116442015-06-30T17:09:00.000-04:002015-06-30T17:09:11.133-04:00Dutchess County Gov't Tax Rate Keeps ClimbingOn October 4, 2012, <a href="http://taxblog.billrubin.info/2012/10/dutchess-county-govt-2013-tax-rate.html" target="_blank">I predicted</a> 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.<br />
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Since <a href="http://taxblog.billrubin.info/2011/04/school-tax-rate-comparisons-two.html" target="_blank">true value tax rate</a> 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 <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/12485.htm" target="_blank">tax rate pamphlets</a> published by the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm" target="_blank">Dutchess County Real Property Tax Service Agency</a> (RPTSA).<br />
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<table class="TaxRateTable">
<tbody>
<tr><th colspan="7">Dutchess County</th></tr>
<tr><th class="year" rowspan="2">Year of<br />
Tax Bill</th><th class="marketValue" colspan="2">Taxable Market Value</th>
<th class="levy" colspan="2">Tax Levy</th><th class="taxRate" colspan="2">Tax Rate</th></tr>
<tr><th class="input">Market Value</th><th class="marketValue">Percent<br />
Increase</th>
<th class="input">Tax Levy</th><th class="levy">Percent<br />
Increase</th>
<th class="taxRate">Tax Rate<br />
per $K of<br />
Market<br />
Value</th><th class="taxRate">Percent<br />
Increase</th></tr>
<tr><td>2001</td><td>$15,147,440,406</td><td class="nullValue"></td><td>$50,863,720</td>
<td class="nullValue"></td><td>$3.36</td><td class="nullValue"></td></tr>
<tr><td>2002</td><td>$16,854,441,164</td><td>11.3%</td><td>$50,880,267</td><td>0.0%</td><td>$3.02</td><td>-10.1%</td></tr>
<tr><td>2003</td><td>$20,230,555,948</td><td>20.0%</td><td>$53,280,192</td><td>4.7%</td><td>$2.63</td><td>-12.8%</td></tr>
<tr><td>2004</td><td>$22,867,185,642</td><td>13.0%</td><td>$59,627,595</td><td>11.9%</td><td>$2.61</td><td>-1.0%</td></tr>
<tr><td>2005</td><td>$24,880,843,137</td><td>8.8%</td><td>$70,935,416</td><td>19.0%</td><td>$2.85</td><td>9.3%</td></tr>
<tr><td>2006</td><td>$29,588,132,874</td><td>18.9%</td><td>$75,959,089</td><td>7.1%</td><td>$2.57</td><td>-10.0%</td></tr>
<tr><td>2007</td><td>$33,964,774,405</td><td>14.8%</td><td>$87,276,185</td><td>14.9%</td><td>$2.57</td><td>0.1%</td></tr>
<tr><td>2008</td><td>$38,431,929,924</td><td>13.2%</td><td>$88,057,802</td><td>0.9%</td><td>$2.29</td><td>-10.8%</td></tr>
<tr><td>2009</td><td>$37,215,425,247</td><td>-3.2%</td><td>$94,565,391</td><td>7.4%</td><td>$2.54</td><td>10.9%</td></tr>
<tr><td>2010</td><td>$35,565,853,486</td><td>-4.4%</td><td>$100,781,716</td><td>6.6%</td><td>$2.83</td><td>11.5%</td></tr>
<tr><td>2011</td><td>$32,811,057,769</td><td>-7.7%</td><td>$100,535,544</td><td>-0.2%</td><td>$3.06</td><td>8.1%</td></tr>
<tr><td>2012</td><td>$31,895,759,238</td><td>-2.8%</td><td>$103,754,080</td><td>3.2%</td><td>$3.25</td><td>6.2%</td></tr>
<tr><td>2013</td><td>$30,653,742,121</td><td>-3.9%</td><td>$105,853,037</td><td>2.0%</td><td>$3.45</td><td>6.2%</td></tr>
<tr><td>2014</td><td>$29,575,302,089</td><td>-3.5%</td><td>$107,939,386</td><td>2.0%</td><td>$3.65</td><td>5.7%</td></tr>
<tr><td>2015</td><td>$29,224,529,259</td><td>-1.2%</td><td>$107,577,696</td><td>-0.3%</td><td>$3.68</td><td>0.9%</td></tr>
</tbody></table>
<b><br /></b>I've calculated the Percent Increase and Tax Rate columns from the Market Value and Tax Levy columns in the obvious way.<br />
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<b>Taxable Market Value</b><br />
<b><br /></b>It is helpful to visualize each column as a chart. Here is a chart for the second column:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl1Ut6fkkG3Asy3X82NNYIQ7XFF4tE8hyphenhyphenMRA_6v2uQDG0nKPQgIRv3c8IfgmK2NdB7HPJt-5dRTHM4chiYi968nEUFIxgEJFEdJZKvhW_ZBAacinXZDb_8R-SkDWjm_MTzmCCRkbSNgVTV/s1600/MarketValue.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhl1Ut6fkkG3Asy3X82NNYIQ7XFF4tE8hyphenhyphenMRA_6v2uQDG0nKPQgIRv3c8IfgmK2NdB7HPJt-5dRTHM4chiYi968nEUFIxgEJFEdJZKvhW_ZBAacinXZDb_8R-SkDWjm_MTzmCCRkbSNgVTV/s640/MarketValue.png" width="640" /></a></div>
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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.<br />
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The above chart is consistent with the chart on page 8 of County Executive Marc Molinaro's <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/Budget/2015_tentative_budget/2015_Tentative_Budget_Overview.pdf" target="_blank">2015 Tentative Budget Overview</a>. 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.<br />
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Year to year increases in the taxable market value (third column in above table) are shown below:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirsipHs4BChTHWbbl4cwI-DXf0KfhzK4GzaBSe4tHEyPldyCywzsDRWhcZi7n4_rypSm2q3RzhoDCRdJEKVbrOpYfYyiE_9NpHml-No_J4v29EsfJIGI7xTRJwTokaZ8-kLsEwwiW7tT50/s1600/MarketValueIncrease.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="431" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirsipHs4BChTHWbbl4cwI-DXf0KfhzK4GzaBSe4tHEyPldyCywzsDRWhcZi7n4_rypSm2q3RzhoDCRdJEKVbrOpYfYyiE_9NpHml-No_J4v29EsfJIGI7xTRJwTokaZ8-kLsEwwiW7tT50/s640/MarketValueIncrease.png" width="640" /></a></div>
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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.</div>
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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.</div>
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<b>Tax Levy</b></div>
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Dutchess County's tax levy — the amount billed to property taxpayers (fourth column in above table) — can be visualized as follows:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivqmncpo-A2cFNg95oqLBQy5t0pvPdg2jSSpcy-MY1bSIK9ITiagKxf-vcD9Xsn5W-slyTjEzKbLr1yjCdel-DXdxXwcbsYzfXZ_6Dzgf020li3YjUDULPTwJubg59mnhkwDV5Ef3kte3h/s1600/TaxLevy.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivqmncpo-A2cFNg95oqLBQy5t0pvPdg2jSSpcy-MY1bSIK9ITiagKxf-vcD9Xsn5W-slyTjEzKbLr1yjCdel-DXdxXwcbsYzfXZ_6Dzgf020li3YjUDULPTwJubg59mnhkwDV5Ef3kte3h/s640/TaxLevy.png" width="640" /></a></div>
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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):</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOkji9fB4fWOwIbnNevtnY8f26iI0aCTs0xszNb0BEw-SUSEc7-wPqMwpm4smemU5c61S7T0t1ZcUxxVqD8xhy8bT1xPIVycpE8KPmdnCn7ATk-WsBfCs9xXyyCtGJdRWKDI3Qbyylq1Vb/s1600/TaxLevyIncrease.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOkji9fB4fWOwIbnNevtnY8f26iI0aCTs0xszNb0BEw-SUSEc7-wPqMwpm4smemU5c61S7T0t1ZcUxxVqD8xhy8bT1xPIVycpE8KPmdnCn7ATk-WsBfCs9xXyyCtGJdRWKDI3Qbyylq1Vb/s640/TaxLevyIncrease.png" width="640" /></a></div>
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Molinaro's report does not show any charts related to tax levy or tax rate.</div>
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<b>Tax Rate</b></div>
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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. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSI50MYqR3ZyAxxgg_N-U3KNqXpXfs0H-Q2dUeKmY2J-57hQvzvNCN4ZjAODZQT6PESyEaTKYcS8LtxnlKSkXIgE_cPOj_Po5Z0lWt4XzQ6zn2NT8r7iD1OOwH1fYWhDOcbZFKCJUMxAGw/s1600/TaxRate.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSI50MYqR3ZyAxxgg_N-U3KNqXpXfs0H-Q2dUeKmY2J-57hQvzvNCN4ZjAODZQT6PESyEaTKYcS8LtxnlKSkXIgE_cPOj_Po5Z0lWt4XzQ6zn2NT8r7iD1OOwH1fYWhDOcbZFKCJUMxAGw/s640/TaxRate.png" width="640" /></a></div>
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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:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilWbB23bYKkAeKjpaKPxmM52SYvDDUSoOKz7LnS6BUU4AGEi5aLr4h5bLLKPMpGSYHHoTwOjBD0tF0FIUUii2ORtqG8mhEcpyp-9qGS3_rMAamFi_9owyp6GqKip3sOdTgJjT_8906f_Kp/s1600/TaxRateIncrease.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="428" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilWbB23bYKkAeKjpaKPxmM52SYvDDUSoOKz7LnS6BUU4AGEi5aLr4h5bLLKPMpGSYHHoTwOjBD0tF0FIUUii2ORtqG8mhEcpyp-9qGS3_rMAamFi_9owyp6GqKip3sOdTgJjT_8906f_Kp/s640/TaxRateIncrease.png" width="640" /></a></div>
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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) <i>decrease</i> in tax levy for 2015, which almost, but not quite, compensates for the 1.2 percent decrease in taxable market value. </div>
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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.</div>
Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-18926556896824402422015-06-23T14:54:00.000-04:002015-06-23T14:54:24.523-04:00Rubin Resigns as Fairview Fire CommissionerYour devoted blogger resigned as Fairview Fire Commissioner on December 31, 2014, after serving two years of a 5-year term. My resignation was in response to a series of actions by fellow commissioners Bob Gephard, Ginny Buechele, and Jim Doxsey, a voting majority of the Fairview Board of Fire Commissioners, who took every possible step to assure that I could make no effective contribution to the District in 2014, and who would have maintained this personal campaign against me had I continued on the Board. For more details, see my resignation letter on page 7 of the <a href="http://fairviewfd.net/doc/MeetingMinutes/2015.01.06finalmin.pdf" rel="nofollow" target="_blank">Board's January 6, 2015, meeting minutes</a>.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-25705891419776102702013-06-25T23:00:00.000-04:002013-06-25T23:00:51.229-04:00Rubin Elected Fairview Fire Commissioner; Second Race Is Tied<br />
<i>This post was originally published on December 15, 2012 at 7:40 PM, but has been updated three times, as indicated below.</i><br />
<br />
In a remarkable cliff-hanger election in the Fairview Fire District on December 11, Virginia Buechele and Alan Crotty are tied for the three-year fire commissioner position. Your devoted blogger was elected to a five-year commissioner position.<br />
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<b>Three-Year Commissioner Slot</b><br />
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Out of <a href="http://fairviewfd.net/Meeting%20Minutes/2013%20Dec.%2013%20certification.pdf">92 ballots</a> cast, each of the two candidates in the three-year contest received 46 votes. Buechele, former leader of the <a href="http://www.geocities.com/Heartland/Acres/2843/fairview.html">Fairness for Fairview</a> advocacy organization, has been a Fairview fire commissioner for one year. Her opponent, Alan Crotty, was a volunteer Fairview Fire Chief in the early '90s, but has not been involved in Fairview issues in recent years. As in the <a href="http://taxblog.billrubin.info/2009/12/gephard-elected-fairview-fire.html">2008, 2009,</a> and <a href="http://taxblog.billrubin.info/2011/12/buechele-and-calamari-elected-fairview.html">2011 election</a>s, this contest was a choice between a relative newcomer aligned with taxpayer advocacy and a veteran aligned with the fire station. Voter turnout was considerably lower than in any previous contested election in the last five years.<br />
<br />
Remarkably, the result of the three-year contest was delayed until a few days ago. That's because during the election, the election inspectors arranged for a provisional ballot for a voter not listed on Fairview's voter roll. It wasn't until December 13 that the Dutchess County Board of Elections determined that this voter was indeed a legitimate voter in the Fairview Fire District, mistakenly omitted from the roll. When the election inspectors opened the provisional ballot at a public meeting on December 13 at 5:30 P.M., it was found to be the tying vote. According to New York State law, tied races are to be decided by a special runoff election between the two candidates within 45 days after the election. However, this deadline will be missed. See UPDATE 1/1/2013 below.<br />
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<b>Five-Year Commissioner Slot</b><br />
<br />
It was not determined until November 21 that the five-year commissioner slot would be uncontested, although I did not find out until November 26. I received 74 votes out of the 92 ballots cast. Of the remaining 18 ballots, 14 were blank and 4 went to two write-in candidates.<br />
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<b>Fairview Still Won't Have a Full Board</b><br />
<br />
Instead of the normal 5-member board of fire commissioners, Fairview has had only 4 or fewer commissioners for the last year and a half. This deficiency has inevitably meant that less work got done. It also has made decision-making more difficult. For example, the board failed to appoint a commissioner last winter because of a 2-2 deadlock.<br />
<br />
There was every reason to expect that this month's election would finally allow the board to achieve full strength. But the impossible-to-anticipate tie means that the board's next meeting on January 8-th will once again be with only 4 commissioners. Presumably, this problem will be resolved expeditiously with the run-off election. Unless, of course, it again results in a tie!<br />
<br />
<b>This Blog Will Change</b><br />
<br />
When I take office as Fairview Fire Commissioner on January 8, this blog will change in three ways:<br />
<ol>
<li>I probably won't publish posts critical of Fairview Fire District officials. After all, I'll be one of them. I expect to make my views known from the inside.</li>
<li>I probably won't publish posts on factual topics related to the Fairview Fire District, such as Fairview fire tax rates, Fairview exempt percents, and so on. My preference would be for such information to appear on the <a href="http://fairviewfd.net/">Fairview Fire District website</a>.</li>
<li>The frequency of posts will diminish because I will have less time to conduct property tax investigations.</li>
</ol>
<b>UPDATE 1/1/2013 - Tied Race To Be Contested in Court</b><br />
<ol>
</ol>
<div>
In recent days, Buechele has taken legal action to challenge the official result of the three-year contest, claiming that the provisional ballot was improperly prepared, and therefore should not have been counted. If Buechele's claim is upheld by the court, she would be declared the winner of the three-year contest. The court is scheduled to hear arguments for both sides on January 9. Until this dispute is resolved, plans for a runoff election are on hold.<br />
<br />
<b>UPDATE 5/20/2013 - Court Rules Against Buechele; Appeal is Planned</b><br />
<b><br /></b>
On January 9, Supreme Court Judge Peter Forman heard arguments from Buechele's attorney and from the Fairview Fire District's attorney. On May 15, Forman issued a ruling against Buechele. She plans an appeal.<br />
<br />
<b>UPDATE 6/25/2013 - Buechele Loses Appeal, but Wins Run-Off Election</b><br />
<b><br /></b>
On June 18, Buechele's appeal was heard by four judges of the appellate court. The next day, they issued a ruling against Buechele. This ruling paved the way for the Fairview Fire District to go ahead with a run-off election planned for today. The result of today's election is 106 votes for Buechele, 97 votes for Crotty, and 3 invalid ballots. Thus, after an additional half-year delay, Fairview will finally have a full roster of five fire commissioners, for the first time in about two years.<br />
<br /></div>
Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com1tag:blogger.com,1999:blog-8385941970577961249.post-71245933452053311492013-04-13T10:38:00.000-04:002013-04-13T10:38:45.502-04:00Fairview Versus Fairview<i>I've been meaning to write this frivolous post for a long time. Now's the time. No, it's not a belated April fools joke.</i><br />
<br />
The Fairview Fire District is a small fire district, only a few square miles in size, formed early in the twentieth century. Yet it has a large budget, since it's a predominantly career fire district which provides both fire protection and emergency medical services. Fairview responds to a few thousand alarms per year. Fairview contains many tax exempt properties including a community college and other institutions of learning, a religious hospital facility, town and county government properties, institutions for people with disabilities, and various other not-for-profit organizations. Approximately half of Fairview's market value is tax exempt. As a result of all these factors, Fairview has the highest fire tax rate in the county, and perhaps one of the highest fire tax rates in New York State.<br />
<br />
I'm obviously describing the <a href="http://fairviewfd.net/">Fairview Fire District in Dutchess County</a>, right? <i>Right?!?</i><br />
<br />
Nope. I fooled you! Although all of the above well describes Fairview in Dutchess, the above narrative just as well describes the <a href="http://www.fairviewfire.org/FireDistrict.htm">Fairview Fire District in Westchester County</a>. That's right, the Town of Greenburgh in Westchester County contains a fire district called the Fairview Fire District. It's just spooky how many similarities there are between the two same-named districts.<br />
<br />
<b>Similarities Between the Two Fairviews</b><br />
<br />
Fairview in Dutchess is 4.5 square miles; Fairview in Westchester is 5.5 square miles. Fairview in Dutchess was formed in 1910; Fairview in Westchester was formed in 1927. Both districts have multi-million dollar budgets primarily derived from fire taxes, though both receive some income from Payments in Lieu of Taxes (PILOTs). Fairview in Dutchess has approximately 17 career firefighters and about as many volunteer members, responding to about 1,750 alarms each year; Fairview in Westchester has 45 career firefighters and 16 volunteer members, responding to about 2,500 alarms each year.<br />
<br />
Fairview in Dutchess contains Dutchess Community College; Fairview in Westchester contains Westchester Community College. Folks, I'm not making this up! Fairview in Dutchess contains St. Francis Hospital; Fairview in Westchester contains the Hebrew Hospital Home. Fairview in Dutchess contains Dutchess County and Town of Poughkeepsie government properties; Fairview in Westchester contains Westchester County and Town of Greenburgh government properties. Fairview in Dutchess contains Greystone Programs; Fairview in Westchester contains a center for retarded adults run by the New York State Division of Mental Health. You get the picture.<br />
<br />
The last I looked (2012), 51.7 percent of the market value for Fairview in Dutchess is tax exempt. For Fairview in Westchester, the corresponding figure is “more than 47 percent”.<br />
<br />
Now let's get to the fun part — tax rates. You knew I'd get to that eventually. The 2013 true value tax rate for Fairview in Dutchess is $6.70; that for Fairview in Westchester is “only” $4.80. Still, $4.80 is quite a high fire tax rate. One official of Fairview in Westchester believes it is the highest fire tax rate in Westchester County.<br />
<br />
<b>Differences Between the Two Fairviews</b><br />
<br />
Fairview in Dutchess has a single firehouse, which is staffed 24x7. Fairview in Westchester has two firehouses, which are staffed on a more limited basis. Fairview in Dutchess spans portions of two towns, Poughkeepsie and Hyde Park; Fairview in Westchester is entirely contained within the Town of Greenburgh. There are undoubtedly other differences between the two Fairviews, but they've been more difficult to find than the similarities. Nope, you just can't make this stuff up.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-80085777247181347992012-11-26T13:45:00.000-05:002012-11-26T13:45:15.922-05:00Full Value versus Fractional Value Assessing — A Comparison<br />
<i>Property tax in New York State is fundamentally based on current market value. But this simple fact is obscured by New York’s convoluted municipal assessment system, in which some towns, cities, and villages are assessed at <b>full</b> market value, while others are assessed at a <b>fraction </b>of market value. Whether properties are assessed at full or fractional value has no effect on tax bills, though many taxpayers and even some government officials seem to think otherwise. This post attempts to demystify fractional value assessing from the viewpoint of the assessor’s job.</i><br />
<br />
An <i>assessing unit</i> is a municipality which has the power under New York State law to estimate the value for taxing purposes of each parcel of real estate in its jurisdiction. The assessing units in Dutchess County are the 20 towns, the 2 cities, and some of the 8 villages. Each assessing unit has a government official called an <i>assessor</i>, whose job is to estimate the <i>current market value</i> of every property in her assessing unit, and to publish these determinations in a list of properties called the <i>assessment roll</i>. The reason for the focus on market value is that <i>property tax is fundamentally based on market value</i>. For each property in the yearly assessment roll, the assessor includes the <i>assessment</i> of that property for that year. The assessment is not necessarily the market value itself, but it is always a <i>measure</i> of the market value. <i>The essential difference between assessments at full value and assessments at fractional value is the way the assessor expresses the assessments in the assessment roll.</i><br />
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<b>Market Value Depends on Condition of the Property</b><br />
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The <i>market value</i> of a property is simply the amount a willing buyer would pay a willing seller for the property. It is obvious that the market value of a property depends on the unique characteristics of the property, including the condition of the property. If the condition of a property changes significantly from one year to the next, such as by major improvement or damage, it is obvious that the market value of the property will change to reflect this. Your decaying house built in 1910 might sell for only $100,000, but if you tear it down and build a McMansion, your property might sell for $1 million. If the McMansion burns down, your property might sell for only the value of the land, say $20,000.<br />
<br />
<i>The condition of most properties generally does not significantly change over relatively short periods of time. </i>Most properties are not significantly improved nor suffer significant damage from one year to the next. So you might think that the market value of most properties does not change from one year to the next. Wrong! Market value of real estate also depends on forces unrelated to the condition of the property.<br />
<br />
<b>Economic Forces Cause Market Values to Trend Up or Down</b><br />
<br />
The market values of properties often change over time for reasons unrelated to the condition of the properties. Large scale economic forces independent of the condition of individual properties affect real estate values. These forces generally affect all properties in a neighborhood or region in the same way.<br />
<br />
Assessors employ “trend analysis” or <i>trending</i> to account for these forces. This means that for every property in a neighborhood, or even in her entire assessing unit, the assessor adjusts last year’s market value by a fixed percentage to account for these forces. For example, if real estate values decline 3.57 percent (as happened in the Town of Hyde Park this year), she would lower the market value of each property by 3.57 percent to indicate this.<br />
<br />
<b>What about Equalization Rate, Full Value, and Fractional Value?</b><br />
<br />
Notice that we’ve come all this way in the discussion without mentioning the dreaded term “equalization rate”. We also haven’t yet mentioned the terms “full value” or “fractional value” that are the subject of this post. That’s because, as I cannot emphasize too strongly, <i>none of these concepts plays a role in property tax. Property tax is fundamentally based on market value, and the essence of the assessor’s role is to estimate market value.</i><br />
<br />
The only difference between assessing units which are assessed at full value and assessing units which are assessed at fractional value is the way in which the assessor <i>expresses</i> the market values of properties.<br />
<br />
<b>Assessing at Full Value</b><br />
<br />
The term <i>full value</i> is just an assessor’s term for “market value”. In an assessing unit assessed at full value, the assessor expresses the market value of every property directly, by actually showing the market value for every property on the assessment roll. But for historical reasons, and perhaps to confuse the unwashed, she doesn’t actually call it “market value”; she calls it <i>assessed value</i>. So <i>in an assessing unit assessed at full value, assessed value is market value.</i><br />
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<b>Assessing at Fractional Value Was Illegal For Centuries</b><br />
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The land we now call New York State has had property tax for three and a half centuries (with some respites), beginning here more than a century before the birth of the nation. For at least the last two centuries, the real property tax laws provided that tax amounts be proportional to the current market value of properties. This concept provides a basic element of fairness: Two properties with the same market value should pay the same tax to a given taxing unit such as a school district, even if they are in different assessing units. So property taxes in New York have always been fair, right?<br />
<br />
Well, no, not at all. What the law said was one thing, but what actually occurred was quite another. For two centuries, properties were routinely assessed well below market value, in successful attempts to gain tax advantages for constituents. Sometimes assessments were made at a <i>uniform fraction of market value</i> within an assessing unit, but apportionment of taxes among assessing units was haphazard at best. The result was widely differing taxes among similarly situated taxpayers. For most of our history, these illegal practices were ignored by both the legislative and judicial branches of government, which turned a blind eye to these flagrant violations of the law by the executive branch.<br />
<br />
<b>Requirements for Fair Fractional Value Assessing</b><br />
<br />
New York’s property tax system was unfair for centuries, but not simply because we had fractional value assessing. It was unfair because we had fractional value assessing without acknowledging that we had fractional value assessing. Since fractional value assessing was not officially sanctioned, we didn’t compensate for it. But we could have. A system with fractional value assessing can be fair if the following two key requirements are met:<br />
<br />
1.<span class="Apple-tab-span" style="white-space: pre;"> </span>Within each assessing unit, all properties are assessed at a uniform percent of market value. The assessor must specify the percent of market value that is used.<br />
2.<span class="Apple-tab-span" style="white-space: pre;"> </span>For each taxing unit (such as a school district) comprising portions of multiple assessing units (such as Towns), the tax levy is apportioned among the Towns in proportion to the taxable market values of each Town or portion thereof in the District.<br />
<br />
With fractional value assessing, the fraction of market value in an assessing unit is called the <i>equalization rate</i> or the <i>level of assessment</i>, depending on who’s specifying it.<br />
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<b>Why Is Fractional Value Assessment Problematic?</b><br />
<br />
Fractional value assessing is needlessly complex. It introduces gratuitous concepts like equalization rate and assessed value. Fractional value assessing makes it inconvenient to compare property values across assessing units, because two properties with the same assessed values in different assessing units can have completely different market values, depending on the equalization rates. Full value assessing is straightforward and intuitive. Property values are expressed the same way that buyers and sellers of property express them.<br />
<br />
<b>Assessing at Fractional Value Became Legal</b><br />
<br />
For centuries, New York’s assessing system was characterized by fractional value assessing, which was technically illegal, but widely practiced, and by apportionment that was fair on paper, but poorly administered. This legacy system was reformed in 1981, but not in the way one might expect. The obvious way to fix the problem of inequitable property tax would have been to enforce the long-existing laws requiring all assessments to be at full value. This was the approach recommended by most legal scholars, by state bureaucrats, and even by then-Governor Hugh Cary. But apparently the voice of reason was no match for the entrenched practice of fractional value assessing, overwhelmingly supported by local government officials and taxpayers who really didn't understand (and still don't understand!) how property taxation works. Listening to its constituents rather than to the tax wonks, the New York State Legislature enacted a law — over Cary’s veto — essentially legalizing for the first time the long-existing practice of fractional value assessing. However, this time, the new law provided for controls at the state and local levels to assure equitable property taxes based on the two requirements for fair fractional value assessing listed above.<br />
<br />
<b>Fractional Value Assessing Is Still a Bad Idea</b><br />
<br />
The current system, which uses a combination of full and fractional value assessing, is reasonably fair in distributing the tax burden equitably among taxpayers. However, the prediction of legal scholars that fractional value assessing would lead to confusion has surely come to pass. Many of my previous blog posts discuss misunderstandings of fractional value assessing by government officials and the Poughkeepsie Journal. Most of these misunderstandings do not result in unfair taxation, but in misleading <i>descriptions</i> of the taxation. See, for example, <a href="http://taxblog.billrubin.info/2012/10/hyde-park-school-district-promulgates.html">Hyde Park School District Promulgates Misleading Tax Information</a>. New York State has been using financial incentives and other measures to encourage local assessing units to convert from fractional to full value assessing. This pressure seems to be working, though slowly. In 2000, all two dozen or so of Dutchess County’s assessing units used fractional value assessing. Now only 5 do: The Towns of Dover, Hyde Park, Pawling, Pine Plains and Stanford are still assessed at fractional value.<br />
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<b>Currency Analogy</b><br />
<br />
Fractional value assessing is analogous to the world’s money supply, with innumerable different currencies. An iPad may cost $500 in the U.S., €390 in Europe, or ¥40,195 in Japan. It does no good to know that an iPad costs 28,000, without knowing that the currency is Indian rupees. Similarly, it does no good to know the assessed value of a property, or even of an entire assessing unit, without knowing the equalization rate. If full value assessing is considered analogous to U.S. currency, then equalization rates are analogous to exchange rates from U.S. dollars to other currencies. Just as exchange rates change over time, so do equalization rates. Having all properties assessed at full value is analogous to having a global currency, a sort of super-Euro. With a super-Euro, prices could be compared world-wide without any conversions. Similarly, assessed values of properties could be compared directly, without the need for equalization rates. Assessed values would just be market values, as they were originally meant to be.<br />
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<i><span style="font-size: x-small;">I’d like to thank three anonymous reviewers with knowledge of the assessing process for previewing this post.</span></i>Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com1tag:blogger.com,1999:blog-8385941970577961249.post-23603587044353466772012-10-14T17:51:00.000-04:002012-11-05T16:26:09.749-05:00Hyde Park School District Promulgates Misleading Tax Information<i>When it comes to understanding how property taxes work, it is amazing how many government officials who should know better get it wrong. The problem is always the same: The errant officials erroneously believe that assessed values have intrinsic meaning, when in reality assessed values mean nothing with respect to property tax until converted to market values using the appropriate equalization rates. At least three local municipalities have made this mistake, as documented <a href="http://taxblog.billrubin.info/2012/01/town-of-pleasant-valley-publishes.html">here</a>, <a href="http://taxblog.billrubin.info/2011/09/fairview-fire-district-treasurer.html">here</a>, and <a href="http://taxblog.billrubin.info/2010/11/town-of-hyde-park-to-increase-property.html">here</a>. Now the <a href="http://www.hpcsd.org/">Hyde Park School District</a> can be added to this list of notoriety.</i><br />
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On August 23, 2012, Hyde Park School District Assistant Superintendent for Business Wayne Kurlander presented <a href="http://www.boarddocs.com/ny/hpcsd/Board.nsf/files/8XFQXV6A826D/$file/Tax%20Levy%20Calculations%20%26%20Rates%20Final%20PPT%20BOE%208-23-12%20%5BCompatibility%20Mode%5D.pdf">Tax Levy Calculations, Rates</a> to the Board of Education. Unfortunately, this presentation gives a misleading picture of changes in the school district's property values and tax rate. Even more unfortunately, the Poughkeepsie Journal has uncritically reported the claims in Kurlander's presentation, leading to a sense of unfairness where no unfairness actually exists.<br />
<br />
<b>Tax Rate Change Calculation Mistake</b><br />
<br />
Kurlander's “Tax Rate Changes” table on page 5 of <a href="http://www.boarddocs.com/ny/hpcsd/Board.nsf/files/8XFQXV6A826D/$file/Tax%20Levy%20Calculations%20%26%20Rates%20Final%20PPT%20BOE%208-23-12%20%5BCompatibility%20Mode%5D.pdf">his presentation</a> calculates a year-to-year difference of $0.78 (column 4) between Hyde Park's tax rates per thousand dollars of assessed value. <i>This calculation makes no sense, because Hyde Park's equalization rates are different (54% versus 56%) for the two years being compared. </i>It would be like subtracting 50 miles per hour from 100 kilometers per hour, and getting 50 “something” per hour. <i>A meaningful calculation requires that the two tax rates first be converted to comparable units before subtraction.</i> An obvious way to do this is to multiply each tax rate by its corresponding equalization rate, thus yielding <i>true value tax rates</i>.<br />
<br />
Since the $0.78 difference makes no sense, neither does the 2.21% rate change (column 5). When the correct calculation is performed, Hyde Park's true value tax rate change is of course 6.00% — the same as for all the other towns!<br />
<br />
The Poughkeepsie Journal took Kurlander's flawed calculation to formulate a misleading headline, <i>Some in Hyde Park face 6% tax hike</i> (August 30, page 1 of Mid-Hudson section). In reality, it's not “some”, it's “all”. The story's subtitle is also misleading: <i>Assessed value drop forces school board to hike 4 towns' rates</i>. In reality, it's not “4 towns'” but “all 5 towns'” in the Hyde Park School District. The story's lead sentence is unambiguous: “School tax rates for most town homeowners will increase by 2.2 percent this school year.” <i>This statement is flat out false.</i> A correct statement would read, “School tax rates for all homeowners will increase by 6 percent this school year.” Of course, none of the corrected statements sound as sensational as the incorrect and misleading ones. But in the newspaper's defense, Journal reporter John Davis did nothing more than uncritically elaborate Kurlander's presentation.<br />
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<b>Superintendent's Statement is Incorrect</b><br />
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Kurlander is not the only Hyde Park School District official who misunderstands how tax rates work. Hyde Park School Superintendent Greer Fischer is quoted in the Poughkeepsie Journal story as saying, “That it's been 16 years since the Town of Hyde Park has gone through an assessment does make for a disparity in the rate changes.”<br />
<br />
<i>No, it does not. There is no disparity in the rate changes this year, and there hasn't been a disparity in the rate changes in the last ten years. Each year, all five towns in the Hyde Park School District have paid the same true value tax rate.</i> In other words, <i>every property owner in the District pays the same proportion of his property’s taxable market value, regardless of Town.</i> This simple fact is a basic principle of New York State Real Property Tax Law. Another way to state this basic principle is as follows: <i>Two properties in different Towns with the same taxable market value will pay the same Hyde Park school tax. </i>This statement is true this year, it was true last year, and it's been true for each of the last 10 years. Since the tax rates are the same in all the Towns, so are the tax rate changes. That's why my recent post <a href="http://taxblog.billrubin.info/2012/10/hyde-park-school-district-tax-rate-is.html">Hyde Park School District Tax Rate Is Highest in Millennium</a> lists only one tax rate and only one tax rate change for each year.<br />
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<b>Assessed Value Change Calculation Mistake</b><br />
<br />
Kurlander's “Comparison of Taxable Assessed Values” table on page 12 of his presentation makes a similar conceptual error: The Hyde Park entry (second row) compares assessed values from two different years with different equalization rates. The listed percent change of -0.48% for Hyde Park makes no sense, for the same reason that comparing pounds to kilograms makes no sense. A meaningful calculation requires that the assessed values first be converted to comparable units. An obvious way to do this is to divide each assessed value by its corresponding equalization rate, thus yielding taxable market value. When the correct calculation is performed, Hyde Park's percent change is -4.04%, not -0.48%.<br />
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<b>Meaningful Tax Information is Essential</b><br />
<br />
My purpose in all property tax investigations is not to embarrass government officials, but to assure that property owners, residents, government officials, and other stakeholders have meaningful, accurate information about taxes. So I was glad when Kurlander granted me the opportunity to meet with him and Hyde Park School District Treasurer Linda Steinberg on September 7. Although we had a lengthy and cordial interchange, I was not able to convince Kurlander that he had made any mistake. At Kurlander's request, I promptly emailed them all my backup calculations. Unfortunately, I've heard nothing from him since then, despite numerous contact attempts. I will update this post to reflect any meaningful Hyde Park School District feedback.<br />
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<b>UPDATE 11/5/2012 - District May Change Tax Message</b><br />
<br />
I'm pleased to report that a prominent member of the Hyde Park School District Board of Education has come to understand that the District's current way of explaining school tax is problematic, and that a more consistent, coherent, and technically accurate approach is needed. I'm hopeful that I won't need to write a post such as this on the Hyde Park School District next year.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-59510194391082698542012-10-13T20:19:00.000-04:002012-10-13T20:19:58.506-04:00Hyde Park School District Tax Rate Is Highest in MillenniumFive years after the 2008 global economic meltdown, the effects are still being felt here in Dutchess County. Property values are continuing to drop. For the latest assessment rolls (July 1, 2012), Dutchess County's taxable market value dropped 3.9 percent over last year. That's a greater drop than the previous year's, and only a fraction of a percent less than the <i>average </i>yearly drop of the last four years. So the trend of falling property values continues unabated.<br />
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My recent post <a href="http://taxblog.billrubin.info/2012/10/dutchess-county-govt-2013-tax-rate.html">Dutchess County Gov't 2013 Tax Rate Likely To Be Highest in Millennium</a> shows this trend and how, all other things being equal, it leads to rising tax rates. Of course, all other things aren't equal — all other things are worse also. The meltdown means that government services will actually cost more, while delivering less. Dutchess County Government's 2013 true value tax rate will almost certainly be the highest in this millennium (so far). <a href="http://taxblog.billrubin.info/2009/09/tax-rate-is-all-that-matters.html">High tax rates are burdensome for property taxpayers</a> because the tax rate is essentially the proportion of a taxpayer's wealth, as measured by the taxable market value of his/her property, that is paid in tax.<br />
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<b>Hyde Park School District's Market Value</b><br />
<br />
So much for the big picture in Dutchess County. For smaller local government taxing authorities (towns, villages, cities, school districts, and special districts), we are seeing the same effects of continually decreasing property values, record-breaking tax levies, and worst of all, record-breaking tax rates. This post examines these effects for the Hyde Park School District. For the latest assessment rolls, the Hyde Park School District's taxable market value has dropped only 3.1 percent since last year, compared with 3.9 percent for Dutchess County as a whole.<br />
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<b>District's </b><b>Tax Levy</b><br />
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The Hyde Park School District's tax levy has increased every year of this millennium, even in the face of a recently decreasing tax base. <i>The District's 2012 tax levy of $54.2 million is the highest in this millennium, and almost certainly the highest in the history of the District.</i> Not only that, but the following chart shows that the District's 2012 tax levy <i>increase</i> of 2.7 percent is the <i>second highest</i> since the meltdown began.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1_5FAXCRYwkugPXTDfRUELySglte802Sy1rekVO32Y73NCu-PtQ0CILxjeK4VROWoeh4ovDdFSUpSSszbMBpAAZKVRobkDRFzHMXJcMfgIy1Fsb-Rr3HZUoUoHXTVxqa9uu7JZ7Q0I5L-/s1600/TaxLevyIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1_5FAXCRYwkugPXTDfRUELySglte802Sy1rekVO32Y73NCu-PtQ0CILxjeK4VROWoeh4ovDdFSUpSSszbMBpAAZKVRobkDRFzHMXJcMfgIy1Fsb-Rr3HZUoUoHXTVxqa9uu7JZ7Q0I5L-/s640/TaxLevyIncrease.jpg" width="640" /></a></div>
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Data for 2012 is from a presentation <a href="http://www.boarddocs.com/ny/hpcsd/Board.nsf/files/8XFQXV6A826D/$file/Tax%20Levy%20Calculations%20%26%20Rates%20Final%20PPT%20BOE%208-23-12%20%5BCompatibility%20Mode%5D.pdf">Tax Levy Calculations, Rates</a> by Hyde Park School District Assistant Superintendent for Business Wayne Kurlander to the Board of Education on August 23, 2012. Data for earlier years is from the yearly <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/12485.htm">tax rate pamphlets</a> published by the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm">Dutchess County Real Property Tax Service Agency</a>.<br />
<b><br /></b>
<b>District's </b><b>Tax Rate</b><br />
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Here's the really bad news: <i>The Hyde Park School District's 2012 true value tax rate of $20.42 per thousand dollars of market value is the highest in this millennium</i> — exceeding $20 for the first time — as shown in the following chart:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIsWCJ_EocQye0q-7ipPYrF9ECSNHndtNWHCj5cwTcbfuH2DFF-Hyf2LtQBJYL9R4ujhTyvjE7EqoQAUCsP9-ovNfxz0uzlRFEaNkUfmDL0CRbRpXcJJ9iAyUacyhThqDaCbBsZdKmt2tu/s1600/TaxRate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIsWCJ_EocQye0q-7ipPYrF9ECSNHndtNWHCj5cwTcbfuH2DFF-Hyf2LtQBJYL9R4ujhTyvjE7EqoQAUCsP9-ovNfxz0uzlRFEaNkUfmDL0CRbRpXcJJ9iAyUacyhThqDaCbBsZdKmt2tu/s640/TaxRate.jpg" width="640" /></a></div>
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This means that <i>Hyde Park School District taxpayers are paying a greater proportion of their wealth</i>, as measured by the taxable market value of their property, <i>than at any previous time in this millennium</i>. The second highest tax rate occurred in 2000, when property values were only about half of what they are now.<br />
<br />
The following chart shows that <i>the 2012 Hyde Park School District's tax rate <b>increase</b> of 6.0 percent is the second highest in this millennium</i>. (The highest, in 2010, was mainly caused by a whopping 13.1 decrease in the District's taxable market value.)<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfHfSs5WyZD_JLhj13-wCcJbRKLTVAeHjFnUod2duHd40I9CMgzARBE_4LR-jaKKDhejzMARiWAAQdy-Vq1J9FoJF4DWdbp1CnmOJYWdODuoka77xJEHe-_ibSDfgnrOWvAM5qukejnQ3B/s1600/TaxRateIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfHfSs5WyZD_JLhj13-wCcJbRKLTVAeHjFnUod2duHd40I9CMgzARBE_4LR-jaKKDhejzMARiWAAQdy-Vq1J9FoJF4DWdbp1CnmOJYWdODuoka77xJEHe-_ibSDfgnrOWvAM5qukejnQ3B/s640/TaxRateIncrease.jpg" width="640" /></a></div>
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If you find these charts useful, you can find more of them and the accompanying numerical data in my report <a href="http://billrubin.info/PropertyTax/HydeParkSchool/HydeParkSchoolTax12.pdf">Hyde Park School District Tax Data</a>.<br />
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<b>Hyde Park School District's Tax Presentation is Misleading</b><br />
<br />
The Hyde Park School District has not explained its current tax parameters in historical perspective, at least not according to the <a href="http://www.boarddocs.com/ny/hpcsd/Board.nsf/files/8XFQXV6A826D/$file/Tax%20Levy%20Calculations%20%26%20Rates%20Final%20PPT%20BOE%208-23-12%20%5BCompatibility%20Mode%5D.pdf">Tax Levy Calculations, Rates</a> presentation by Kurlander mentioned above. Stakeholders have no way of knowing from Kurlander's presentation that property owners are being taxed at a higher rate than ever in this millennium.<br />
<br />
It is understandable that the District may not want to emphasize such dire facts. Unfortunately, Kurlander's presentation does not simply leave out important information. It actively promotes a misleading picture which confounds the ability of taxpayers, the board of education itself, and other stakeholders to properly understand the changes in the school district's property values and tax rate from last year to this year. This misleading picture was uncritically reported by the Poughkeepsie Journal, in a successful attempt to create a sense of unfairness where no unfairness actually exists.<br />
<br />
I will have more to say about Kurlander's presentation in a forthcoming post.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-29342757559957245162012-10-04T20:56:00.000-04:002012-10-07T14:55:34.342-04:00Dutchess County Gov't 2013 Tax Rate Likely To Be Highest in MillenniumNewly elected County Executive Marcus Molinaro is many weeks away from announcing a proposed 2013 budget. After that, the county legislature must deliberate on adjustments before approving a final budget in December. Nevertheless, I can already predict with some confidence that <i>the final 2013 county budget will result in </i><i>the highest tax rate in this millennium</i><i>, and </i><i>the highest tax levy in the history of Dutchess County</i>. In other words, properties will be taxed more steeply by Dutchess County Government than ever before in this millennium. These predictions are based on two tax trends:<br />
<ol>
<li>Dutchess County's taxable market value continues to fall — for the fifth year in a row.</li>
<li>Dutchess County Government's tax levy has never significantly fallen, year-to-year.</li>
</ol>
<b>Taxable Market Value</b><br />
<b><br /></b>
Dutchess County's taxable market value and tax levy for each year from 2001 through 2012 are derived from the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/12485.htm">tax rate pamphlets</a> published by the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/RealPropertyTax/RPIndex.htm">Dutchess County Real Property Tax Service Agency</a> (RPTSA).<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig_qlsK_AcCzrWbeJoaqVUV3Esi6LzlKyUC0ULtcAcGTHmEOevLOqhJKMzPkqh26Rys1OkETleIVgrl1Nh_SU8Udd0CCtfCZsbvo2AjJ5POE90nKCRZoiQfX6ZFSCW2BzLN_Xz8lgEmu71/s1600/table.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="448" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEig_qlsK_AcCzrWbeJoaqVUV3Esi6LzlKyUC0ULtcAcGTHmEOevLOqhJKMzPkqh26Rys1OkETleIVgrl1Nh_SU8Udd0CCtfCZsbvo2AjJ5POE90nKCRZoiQfX6ZFSCW2BzLN_Xz8lgEmu71/s640/table.jpg" width="640" /></a></div>
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For the 2013 tax bill, only an initial estimate of Dutchess County's taxable market value is available (shown in yellow), based on the July 1, 2012, assessment rolls. This value is shown as $30.7 billion on page 23 of a <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/Budget/BDFinUpdate072012.pdf">fiscal presentation</a> by the <a href="http://www.co.dutchess.ny.us/CountyGov/Departments/Budget/BDIndex.htm">Dutchess County Budget Office</a>. The downward trend in property values since the beginning of the economic meltdown in 2008 is evident in the following chart:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_iZtbebdWbn7Gzgddk-pepfcHgr5vepCtvvmFCzNj_hDTGiJTDFGNG9EHhkOD5DsUUph8m_Cp3a3zjrO_jELZG1bcbdGjaSHZjzaSJo-bMvgCJe5tPXY6gwoIxu3QYmo4n1Msslgz-0Nj/s1600/MarketValue.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_iZtbebdWbn7Gzgddk-pepfcHgr5vepCtvvmFCzNj_hDTGiJTDFGNG9EHhkOD5DsUUph8m_Cp3a3zjrO_jELZG1bcbdGjaSHZjzaSJo-bMvgCJe5tPXY6gwoIxu3QYmo4n1Msslgz-0Nj/s640/MarketValue.jpg" width="640" /></a></div>
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The 2013 taxable market value is shown in yellow to indicate that it is only a preliminary value. The final value, which will not be available until late January 2013, is most likely to be somewhat <i>lower </i>than this value for a variety of reasons explained in detail <a href="http://taxblog.billrubin.info/2011/09/tax-rate-viewpoints-taxpayer-versus.html">here</a>.<br />
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Note that taxable market value is a <i>net</i> value, including <i>both</i> 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 from 2008 to 2013 it fell 20 percent. Once again, this 20 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, <i>the value of existing construction must have dropped <b>more than 20 percent</b> since 2008. </i><br />
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Year to year increases in the taxable market value are shown below:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjI2X-nDFBMrNJJHyi-Fu0-KGp28KfYG1RsQkWGM54G1wyXZXWJBYLdBXhBGONybIPp3nTT0X35sw1uBdRp7vyMkeI8HCmVgZWHIcgUGDuMNAgweegTohMMAGBxfZ1nws2PbxwyaRwW3nZ/s1600/MarketValueIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgjI2X-nDFBMrNJJHyi-Fu0-KGp28KfYG1RsQkWGM54G1wyXZXWJBYLdBXhBGONybIPp3nTT0X35sw1uBdRp7vyMkeI8HCmVgZWHIcgUGDuMNAgweegTohMMAGBxfZ1nws2PbxwyaRwW3nZ/s640/MarketValueIncrease.jpg" width="640" /></a></div>
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When I performed <a href="http://taxblog.billrubin.info/2012/01/dutchess-county-2012-tax-rate-is.html">this analysis last year</a>, it appeared as if the property value free-fall was nearly over, since the 2012 taxable market value decrease was the smallest since the meltdown. But the 2013 estimate clearly contradicts that conclusion. Although the 2013 decrease is only an initial estimate, <i>the final decrease will most likely be somewhat greater.</i> Note that all these market values lag tax bills by a year and a half. For example, for tax bills to be paid in February 2013, the corresponding market values are as of July 1, 2011.<br />
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<b>Tax Levy</b><br />
<b><br /></b>
To reason about the 2013 tax levy, let's consider Dutchess County's tax levy history:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5Xn5bOgGFXxacTzM4A2wgPIyygT-pYq4j39XZJvOu9OhHqOR2WZsRGos8Kap0zIQWrVlQi5-00MvIbizgL3B4Bhtq3_ZVnpyoZCIBg15YtsVxlFDnXWO9P6ll0Kh3_LM2KTbnl6imOPte/s1600/TaxLevy.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh5Xn5bOgGFXxacTzM4A2wgPIyygT-pYq4j39XZJvOu9OhHqOR2WZsRGos8Kap0zIQWrVlQi5-00MvIbizgL3B4Bhtq3_ZVnpyoZCIBg15YtsVxlFDnXWO9P6ll0Kh3_LM2KTbnl6imOPte/s640/TaxLevy.jpg" width="640" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisgg20ZpJdfRT-tCtNqGuQCsO30-X2Rxws_nBWeadUZxYZitEsCJZDyYBSXFPbdYQgR8LadIoV7HKz3PVjjjVr-XhTmQ9O-HcNcdr48U5Sth00azlFQVJY7r0XuVJ0lC5wKDhFVxtVDvMO/s1600/TaxLevyIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisgg20ZpJdfRT-tCtNqGuQCsO30-X2Rxws_nBWeadUZxYZitEsCJZDyYBSXFPbdYQgR8LadIoV7HKz3PVjjjVr-XhTmQ9O-HcNcdr48U5Sth00azlFQVJY7r0XuVJ0lC5wKDhFVxtVDvMO/s640/TaxLevyIncrease.jpg" width="640" /></a></div>
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The above charts show that Dutchess County's tax levy has increased by a significant amount almost every year. Only in 2002 and 2011 has the tax levy been essentially unchanged from the previous year. Accordingly, <i>I've made the most conservative assumption, that Dutchess County's 2013 tax levy increase will be zero.</i> Based on history, it's unlikely that Dutchess County's 2013 tax levy will be lower than the 2012 levy. The yellow bar indicates that this data point is speculative.<br />
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<b>Tax Rate</b><br />
<br />
<div>
The 2013 true value tax rate, which is calculated by dividing the assumed 2013 tax levy by the 2013 taxable market value, is <i>$3.38 per thousand dollars of market value</i>: </div>
<div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5diFYy3eY82wuYgjFG01LQnjR1FXlBrihjrWbx8ixdadpDkajd6uuzs0DBVAnNqAK5xPyHqXkSdPw45OHc8P3B1Uju3R4-OC0huxkh8MXAVvRORMEIzQHBXvaG9yEMzvCPzzaEq1sb4gv/s1600/TaxRate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg5diFYy3eY82wuYgjFG01LQnjR1FXlBrihjrWbx8ixdadpDkajd6uuzs0DBVAnNqAK5xPyHqXkSdPw45OHc8P3B1Uju3R4-OC0huxkh8MXAVvRORMEIzQHBXvaG9yEMzvCPzzaEq1sb4gv/s640/TaxRate.jpg" width="640" /></a></div>
<div>
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<div>
The above chart shows that <i>this projected 2013 tax rate for Dutchess County</i> (in yellow) <i>is higher than in any previous year.</i> <i>This projection </i><i>is almost certainly a low estimate.</i> That's because the final 2013 taxable market value and the 2013 tax levy are both likely to move in a direction to increase this tax rate even further. The tax rate increase chart gives a third reason to conclude that the $3.38 estimate is conservative:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzVVXY3Puw-OagVR39xLxASDa8rO9Xu9dKwPrKHC2l_CD_9KvXe4w7i8VLaFiaw9ua8BT0UwiPW4wEiJU0uu23buTJ1PkCMjdPngxBrj6KMASZ3CO7hQwgfR2VWXs67shdxLIcoj7rArCJ/s1600/TaxRateIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhzVVXY3Puw-OagVR39xLxASDa8rO9Xu9dKwPrKHC2l_CD_9KvXe4w7i8VLaFiaw9ua8BT0UwiPW4wEiJU0uu23buTJ1PkCMjdPngxBrj6KMASZ3CO7hQwgfR2VWXs67shdxLIcoj7rArCJ/s640/TaxRateIncrease.jpg" width="640" /></a></div>
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If Dutchess County's 2013 tax rate turns out to be “only” $3.38 — the highest in this millennium — it will still represent <i>the lowest tax rate <b>increase </b>since the meltdown</i>.<br />
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<b>Will My Predictions Stand the Test of Time?</b><br />
<br />
What would it take for my tax rate prediction of at least $3.38 or my prediction of the largest tax levy in Dutchess County's history to be wrong? Well, perhaps Molinaro will propose an especially frugal budget with a lower tax levy than last year's. But this won't be easy to do. Former County Executive William Steinhaus was known for shrinking county government and implementing other austerity measures in the years since the meltdown. It's unlikely there's a lot of fat to cut. Meanwhile, the costs of everything are continuing to increase. The effects of the 2008 economic meltdown are still being felt all over, despite allegations of a “recovery”.<br />
<br />
<b>How Will We Know Whether My Predictions Are Correct?</b><br />
<br />
The first and most significant indication of whether my predictions are correct will occur next month, when Molinero announces his proposed budget. The second and probably less significant indication will be when the County Legislature approves the budget, possibly with modifications, in December. But the final word will not be out until January, when the 2013 tax rate pamphlet is released by the RPTSA, possibly with slight adjustments as described <a href="http://taxblog.billrubin.info/2011/09/tax-rate-viewpoints-taxpayer-versus.html">here</a>. It is these tax rates that are used to generate property tax bills. Ultimately, it is the property tax bills that define how steeply taxpayers are being taxed.<br />
<br />
<b>I Hope I'm Wrong</b><br />
<br />
It would be great if my predictions turn out to be wrong. Property taxpayers have been suffering more every year since the meltdown, and of course not just from Dutchess County Government taxes. Only time will tell whether my prediction of Dutchess County's 2013 tax rate of $3.38 turns out to be low-ball.<br />
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<b>UPDATE 10/6/2012 — Budget May Exceed 2% Tax Cap</b><br />
<br />
Just a day after publication of this post, it already looks like my caution that my predictions might be wrong may be unwarranted. A front page story in yesterday's Poughkeepsie Journal describes Molinaro's intent to replenish the County's rainy-day fund. The story quotes Dutchess County Legislative Chairman Robert Rolison as saying that <i>Molinaro's plan would probably require exceeding the State's 2 percent tax cap</i>. Nevertheless, Rolison signaled his intent to support such an increase. As I see it, the stage is already being set to increase the County's 2013 tax levy by <i>at least</i> 2 percent over 2012. Even at just 2 percent, the 2013 tax rate would be $3.45, a 6.1 percent increase over 2012. Such a result would easily confirm my predictions.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com1tag:blogger.com,1999:blog-8385941970577961249.post-70968588670795708332012-10-02T17:47:00.000-04:002012-10-02T17:47:46.107-04:00Big Three Fire Districts Continue Divergent Tax Strategies<br />
<i>This post updates <a href="http://taxblog.billrubin.info/2011/10/big-three-fire-districts-use-divergent.html">one I posted a year ago</a>, adding data for the 2013 proposed budgets.</i><br />
<br />
Each of the <a href="http://taxblog.billrubin.info/2010/04/big-three-fire-districts-of-dutchess.html">Big Three Fire Districts of Dutchess County</a> — Arlington, LaGrange, and Fairview — seems to have employed its own tax strategy for meeting the continuing fiscal challenges of the 2008 economic meltdown. LaGrange's strategy seems a relatively moderate reflection of the economic meltdown, Arlington appears to be on a spending spree, while Fairview appears to be starving the District of resources. This viewpoint about Fairview is consistent with the fact that Fairview has not been contributing adequately to its reserve funds in recent years, as described <a href="http://taxblog.billrubin.info/2011/05/fairview-fire-district-is-in-crisis.html">here</a> and <a href="http://taxblog.billrubin.info/2012/09/fairview-fire-district-2013-budget-is.html">here</a>.<br />
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The following chart gives one way to see the dramatic differences among the three strategies:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi5OEUq-Q6SemIGe2oCLQsdaXuftz6yq7hk4T10Q7dOB2JlOc8EL8jGQ_9QSHf1yTQLLPX_GJ-pKNKi01gcD1fhgThzi15T8GpkfpV5eXi1c2F4cukht3dms_g0wsEnFpcPb-Tlv_LiTtuA/s1600/Big3CumulativeLevyIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi5OEUq-Q6SemIGe2oCLQsdaXuftz6yq7hk4T10Q7dOB2JlOc8EL8jGQ_9QSHf1yTQLLPX_GJ-pKNKi01gcD1fhgThzi15T8GpkfpV5eXi1c2F4cukht3dms_g0wsEnFpcPb-Tlv_LiTtuA/s640/Big3CumulativeLevyIncrease.jpg" width="640" /></a></div>
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Each bar in the above chart shows the <i>cumulative increase in tax levy, compared with the 2008 tax levy</i>. That is, each bar shows how much <i>more</i> money has been collected between 2008 and that year than <i>would </i>have been collected if every tax levy to that point were equal to the 2008 tax levy. For example, a 2009 bar shows the difference between the 2009 tax levy and the corresponding 2008 tax levy, expressed as a percent of the 2008 tax levy; a 2010 bar shows the difference between the 2009 tax levy and the corresponding 2008 tax levy <i>plus </i>the difference between the 2010 tax levy and the 2008 tax levy, expressed as a percent of the 2008 tax levy. In other words, <i>this chart illustrates the effect over time of <b>deviating</b> from a strategy of holding the tax levy flat at the 2008 level</i>. Because all changes are normalized relative to each District's 2008 tax levy, this chart makes it possible to directly compare each of the Big Three fire districts with each other.<br />
<br />
<b>Strategies of the Big Three — Tax Levy Viewpoint</b><br />
<br />
The LaGrange Fire District has taken the moderate strategy of maintaining its tax levy relatively close to its 2008 level. Thus, its bars are barely visible until 2012. The amount of additional tax money LaGrange will have collected through 2013 is just 6.7 percent of LaGrange's 2008 tax levy, or $331,000. That's the meaning of LaGrange's 2013 bar of 6.7 percent.<br />
<br />
The Arlington Fire District has taken the strategy of significantly increasing the tax levy almost every year, so that the cumulative increase in Arlington's fire tax levy from 2008 until 2013 (proposed budget) is 82 percent. Thus, the amount of additional tax money Arlington will have collected through 2013 is 82 percent of Arlington's 2008 tax levy, or about $10.6 million.<br />
<br />
Now we come to poor Fairview. And I mean poor. The Fairview Fire District has taken the opposite strategy from Arlington by <i>decreasing </i>its tax levy every year until 2012. The cumulative decrease in Fairview's fire tax levy from 2008 until 2013 (proposed budget) is 18.6 percent. This means that the amount of tax money Fairview has failed to collect through 2013 is 18.6 percent of Fairview's 2008 tax levy, or about $563,000. Fairview's 2013 proposed tax levy is the first time Fairview has exceeded its 2008 tax levy. That's why Fairview's 2013 bar is shorter than its 2012 bar.<br />
<br />
<b>Strategies of the Big Three — Tax Rate Viewpoint</b><br />
<br />
Taxable market values in the big three fire districts have fallen every year since 2008. For the period 2008 to 2013, they fell a total of about 27 percent in LaGrange and Arlington, but only 16 percent in Fairview. Fairview's shallower decline means that Fairview's tax rate has taken less of a hit than LaGrange and Arlington have incurred. Nevertheless, the differing strategies of the Big Three are starkly evident in this chart of cumulative tax rate increase since 2008:<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBwGfE9y7L9vfjOEvi9kfxEjNdZE43peMYSY19pAgMB-arcs6E80hVSblRDsVr-ecoaF8I1Hn71uGA3n5fhuIDli_pXd-7gM_gUvLuE_wNOcCvJQUerGg8-xmZPWyzChslPRHgnzOPW90H/s1600/Big3CumulativeRateIncrease.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="416" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBwGfE9y7L9vfjOEvi9kfxEjNdZE43peMYSY19pAgMB-arcs6E80hVSblRDsVr-ecoaF8I1Hn71uGA3n5fhuIDli_pXd-7gM_gUvLuE_wNOcCvJQUerGg8-xmZPWyzChslPRHgnzOPW90H/s640/Big3CumulativeRateIncrease.jpg" width="640" /></a></div>
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The above chart is easier to explain than the previous one. Each bar is simply the percent increase in the true value tax rate for the year, compared with the corresponding 2008 tax rate (rather than compared with the previous year's tax rate). Because all tax rates are normalized relative to each District's 2008 tax rate, this chart makes it possible to directly compare the strategies of each of the Big Three fire districts.<br />
<br />
The true value tax rate is a good measure of how steeply taxpayers' wealth — measured by the market value of their properties — is taxed. Therefore, the above chart shows, for each fire district, how much more steeply taxpayers are being taxed compared with the meltdown year of 2008. Looking at the proposed 2013 budgets, Arlington will tax 66 percent more steeply; LaGrange will tax 42 percent more steeply; poor Fairview will only tax 28 percent more steeply.<br />
<br />
<b>The Proposed 2013 Budgets Continue These Divergent Strategies</b><br />
<br />
The proposed 2013 budgets for Arlington and LaGrange are not isolated decisions, but are continuations of strategies that have been followed by these district since the economic meltdown of 2008. Fairview, however, appears to be changing its strategy in the last year or so, with two double-digit tax rate increases in a row. Even so, the above charts show that Fairview still hasn't caught up with LaGrange regarding its response to the economic meltdown.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-38687197128875023452012-09-24T16:46:00.000-04:002012-09-24T16:46:20.793-04:00Fairview Fire District Draft 2013 Budget Document Is FlawedThe Fairview Fire District has posted on its website a <a href="http://fairviewfd.net/CommissionersB/2013proposedbudgetweb003.pdf">draft 2013 budget</a> that breaks at least three records for high fire taxes, as I discuss <a href="http://taxblog.billrubin.info/2012/09/fairview-fire-district-2013-budget-is.html">here</a>. The budget document also breaks some records for murkiness and confusion. That's saying a lot, considering the standard for inaccuracy, opaqueness, and just plain nonsense established by last year's budget, as I discuss <a href="http://taxblog.billrubin.info/2011/09/fairview-fire-district-treasurer.html">here</a>, <a href="http://taxblog.billrubin.info/2011/09/suggestions-to-improve-fairviews-fire.html">here</a>, and <a href="http://taxblog.billrubin.info/2011/10/fairview-fire-district-commissioners.html">here</a>.<br />
<br />
Although I consider myself <a href="http://en.wikipedia.org/wiki/Yogi_Bear">smarter than the average bear</a> when it comes to following quantitative discussions, I had more than a little trouble understanding the thread of discussion on the first page of the draft budget. There's hardly a sentence on that first page that I can confidently explain to myself, let alone to someone else. One could begin anywhere, but let's start with the two tables on the first page. None of the entries in the four rows of these tables made any sense to me upon first reading. Even after an extensive analysis, only a few entries in these tables make sense.<br />
<br />
<b>First Row of Tables</b><br />
<br />
The first row of each table is labeled “Tax Rate”, but all the entries are given as percents. That's more than a little odd, since tax rates are not ordinarily expressed in percents, but in dollars per thousand dollars of assessed (or market) value. Expressing tax rates as percents sounds a little like a cop stopping a motorist for speeding and saying, “I clocked you going 80 percent in a 55 percent zone.” Actually, it is possible in principle to express tax rates as percents ($10 per thousand dollars of market value is the same thing as 1 %), <i>but I'm dead sure that's not what's intended here</i>.<br />
<br />
In attempting to understand the table entries, my first assumption was that the “Tax Rate” label was really intended to be “Tax Rate Increase”, since tax rate increase is commonly expressed as a percent. This assumption is confirmed by sentences in the second and third bullet items above the first table, both of which describe specific numbers in the first row as “Tax Rate increase”. With this repeated confirmation in prose, it hardly seems possible that “Tax Rate Increase” isn't the intended meaning.<br />
<br />
Nevertheless, I doubt that “Tax Rate Increase” is the intended meaning. Here's why: <a href="http://billrubin.info/PropertyTax/FairviewFireDistrict/FairviewFireDistrict2013proposed.pdf">My own calculation of taxes</a> based on numbers given in the draft 2013 budget spreadsheets show a tax rate increase of 15.83 percent — not the 14.74 percent given in the last column of the second table. On the other hand, it just so happens that 14.74 percent is the tax <i>levy</i> increase corresponding to the draft budget. So most likely, the intended meaning of the first row of the tables is not “Tax Rate” but instead “Tax Levy Increase”. This implies that the two sentences above the first table which refer to “Tax Rate increase” should really read “tax levy increase”.<br />
<br />
Not only are these numerical quantities called by their wrong name repeatedly, but the <i>same </i>numerical quantities are called by <i>different </i>wrong names in different places. They're never called by their right name. <i>Readers of this document who have not done their own analysis can have no hope of understanding that the numbers in the first row of each table, labeled “Tax Rate”, are really “Tax Levy Increase”, nor that these same numbers, referred to in two sentences as “Tax Rate Increase” are really “Tax Levy Increase”.</i><br />
<br />
<b>Second Row of Tables</b><br />
<br />
The second row of each table is labeled “Budget”. In this context, the term “budget” ordinarily refers to the total amount of revenue or the total amount to be spent by an agency. However, the $2,856,725 entry in the first column of the first table is neither of these. Instead, it is exactly equal to <i>the 2012 tax levy </i>portion of total 2012 revenue. Similarly, the $3,277,700 entry in the last column of the last table is the proposed 2013 tax levy. Both these numbers appear as tax levies in the Excel spreadsheets on subsequent pages. Once again, <i>readers of this document can have no way of knowing that the numbers in the second row, labeled “Budget” are really “Tax Levy”</i>.<br />
<br />
<b>Third and Forth Rows of Tables</b><br />
<br />
These rows are labeled with abbreviations for “Town of Poughkeepsie Tax” and “Hyde Park Tax”. The term “tax” is rather ambiguous, but one would expect it to relate to some dollar amount. No such luck: All the entries in these rows are percents. I found no clues in the text of this page, or in my own analysis, for the meaning of the numbers in these rows. <i>I've thrown up my hands regarding the meaning of the entries in the third and forth rows.</i><br />
<br />
<b>First Page of Draft 2013 Budget Is Unintelligible</b><br />
<br />
So let's summarize: On the first page, “tax rate” doesn't mean “tax rate”, “tax rate increase” doesn't mean “tax rate increase”, and “budget” doesn't mean “budget”. They all mean something else. And I have no idea what “TOP Tax” and “HP Tax” mean. Furthermore, I haven't even tried to unscramble the meaning of the first and second column headings, “2012 Budget with only Assessment change” and “2012 Budget with Assessment change +Salary/Benefits”. The accompanying prose only adds to the confusion. For example, the fifth bullet item reads, “The $40,000 "In Lieu of Taxes" from St Francis is now part of the TOP assessed value.” What? A payment in lieu of taxes can become part of an assessed value? That doesn't make any sense.<br />
<br />
<b>A Failed Attempt To Tell a Story</b><br />
<br />
My sense is that this first page is attempting to tell a story about how the proposed 2013 budget has been developed, based on changes that have occurred in the past year. This is an admirable objective. Unfortunately, the attempt is a failure. The most polite way to say it is that the words used on the first page do not have their ordinary meanings. The sentences are at best ambiguous, and at worst nonsense. Most of the content of the first page of the draft 2013 budget is unintelligible gibberish.<br />
<br />
<b>Excel Spreadsheets Continue a Tradition of Tax Misinformation</b><br />
<br />
Well, the first page of the Draft 2013 budget may be unintelligible, but at least everything in the accompanying Excel spreadsheets documenting the budget makes sense, right?<br />
<i><br /></i>
Well, no. Hopefully, the individual budget items make sense. I have no way of knowing one way or the other. But when it comes to tax parameters, the spreadsheets continue a tradition of misinformation going back at least to May 2011 and probably much further. All this misinformation derives from a failure by members of the Budget Committee to understand the full implications of the fact that <i>property tax is fundamentally based on taxable market value</i> — not on assessed value. Stated another way, assessed value and equalization rate do not relate in any essential way to budget or taxing considerations. They are nothing more than a legacy artifact of the way tax bills are generated.<br />
<br />
The Budget Committee's misunderstanding affects the 2013 budget spreadsheets in at least two places:<br />
<ol>
<li>On page 6 of the spreadsheet, the third line, called “Total Assessed Valuation” is garbage, as I have explained <a href="http://taxblog.billrubin.info/2011/09/fairview-fire-district-treasurer.html">here</a>. It is a meaningless concept, like saying “I delivered 375 pounds of bricks to Poughkeepsie and 75 kilograms of bricks to Hyde Park, for a total of 450 weight of bricks.”</li>
<li>On page 7 of the spreadsheet, the last line purports to show the tax rate increase for Hyde Park as 11.6912 percent. This value is incorrect, as I have explained <a href="http://taxblog.billrubin.info/2011/09/fairview-fire-district-treasurer.html">here</a>. It is like saying “I accelerated from 50 miles per hour to 100 kilometers per hour, so my speed increased by 100 percent.” (The correct tax rate increase for Hyde Park is 15.8282 percent — the same as for Poughkeepsie.)</li>
</ol>
Once again, this tax misinformation is not new, and neither is my critique of it.<br />
<br />
<b>Embarrassment for Fairview</b><br />
<br />
In my view, the Fairview Fire District is not well served by a 2013 budget process which displays an incoherent story of the changes since 2012, and which presents tax misinformation. Not only are the general public and other stakeholders prevented from seeing an accurate picture of Fairview's financial situation, but the Board of Fire Commissioners itself can hardly make effective fiscal decisions in an atmosphere of confusion. At the very least, the Budget Committee has brought embarrassment to the Fairview Fire District, <a href="http://taxblog.billrubin.info/2011/10/fairview-fire-district-commissioners.html">just as it did last year</a>. It's clear that a different approach to the budget process is needed. Given the standard set by current officials, it would not be difficult for a different team to do better.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-85107562380892689082012-09-21T09:56:00.000-04:002012-09-21T09:56:42.845-04:00Automatic Notifications for this Blog Were Temporarily BrokenAutomatic notifications of new posts to this blog, including email subscriptions, became temporarily broken after I changed the primary URL of this blog from <b>FireTaxDutchess.blogspot.com</b> to <b>TaxBlog.BillRubin.info</b>. Although automatic notifications are now restored, subscribers were not notified of my post yesterday, <a href="http://taxblog.billrubin.info/2012/09/fairview-fire-district-2013-budget-is.html">Fairview Fire District 2013 Budget Is a Record Breaker</a>. My apologies for the inconvenience.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-71877021181955756802012-09-20T15:29:00.003-04:002012-11-01T16:52:22.509-04:00Fairview Fire District 2013 Budget Is a Record BreakerThe Fairview Fire District, already known for having the <a href="http://billrubin.info/FairviewFireTax/Consolidation.pdf">highest fire tax rate in Dutchess County</a> and <a href="http://taxblog.billrubin.info/2012/02/which-fire-district-has-highest-tax.html">possibly the highest fire tax rate in New York State</a>, has posted on its website a <a href="http://fairviewfd.net/CommissionersB/2013proposedbudgetweb003.pdf">draft 2013 budget</a> that breaks many of its own records for high fire taxes. Although this budget is still only preliminary, it is the starting point for a proposed 2013 budget which must be approved by Fairview's Board of Fire Commissioners at an open meeting on September 25. The tax effects of this budget can be described with three superlatives:<br />
<ol>
<li><i>The <b>highest</b> true value fire tax rate in this millennium</i>, a whopping $6.63 per thousand dollars of market value.</li>
<li><i>The <b>highest</b> tax rate <b>increase</b> in this millennium</i>, a whopping 15.8 percent increase over last year's tax rate.</li>
<li><i>The <b>highest</b> tax levy in this millennium</i>, and almost certainly the highest tax levy in Fairview's history, at $3,277,000.</li>
</ol>
<b>Tax Levy Increase</b><br />
<br />
If there's any good news here, it's the fact that the budget does <i>not</i> call for the highest tax levy <i>increase </i>in this millennium. It only calls for the <i>second highest</i> tax levy increase in this millennium, at 14.7 percent. The highest was set in 2008, at 20.9 percent. This parameter is the one that New York State's new “tax cap” law tries to limit to two percent. Of course, <a href="http://taxblog.billrubin.info/2011/09/two-percent-tax-cap-does-not-affect.html">the two percent tax cap doesn't really affect fire districts</a>.<br />
<br />
<b>Fairview's Tax History</b><br />
<br />
The following chart shows Fairview's tax rate history. The 2013 bar is yellow to indicate that <i>it is only a preliminary value</i>, not yet approved by the Board of Fire Commissioners.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJHydNMlRyFUEJt6b8NgzQwGtthpuxokp5gX_2Gp__YHGL26DejUelqWyInm2bSc56t1FpQjaY-ySQExk5pAfXTVG-h_2SkaBOTjNmtm05X0z_Wy_kGW4Z1nIRdH6i-_QGBO6SRhrwn_Di/s1600/TaxRate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJHydNMlRyFUEJt6b8NgzQwGtthpuxokp5gX_2Gp__YHGL26DejUelqWyInm2bSc56t1FpQjaY-ySQExk5pAfXTVG-h_2SkaBOTjNmtm05X0z_Wy_kGW4Z1nIRdH6i-_QGBO6SRhrwn_Di/s640/TaxRate.jpg" width="640" /></a></div>
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If you find charts like this useful, you can find similar ones for Fairview's market value and tax levy, as well as the yearly increases in each, and the data they are derived from, in my document <a href="http://billrubin.info/PropertyTax/FairviewFireDistrict/FairviewFireDistrict2013proposed.pdf">Fairview Fire District Property Tax Data</a>.<br />
<br />
<b>Fairview's Tax Rate Is Nearly 1/3 the School Tax Rate</b><br />
<br />
Most property taxpayers in the Fairview Fire District also pay Hyde Park school taxes — the largest single tax on property tax bills. <i>The Fairview fire tax is the second largest tax on property tax bills.</i> Fairview's fire tax rate is 32 percent as high as the 2012-2013 Hyde Park school tax rate, even though the Hyde Park School District has its own list of superlatives, including the highest tax rate in this millennium. But that's another story.<br />
<br />
<b>Reserve Funds Unfunded — Again</b><br />
<br />
Regular readers of this blog are aware that the Fairview Fire District has not been setting aside sufficient funds for future obligations in recent years. Fairview's 2010 budget contributed $143,000 to the reserve funds, roughly half of what should be contributed each year to finance long-term obligations. In 2011 and 2012 <a href="http://taxblog.billrubin.info/2011/10/fairview-fire-district-proposed-2012.html">nothing was contributed to the reserve funds</a>. The draft 2013 budget continues this short-sighted practice of contributing nothing to the reserve funds. So even with the exceptionally large tax rate increases of 2012 and 2013 (proposed), Fairview is getting further and further away from a sound fiscal footing. As I see it, <i>even as Fairview's tax rates go through the roof, <a href="http://taxblog.billrubin.info/2011/05/fairview-fire-district-is-in-crisis.html">Fairview's long term financial crisis</a> is deepening.</i><br />
<br />
<b>It Gets Even Worse</b><br />
<br />
Perhaps you're thinking you've now heard all the Bad News® about the draft 2013 budget. But you haven't. Last year, Fairview's treasurer presented and Fairview's board of fire commissioners approved a <a href="http://taxblog.billrubin.info/2011/10/fairview-fire-district-commissioners.html">budget document containing many flaws</a>, including two contradictory tax rates, both of which were wrong. Fairview's board was clearly indifferent to whether the budget numbers presented to the public — or to themselves — made any sense.<br />
<br />
I figured that this year, with two new board members, consideration would be given to avoiding the same kinds of embarrassing mistakes that were made last year. But I've clearly underestimated the ability of commissioners to create even more confusion than before. My analysis of presentation flaws in the draft 2013 budget is the subject of <a href="http://taxblog.billrubin.info/2012/09/fairview-fire-district-draft-2013.html">a forthcoming post</a>.<br />
<br />
<b>UPDATE 11/1/2012 — Budget for 2013 is Finalized</b><br />
<br />
At yesterday's Fairview Fire Commissioners meeting, the Board approved a final 2013 budget, unaltered from the above-described draft budget. Commissioners Ginny Buechele and Bob Gephard expressed “regrets” about the tax increase, but the vote was unanimous.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-56445337740877478992012-06-21T11:21:00.000-04:002012-06-21T11:21:11.175-04:00Pace Study's Analysis of Fairview Fire Tax Rate is FlawedPace University's <a href="http://www.pace.edu/dyson/research-and-resource-centers/academic-centers-and-institutes/michaelian-institute">Michaelian Institute for Public Policy and Management</a> released its 189 page <a href="https://dl.dropbox.com/u/61464897/Fairview/FairviewFinalReport20120621.pdf">Fairview Fire District Consolidation and Efficiency Study</a> final report on June 12. This work, known locally as the <i>Pace Study</i>, examines the feasibility of Fairview consolidating with one or more neighboring fire districts. Pace Study Principal Investigator Michael Genito will present this work at a public meeting this evening, according to the <a href="https://sites.google.com/site/fairviewstudy/">Pace Study website</a>.<br />
<br />
In spite of the central importance of tax rates to fiscal analysis, the final report devotes <i>only three sentences and one chart</i> to Fairview's past and future tax rates. Unfortunately, these three sentences, which pertain to average yearly tax rate increase and projection to 2017, are incorrect. Also, the chart contains some incorrect data and an incorrect linear approximation. When I presented my analysis to Genito, he readily concurred that all these statements and the chart are flawed.<br />
<br />
<b>Flawed Final Report Passage</b><br />
<br />
The flawed information, on page 175 of the <a href="https://dl.dropbox.com/u/61464897/Fairview/FairviewFinalReport20120621.pdf">final report PDF</a> (labeled page 167), is as follows:<br />
<blockquote class="tr_bq">
<i>The Fairview Fire District tax rate has increased on average 4.4% each year from 2008 through 2012. A linear regression of the past five years going forward indicates that by 2017 the tax rate would approximate $6.50 per $1,000 taxable assessed valuation. As such, and all things being equal, the median home would expect to see their fire service property tax to rise from $1,321 per year to $1,502 in 2017.</i></blockquote>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg3rbdEI-UFQtDGLtdTUBJUkeKLoCmBnFn7kAAyPg3zRx6_YVpALeVl26R0qq-5rgOAUATJvgaDBtIpvSFTeAsyybopNKc9c6aJCFGzVv_A_amIMjoDPuPuhTgD_s5Gq5GVk1oh_qeE_zs/s1600/PaceFairviewTaxRateChart.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="384" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgg3rbdEI-UFQtDGLtdTUBJUkeKLoCmBnFn7kAAyPg3zRx6_YVpALeVl26R0qq-5rgOAUATJvgaDBtIpvSFTeAsyybopNKc9c6aJCFGzVv_A_amIMjoDPuPuhTgD_s5Gq5GVk1oh_qeE_zs/s640/PaceFairviewTaxRateChart.jpg" width="640" /></a></div>
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The above chart, copied from the final report, is confusingly labeled “Tax Rate per $1,000 Assessed Value”, but it is clear from context that this data is really <i>tax rate per thousand dollars of <b>market </b>value</i>, otherwise known as <i>true value tax rate</i>. This is the appropriate kind of tax rate for this analysis.<br />
<br />
<b>2008 Fairview Fire Tax Rate Is Incorrect</b><br />
<br />
The key flaw is that <i>the 2008 tax rate in the above chart is incorrect</i>. Fairview's effective 2008 tax rate is $5.16, whereas the above chart shows it to be approximately $4.83. <i>The final report's error in Fairview's 2008 tax rate leads to all the other errors in this passage</i>, as will be explained below.<br />
<br />
<b>Genito's Blunder</b><br />
<br />
How did Genito come to make this error? He apparently took an unwarranted shortcut. Instead of dividing Fairview's tax levy by Fairview's market value (the correct method, and the definition of true value tax rate), he took the <i>Poughkeepsie portion</i> of Fairview's tax levy and divided it by the <i>Poughkeepsie portion</i> of Fairview's market value. Under ordinary circumstances, such as between 2009 and 2012, Genito's method would give the same — or nearly the same — result as the correct method. Unfortunately, <i>Fairview's circumstances in 2008 were far from ordinary.</i><br />
<br />
<b>Inequitable Apportionment</b><br />
<br />
Long-time followers of my work know that for every year from 2001 to 2008, apportionment of Fairview's fire tax levy between Poughkeepsie and Hyde Park has been inequitable, resulting in different true value tax rates for the Poughkeepsie and Hyde Park segments, in violation of New York State Real Property Tax Law. In 2008, the Poughkeepsie segment had a true value tax rate of $4.83 — the number on Genito's chart — but the Hyde Park segment had a whopping true value tax rate of $5.96. All these facts were documented in detail four years ago <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/#apportionment">here</a>, and especially <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/UnfairnessInFairview.pdf">here</a>.<br />
<br />
<b>Corrected Chart</b><br />
<br />
In order to fairly graph tax rates, the Y-axis should ordinarily begin at zero dollars. Genito's chart begins the Y-axis at $2, presumably to better visualize small changes in tax rate. The following chart, using the corrected 2008 value, takes this decision further, beginning the Y-axis at $5. This way, small changes in tax rate can be seen even better.<br />
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<br />
Although the final report's chart includes a straight line approximation to the data and an extrapolation to 2017, such analyses are not appropriate to the corrected data. That's because the corrected data simply does not fit a straight line well enough to justify such an approximation. The corrected data cannot meaningfully be used to linearly extrapolate Fairview fire tax rate out even one year — let alone five years. Once again, Genito concurs with this judgement, which is supported by generally accepted criteria for goodness of fit to a straight line. What this means is that <i>there is simply no basis to support the second and third sentences in the final report's passage, which project 2017 values.</i><br />
<br />
<b>Fairview's Tax Rate Has Been Trending Down Until 2012</b><br />
<br />
We know that taxes are always going up, right? Well, not in Fairview. Examination of the corrected chart between 2008 and 2011 shows that Fairview's yearly tax rate change has been downward twice and upward only once. Even the single upward change from 2010 to 2011 leaves Fairview's tax rate lower than it was in 2008. <i>A standard linear approximation to Fairview's 2008—2011 tax rate would show a <b>decreasing</b> tax rate, not an increasing one.</i><br />
<br />
<b>Fairview's Tax Rate Has Been Approximately Constant — Until 2012</b><br />
<br />
Fairview's downward trend in the 2008—2011 time period is actually quite small. It would probably make more sense to approximate Fairview's tax rate during this time period as a constant value. With such an approximation, Fairview's 2008—2011 tax rate is $5.10 plus or minus 1.2 percent for every year in this interval. The 2011 tax rate is equal to this constant value to within 0.2 percent.<br />
<br />
<b>Fairview's 2012 Tax Rate Breaks the Pattern</b><br />
<br />
This pattern of constant tax rate is broken in 2012, where the tax rate soars 12 percent from its historical value of $5.10. It is this break from the pattern that makes it infeasible to predict future tax rates. Another way to look at it is that <i>there is no way one could have predicted Fairview's 2012 tax rate by extrapolation from the previous 4 years.</i><br />
<br />
<b>Average Yearly Tax Rate Increase Is Misleading</b><br />
<br />
What about the first sentence in the final report's passage (average tax rate increase of 4.4 percent per year)? This statistic depends crucially on the 2008 value. With the corrected value, the average tax rate increase is only 2.6 percent per year, not 4.4 percent. Thus the passage's first sentence is incorrect.<br />
<br />
Of course, even the corrected sentence is of dubious value. Averages can be deceiving. Why mention a formally correct “average increase” when the tax rate actually <i>decreases </i>as often as it increases. A man drowned in a river whose “average” depth was 6 inches. But he was in the 10-foot part. For the average yearly tax rate increase, <i>essentially all of the tax rate increase during the 5-year period occurred in the last year.</i><br />
<br />
<b>Flawed Passage Is Best Removed</b><br />
<br />
According to Genito, the report's inclusion of the above-quoted passage stemmed from a request by Fairview officials (the “Study Committee”) for a projection based on a 5-year history. Now that Genito has accepted my correction, he and I seem to agree that no future projection can be justified by the data. As I see it, the average tax rate increase is misleading as well, and is best omitted. The only part of the flawed passage that could be of positive value is the corrected chart. This chart is certainly useful for understanding Fairview's fiscal situation, but such an understanding appears to be outside the scope of this report.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com7tag:blogger.com,1999:blog-8385941970577961249.post-50120819459824985292012-06-06T13:36:00.000-04:002012-06-06T13:36:17.206-04:00Why Has Fairview's Exempt Percent Increased?The Fairview Fire District has the <a href="http://firetaxdutchess.blogspot.com/2010/04/big-three-fire-districts-of-dutchess.html">highest fire tax rate in Dutchess County</a>, and <a href="http://firetaxdutchess.blogspot.com/2012/02/which-fire-district-has-highest-tax.html">possibly the highest fire tax rate in New York State</a>. One of the reasons for Fairview's high tax rate is that <i>roughly half of Fairview's market value is exempt from paying fire taxes</i>, but the exempt half still accounts for half the fire and emergency service calls to the Fairview Fire District. Fairview's taxable property owners pay not only their own share of fire tax, but also pay for service to the exempt properties. Fairview residents and property owners have had a longstanding interest in knowing exactly what percent of Fairview is exempt, and how Fairview's exempt percent may be changing over time. Unfortunately, there has been a history of misstatement of Fairview's exempt percent, which I have attempted to correct. See <a href="http://firetaxdutchess.blogspot.com/2012/04/fairview-fire-districts-exempt-percent.html">Fairview Fire District's Exempt Percent Is Misstated — Again</a>.<br />
<br />
<b>Fairview's Exempt Percent</b><br />
<br />
The following table shows a 5-year history of Fairview's exempt percent, according to my calculations:<br />
<br />
<table>
<tbody>
<tr><th>Year of Tax Bill</th><th>Exempt Percent</th></tr>
<tr><td align="center">2008</td><td align="center">47.9*</td></tr>
<tr><td align="center">2009</td><td align="center">47.5</td></tr>
<tr><td align="center">2010</td><td align="center">47.9</td></tr>
<tr><td align="center">2011</td><td align="center">50.8</td></tr>
<tr><td align="center">2012</td><td align="center">51.7</td></tr>
</tbody></table>
<blockquote class="tr_bq">
<span style="font-size: x-small;">* Listed exempt percent for 2008 is after correcting for a <a href="http://firetaxdutchess.blogspot.com/2010/03/fairviews-2008-exempt-percent.html">blunder by the Town of Poughkeepsie Assessor's Office</a>.</span></blockquote>
Note that the 2008 “land” tax bill (including the fire, town, county, and other taxes) corresponds to the 2007 assessment roll, and so forth. This table shows that for the years 2008 — 2010, Fairview's exempt percent has been 47.7 plus or minus 0.2 percent. However, beginning in 2011, Fairview's exempt percent has noticeably increased, standing at 51.7 percent for 2012 tax bills. What accounts for this 4 percent increase in Fairview's exempt percent over two years? This post will examine this question.<br />
<br />
<b>Exempt Value has Increased While Taxable Value Decreased</b><br />
<br />
Property values have been falling every year in Dutchess County since the 2008 economic meltdown. Fairview's taxable market value fell 11.8 percent between the 2010 and 2012 tax bills. If Fairview's <i>exempt </i>market value had also fallen 11.8 percent during this period, Fairview's exempt percent would have stayed the same as 2010, at 47.9 percent. But Fairview's exempt market value did not fall 11.8 percent — it actually <i>increased </i>by 2.5 percent! In terms of dollars, <i>Fairview's exempt market value for the 2012 tax bill was about $74 million greater than it would have been if Fairview's exempt percent had remained constant.</i> This $74 million caused Fairview's exempt percent to increase from 47.9 to 51.7 in two years. The $74 million arises from two sources:<br />
<ol>
<li>Four exempt parcels saw dramatic increases in assessed value, for a total of about $41 million. </li>
<li><i>Fairview's other exempt parcels fell in value by only about 4 percent on average, rather than by the 11.8 percent decrease for taxable parcels.</i> These exempt parcels are assessed at approximately $33 million more than they would have been if they'd depreciated in proportion to taxable parcels.</li>
</ol>
<b>Why did four exempt parcels dramatically increase in assessed value?</b><br />
<br />
One might assume that the dramatic increases in four parcels simply reflect major construction projects on these parcels. Surprisingly, <i>this assumption is true only for one of the four parcels.</i> Marist College's parcel at 30 Fulton Street (Parcel number 134689-6162-05-035776-0000) increased in value from $240,000 in 2010 to $17,760,000 in 2012 because student residence halls were constructed on that property between those years.<br />
<br />
The other three parcels, detailed in the following table, are part of the water and sewer systems for the City and Town of Poughkeepsie:<br />
<br />
<table>
<tbody>
<tr><th style="background-color: white;">Parcel number<br />
134689-6062-02<br />
-xxxxxx-0000</th><th>827844</th><th>835560</th><th>818562</th></tr>
<tr><td style="background-color: lightgrey;">Address</td><td align="center">3431 North Rd</td><td align="center">Kittredge Pl</td><td align="center">173 Kittredge Pl</td></tr>
<tr><td style="background-color: lightgrey;">Land use class</td><td align="center">822 (water supply)</td><td align="center">853 (Sewage)</td><td align="center">853 (Sewage)</td></tr>
<tr><td style="background-color: lightgrey;">Owner</td><td align="center">City of<br />
Poughkeepsie<br />
and Town</td><td align="center">City of<br />
Poughkeepsie</td><td align="center">Town of<br />
Poughkeepsie</td></tr>
<tr><td style="background-color: lightgrey;">2008 tax bill</td><td align="center">$4,274,000</td><td align="center">$111,400*</td><td align="center">$159,300</td></tr>
<tr><td style="background-color: lightgrey;">2009 tax bill</td><td align="center">$4,274,000</td><td align="center">$235,000*</td><td align="center">$316,000</td></tr>
<tr><td style="background-color: lightgrey;">2010 tax bill</td><td align="center">$4,274,000</td><td align="center"><i>Not in roll</i></td><td align="center">$316,000</td></tr>
<tr><td style="background-color: lightgrey;">2011 tax bill</td><td align="center"><i>Not in roll</i></td><td align="center"><i>Not in roll</i></td><td align="center">$300,500</td></tr>
<tr><td style="background-color: lightgrey;">2012 tax bill</td><td align="center">$12,000,000</td><td align="center">$10,000,000</td><td align="center">$5,250,000</td></tr>
</tbody></table>
<br />
<i>The above three parcels have had no significant construction or other actual increase in market value in many years. These parcels have just been improperly assessed for at least 5 years:</i><br />
<ul>
<li>The 835569 property was erroneously listed as taxable rather than exempt for the 2008 and 2009 tax bills, as indicated by * after its assessed value.</li>
<li>This same property was erroneously listed with land use class 340 (Vacant land located in industrial areas) for these same years.</li>
<li>Two of the three parcels were erroneously omitted from the assessment roll corresponding to the 2011 tax bill. One was erroneously omitted from the assessment roll for the 2010 tax bill.</li>
<li><i>None of the assessed values for any of these three parcels for any of the 5 years is remotely correct.</i> Even for the 2012 tax bill, the total assessed value is $27,250,000 — only a fraction of the true value of these three properties.</li>
</ul>
According to my discussion with Town of Poughkeepsie Assessor Kathleen Taber, the 2012 values are <i>only the beginning </i>of an attempt to correct the assessments for these parcels. A realistic correction will not be in place until the 2013 land tax bill, which is based on assessments being finalized this month. The current <a href="http://geoaccess.co.dutchess.ny.us/parcelaccess/">Parcel Access</a> database, applicable to 2013, shows a tentative total assessed value for these parcels of $125,000,000 — <i>nearly $100 million more than this year's assessment.</i><br />
<br />
<b>Why did exempt parcels decrease in value less than taxable parcels?</b><br />
<br />
While taxable parcels fell in value 11.8 percent in two years, most exempt parcels fell only about 4 percent. As I understand Taber's explanation for this, many exempt properties are difficult to assess because they don't generally appear on the open market. People don't generally buy or sell municipal sewage treatment plants, college academic buildings, or hospital atriums. Changes in the market value of these properties are difficult to gauge because there really isn't a market for these properties. Taber also mentioned that “commercial” properties tend to decrease in value more slowly than residential properties.<br />
<br />
It may also be that less attention is given to properly assessing exempt properties simply because the stakes are lower. For taxable parcels, property owners pay real money proportional to the assessment. Taxpayers want assurance that they are paying no more than necessary, while municipal governments receiving taxes want assurance that they are collecting the full amount of money from every taxable parcel. Therefore, tax assessors are under considerable pressure to make assessments of taxable properties that are neither too high nor too low. For exempt properties, these incentives are not present. Inaccurate — apparently even wildly inaccurate — assessments aren't so much noticed.<br />
<br />
<b>Summary</b><br />
<br />
There isn't one simple answer as to why Fairview's exempt percent has increased in the last two years. According to my analysis, there are three contributors, in order of decreasing importance:<br />
<ol>
<li>Although Fairview's taxable market value fell by 11.8 percent, Fairview's exempt market value fell by only about 4 percent. The difference means that Fairview's exempt properties were valued $33 million higher than they would have been if they had tracked the taxable decline.</li>
<li>Three municipal water and sewer parcels were grossly under-assessed. The assessor made a correction of $23 million.
</li>
<li>Marist College built student residences, increasing the value of one parcel by $18 million.</li>
</ol>
These three factors contribute 45%, 31%, and 24%, respectively, to Fairview's increase in exempt percent. Thus, all three factors contribute significantly to Fairview's increase.<br />
<br />
<b>Pattern of Under-Assessment of Exempt Properties</b><br />
<br />
The careful reader will have noticed two reasons why Fairview's exempt percent may not be as meaningful as one would like. The first is that gross under-assessment of high-value exempt properties is a bigger issue than previously assumed. Two years ago, I found that <a href="http://firetaxdutchess.blogspot.com/2010/03/fairviews-2008-exempt-percent.html">the St. Frances Hospital complex had been under-assessed</a> by over $100 million. At the time, I assumed this blunder was a one-time event that would be unlikely to be repeated. Now there's a second instance: Municipal water and sewer parcels have been under-assessed by over $100 million. Most of this under-assessment will not be corrected until Fairview's 2013 tax bill. This pattern will continue: The recent construction of dormitories at Dutchess Community College — worth tens of millions of dollars — will not be reflected in Fairview's 2013 exempt percent. Taber told me she didn't have time to add the DCC dorms to the current assessment roll, the basis for Fairview's 2013 tax. The omission of such major contributors to exempt value results in underestimation of the true exempt percent.<br />
<br />
<b>Unequal Depreciation</b><br />
<br />
The second reason why Fairview's exempt percent may not be so meaningful is that market forces apparently do not affect taxable and exempt properties equally. Nearly half (45 percent) of the increase in Fairview's exempt percent in the last two years is due to the fact that the average exempt property lost only one third as much value as the average taxable property did. At least, that's what the assessment rolls say. Do the assessment rolls accurately reflect exempt property values? There is some reason to wonder. If exempt properties have been overvalued in the last few years, Fairview's corresponding exempt percent is artificially high.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-18266519228268296302012-05-03T20:32:00.001-04:002012-05-03T20:32:34.694-04:00Joel Miller Just Can't Get Fairview Facts Straight<div style="text-align: center;">
<i>“Everyone is entitled to his own opinion, but not his own facts.” Daniel Patrick Moynihan</i></div>
<br />
Try as he might, New York State Assemblyman Joel Miller just can't get his facts right regarding the Fairview Fire District. On his first try, in a <a href="http://www.poughkeepsiejournal.com/article/20120422/OPINION04/304220050/Valley-Views-Joel-Miller">Poughkeepsie Journal Valley Views article</a> on April 22, 2012, he wrote<br />
<blockquote class="tr_bq">
<i>Fairview alone had fire district tax rates nearly 10 times higher than 27 other towns in Dutchess County in 2010.</i></blockquote>
I pointed out in <a href="http://firetaxdutchess.blogspot.com/2012/04/joel-millers-flawed-legislation-for.html">Joel Miller's Flawed Legislation for Fire District Budget Empowerment</a> that there are only 20 towns in Dutchess County, and that even if he meant “fire districts” instead of “towns” (which would have made more sense), his statement is still not even close to correct.<br />
<br />
<b>Flawed Staff Work</b><br />
<br />
In preparation for that blog post, I spoke with the staffer for Miller who had generated this misstatement. This staffer had already reviewed some of my own reports, including <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/BigThreeFireDistricts.pdf">The Big Three Fire Districts of Dutchess County</a>. It became clear to me that this staffer was not well prepared to interpret quantitative information, and the staffer readily conceded as much. My instinct was that if Miller were to release a corrected statement, it might also be wrong. Because I genuinely wanted facts to be correctly stated, I suggested a corrected statement, and I offered to preview any proposed new statement about Fairview. I never heard from Miller or any of his staffers about this matter.<br />
<br />
My instinct turned out to be correct. On April 26, Miller sent a press release to each Fairview Fire Commissioner. This press release was essentially a rewording of his Valley Views article, except that the incorrect statement about Fairview was replaced by a new incorrect statement about Fairview:<br />
<blockquote class="tr_bq">
<i>Fairview alone had fire district tax rates nearly eight times higher than 30 other fire districts in Dutchess County in 2010.</i></blockquote>
The irony is that the above statement appears to be a <i>mis-quote of a statement in my own report</i>, which reads<br />
<blockquote class="tr_bq">
<i>Fairview’s tax rate is nearly eight times the average of the non-big-three districts.</i></blockquote>
Apparently the staffer thought the word “average” in my statement didn't really mean anything important, and could just be omitted! But as most European high school students know, an average of a bunch of numbers must be smaller than some of the numbers being averaged. In fact, for ordinary data like tax rates, roughly half the numbers can be expected to be greater than the average. Maybe even much greater.<br />
<br />
And so it is in this case. Half the non-big-three fire districts had tax rates <i>greater than the average</i> of the non-big-three, and half had tax rates less than the average. So Fairview's tax rate was eight times higher than <i>only 14</i> other fire districts — not 30 other fire districts.<br />
<br />
Incidentally, “30 other fire districts” in Miller's statement is wrong too. There were only 30 fire districts in the whole analysis, and the big three fire districts were excluded from this average, so there could only be 27 non-big-three districts. The (weighted) average of these 27 was greater than 14 of these districts, and smaller than 13 of these districts, as one would expect. For five of these districts, Fairview was only about four times higher — not 8 times higher as Miller claimed.<br />
<br />
<b>Miller Has Been Ambivalent About Accuracy</b><br />
<br />
This post isn't about flawed staff work. The <i>princ</i>ipal is responsible for the work of his staff. If Miller had any doubt whether his staff could handle the fire tax rate issue, the doubt was resolved the first time the mistake was made. At that point, Miller knew — or should have known — that his staff didn't know what they were doing on this issue, and so were unlikely to make a proper correction on their own. Miller could have arranged for an independent review of his proposed “correction” before it was released. (I would have been glad to accommodate.)<br />
<br />
But this post isn't just about fire taxes either. Joel Miller represents 6 of Dutchess County's 20 towns in the New York State Assembly. Yet he allowed himself to write “27 other towns in Dutchess County,” a gaffe that he or any member of his staff could easily have corrected without knowing anything about fire tax rates.<br />
<br />
Taken together, these mistakes show Miller to have been ambivalent about the accuracy of his factual statements. Such lapses affect his credibility.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-85871235902101263432012-04-26T20:10:00.000-04:002012-04-26T20:10:14.516-04:00Joel Miller Combats Incestuously Elected Fire CommissionersNew York State Assemblyman Joel Miller has introduced legislation to provide for election of fire commissioners in the November general election. Under current New York State law, election of fire commissioners is held on the second Tuesday of December from 6:00 P.M. to 9:00 P.M., often at a different polling place than for the November general election. According to my recent conversation with Miller, he had intended to mention this initiative, called the <a href="http://assembly.state.ny.us/leg/?sh=printbill&bn=A09707&term=">Fire District Community Participation Act</a>, in his April 22, 2012, <a href="http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=2012304220050&nclick_check=1">Valley Views article</a> in the Poughkeepsie Journal, but it was somehow omitted.<br />
<br />
I heartily support Miller's initiative.<br />
<br />
<b>Why should fire districts be any different from other local governments?</b><br />
<br />
Fire districts are just one more kind of local government in New York State, along with towns, cities, villages, and counties. I know of no reason why fire districts should live by different rules than any of these other local governments.<i> </i>In my recent post <a href="http://firetaxdutchess.blogspot.com/2012/04/joel-millers-flawed-legislation-for.html">Joel Miller's Flawed Legislation for Fire District Budget Empowerment</a>, I used this reasoning to <i>oppose </i>Miller's initiative for popular vote on fire district budgets. Here, the same reasoning argues <i>in favor of</i> Miller's initiative to make the fire commissioner election process the same as that in other local governments. <i>My view in both cases upholds the basic principle that fire districts should live by the same rules as other local governments.</i><br />
<br />
<b>Current law for fire district elections distorts the voice of the people</b><br />
<br />
Although fire commissioners — the representatives in our <a href="http://en.wikipedia.org/wiki/Representative_democracy">representative democracy</a> — are nominally elected by popular vote, New York State law provides that this vote must take place on a different day from the general election, usually at greatly restricted hours, and often at a different polling place from the general election. The practical result is that most voters who bother to vote in fire district elections are those with a substantial personal stake in the outcome — firefighters, fire district officials, and their families. Miller, in the Valley View article, describes the resulting distortion of the people's voice in his usual restrained way as “incestuously elected commissioners.”<br />
<br />
<b>How low is voter turnout in fire district elections?</b><br />
<br />
Voter turnout in fire district elections can be put into perspective by comparing it with that in the general election. An <a href="http://cityroom.blogs.nytimes.com/2010/11/16/new-york-state-ranks-last-for-voter-turnout/">article in the New York Times</a> of November 16, 2010, asserts that <i>New York ranked dead last among all 50 states in voter turnout in that year's general election.</i> How low was dead last? Only 32.1 percent of registered voters voted. But that was in the <i>general</i> election. In the Arlington Fire District's election of December 13, 2011, voter turnout was 0.44 percent, according to data in Miller's Valley View article. So in the general election, one out of three registered voters actually voted, but in the Arlington Fire District's election, it was one out of 230. Such a minuscule voter turnout is probably typical for fire district elections in New York State. It is clear that <a href="http://en.wikipedia.org/wiki/Representative_democracy">representative democracy</a> is not working effectively for fire districts in New York State.<br />
<br />
<b>Abolish taxation with slanted representation</b><br />
<br />
In decades past, fire districts were mostly volunteer, and their tax rates were correspondingly low. It could be argued that fire district “taxation with slanted representation” didn't matter too much in the past, because little money was at stake. Those days are long past. In many districts, volunteerism has dropped off dramatically, and been replaced by career firefighters. Like paid employees in any other field, career firefighters are expensive. Fire tax rates have soared. <i>In some fire districts in Dutchess County, fire taxes are the second largest item of property tax, bested only by school taxes.</i> There is no place in today's world for fire district taxation with slanted representation. Fire district taxation should have the same standard of representation as other local governments do. This means that fire commissioner elections should be part of the general election, as Miller proposes.<br />
<br />
<i>As always, I welcome your reasoned comments to this opinion piece.</i>Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com3tag:blogger.com,1999:blog-8385941970577961249.post-23978835563695763422012-04-25T20:42:00.000-04:002012-04-25T20:42:16.861-04:00Joel Miller's Flawed Legislation for Fire District Budget EmpowermentNew York State Assemblyman Joel Miller has introduced legislation to provide for <i>public vote on fire district budgets in the November general election</i>. Under current New York State law, fire district budgets are controlled by the district's board of fire commissioners. Miller's legislation <a href="http://open.nysenate.gov/legislation/bill/A9762A-2011">A9762A</a>, called the <i>Fire District Budget Empowerment Act</i>, shifts the approval of fire district budgets from the fire commissioners to the general public. Miller announced his popular vote initiative in an April 22, 2012, <a href="http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=2012304220050&nclick_check=1">Valley Views article in the Poughkeepsie Journal</a>.<br />
<br />
<b>Popular Vote on Budget Is Inconsistent With Other Local Governments</b><br />
<br />
As I see it, popular vote on fire district budgets is a risky departure from most governance in this country. There is no public vote on the federal budget, there is no public vote on the New York State budget, there is no public vote on the Dutchess County budget, or on city or village budgets. Instead, the general public votes for <i>representatives </i>(government officials such as legislators, councilmen, etc.) who in turn decide on agency budgets. This is the principle of <a href="http://en.wikipedia.org/wiki/Representative_democracy">representative democracy</a>, one of the foundations of this country. In the case of fire districts, the people vote for fire commissioners, who in turn control the budget.<br />
<br />
<b>Direct Democracy Is Seldom Used But Often Problematic</b><br />
<br />
Miller's initiative is an example of <a href="http://en.wikipedia.org/wiki/Direct_democracy">direct democracy</a>, in which policy decisions are made by popular vote, bypassing or overriding government officials. Direct democracy for economic decisions is used only sparingly in the United States. In California, many major economic decisions beginning with the infamous <a href="http://en.wikipedia.org/wiki/California_Proposition_13_(1978)">Proposition 13</a> have been made by popular vote, with disastrous results.<br />
<br />
The founding fathers were very much opposed to direct democracy (also called “pure democracy”), <a href="http://en.wikipedia.org/wiki/Direct_democracy">according to Wikipedia</a>. John Witherspoon, a signer of the Declaration of Independence, said, “Pure democracy cannot subsist long nor be carried far into the departments of state – it is very subject to caprice and the madness of popular rage.” The American colonists favored representative democracy — not direct democracy. That's why they said “No taxation without <i>representation</i>.” They didn't say “No taxation without popular vote.”<br />
<br />
<b>Why should fire districts be any different from other local governments?
</b><br />
<br />
Fire districts are just one more kind of local government taxing authority in New York State, along with Towns, cities, villages, and counties. I know of no reason why fire districts should be governed differently than any of these other taxing authorities. In my view, fire districts should continue to use the same budget approval process as most other local taxing authorities.<br />
<br />
<b>Incorrect and Misleading Statements in Valley View Article</b><br />
<br />
<a href="http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=2012304220050&nclick_check=1">Miller's Valley View article</a> contains misleading statements, and at least one statement that is just plain wrong. In the context of the Fairview Fire District's high fire tax rate, Miller writes:<br />
<blockquote class="tr_bq">
<i>Fairview alone had fire district tax rates nearly 10 times higher than 27 other towns in Dutchess County in 2010.</i></blockquote>
This statement is absurd, since there are only 20 towns in Dutchess County. Well, perhaps Miller meant “fire districts” instead of “towns”, since there are about 31 fire districts in Dutchess County. I checked with Miller's office, and was assured that yes, that's what he meant. Well, wrong again! <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/Consolidation.pdf">My tax rate analysis from 2009</a> shows (page 14) that Fairview's tax rate was 10 times higher than 13 other fire districts — not 27 other fire districts. Miller's research staffer has conceded that the Valley Views statement — even after changing “towns” to fire districts” — is incorrect.<br />
<br />
Miller misleadingly writes, “This legislation will permit public participation in fire district budgets ...,” as if public participation in the fire district budget process doesn't already exist. But New York State law already requires a fire district to publicize its tentative budget and to hold a public hearing on the budget, during which public input is received. In this way again, state law provides for public participation in the fire district budget process just as it does in most other kinds of local government, including counties, cities, villages, and schools.<br />
<br />
<b>This Is My Opinion</b><br />
<br />
<i>Most of my previous posts have been nonpartisan, focusing on objective facts. This post (except for the last section) is clearly my own opinion. Therefore, it's marked with an “Opinion” label. As always, I welcome your reasoned comments.</i>Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-61500752523461713662012-04-14T15:55:00.000-04:002012-04-14T15:55:44.480-04:00Fairview Fire District's Exempt Percent Is Misstated — AgainProperty taxes are not billed to all real properties, only to <i>taxable </i>properties. Some properties are <i>exempt </i>from taxes because they belong to the government or to not-for-profit institutions such as schools, hospitals, and churches. In most jurisdictions, exempt properties comprise only a small fraction of the total market value of the jurisdiction. Not so in the Fairview Fire District. Fairview is home to three large not-for-profit (NFP) institutions (Marist College, St. Frances Hospital, and Dutchess Community College) in addition to numerous smaller government and private institutions. For more details, see page 11 of <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/BigThreeFireDistricts.pdf">The Big Three Fire Districts of Dutchess County</a>. This might not be a problem for a large fire district, but Fairview is a very small district, comprising only 4.5 square miles. Therefore, the percent of Fairview's market value that is exempt from fire tax — <i>Fairview's exempt percent</i> — is large.<br />
<br />
Although the NFPs pay no fire tax, they still account for about half of the fire and emergency service calls of the Fairview Fire District. Property taxpayers in Fairview pay not only their own share of fire tax, but they also pay the “NFP share”. Fairview's large exempt percent is a major factor in Fairview's high fire tax rate. Fairview has the <a href="http://firetaxdutchess.blogspot.com/2010/04/big-three-fire-districts-of-dutchess.html">highest fire tax rate in Dutchess County</a>, and <a href="http://firetaxdutchess.blogspot.com/2012/02/which-fire-district-has-highest-tax.html">possibly the highest fire tax rate in New York State</a>. Many property taxpayers in Fairview are understandably resentful of their high fire taxes, and they correctly attribute much of the cause to the fact that they are paying the NFP share. How large is the NFP share? That is, what percent of the Fairview Fire District's total market value is exempt from property tax? Briefly, how much is Fairview's exempt percent?<br />
<br />
<b>History of Exempt Percent Misstatement</b><br />
<br />
Unfortunately, there has been a long history of misstatement of Fairview's exempt percent. I have traced these misstatements to two documents. The first document is a single-page undated anonymous sheet, probably from around 2005, claiming that Fairview is 77 percent exempt. All likely parties have disclaimed authorship of this document, and there seems no way to trace its conclusions to primary sources. Therefore, this document cannot be relied upon.<br />
<br />
The second document is a 5-volume report, <i>Land Use Analysis & Assessment Report</i>, prepared for the Fairview Fire District by consultant company <a href="http://www.ctmale.com/">C. T. Male Associates</a> in 2006. Only two sentences in this report refer to Fairview's exempt percent, and even these sentences discuss its value in quite a roundabout way. Unfortunately, Fairview officials incorrectly interpreted the circumlocutory language in the report to mean that Fairview is 73 percent exempt.<br />
<br />
And so it was that by April of 2008, an urban legend had become established that 70 to 80 percent of Fairview's market value is tax exempt. Numbers in this range were widely quoted by Fairview officials, by residents, by the <a href="http://www.poughkeepsiejournal.com/">Poughkeepsie Journal</a>, and even by state and county officials. By June of 2008, State Senator Stephen Saland, State Assemblyman Joel Miller, and Dutchess County legislator Jim Doxsey were all in the process of submitting legislation intended to alleviate the burden on property taxpayers in Fairview and any other fire districts with exempt percents of 50 or more. Fairview's exempt percent had clearly become a potent political weapon in attempts to obtain tax relief.<br />
<br />
<b>Busting the Urban Legend</b><br />
<br />
It was at this time that I began my own investigation of Fairview's exempt percent. On June 18, 2008, I posted a 25-page report <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/Tax%20Exempt%20Properties%20in%20Fairview.pdf">Tax Exempt Properties in Fairview</a> to my newly-created website <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/">Fairview Fire Tax</a>. This report showed that Fairview is 41.7 percent exempt. My result was independently confirmed in a <a href="http://home.roadrunner.com/~billrubin/FairviewFireTax/MyersMemoExempt.pdf">memo</a> issued by Dutchess County Real Property Tax Director Kathleen Myers. Thus, none of the state and county initiatives would have benefited Fairview as intended, because Fairview's exempt percent was not nearly so high.<br />
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Sen. Saland, Assemblyman Miller, and Legislator Doxsey were quick to recognize the legitimacy of my analysis and withdraw their bills. Although some local advocates initially responded to my report with skepticism and even hostility, my result eventually became generally accepted, and the urban legend gradually died away. But local officials were clearly embarrassed by their acceptance and promotion of wildly inaccurate exempt percents for Fairview, and they have become highly sensitive to any misstatements of Fairview's exempt percent.<br />
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<b>Busting the Corrected Exempt Percent</b><br />
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Upon calculating Fairview's exempt percent for tax years 2009 and 2010, I found that the value had jumped up dramatically to 47.5 and 47.9 percent, respectively. Then in March 2010, I made a remarkable discovery: Fairview's exempt percent of 41.7 that I had calculated in 2008 is wrong! Well, 41.7 percent is still the “official” number since it is based on the official assessment roll for 2007. Therefore it is “right” by definition. However, it is still wrong by any reasonable judgment. That's because a blunder by the Town of Poughkeepsie Assessor's Office had caused $120 million in exempt property to be omitted from the official assessment roll for 2007! <a href="http://firetaxdutchess.blogspot.com/2010/03/fairviews-2008-exempt-percent.html">Correcting for this blunder</a> causes Fairview's effective 2008 exempt percent to be 47.9.<br />
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Assuming this correction, <i>Fairview's exempt percent has been about 47.7 percent plus or minus 0.2 percent for tax years 2008, 2009, and 2010. </i>That's where things have stood ... until last month.<br />
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<b>Pace Study Misstatement</b><br />
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The Fairview Fire District has contracted with Pace University's <a href="http://www.pace.edu/dyson/research-and-resource-centers/academic-centers-and-institutes/michaelian-institute">Michaelian Institute for Public Policy and Management</a> to study the feasibility of Fairview consolidating with one or more neighboring fire districts. New York State <a href="http://firetaxdutchess.blogspot.com/2010/01/fairview-fire-district-granted-45k-for.html">awarded Fairview a $45,000 grant</a> two years ago to pay for this study, known locally as “the Pace study”. On March 22, 2012, the study's Principal Investigator, Michael Genito, presented the Study's <a href="http://dl.dropbox.com/u/61464897/Fairview/FairviewInitialFindingsPresentation.pdf">initial findings</a> at a <a href="https://sites.google.com/site/fairviewstudy/">public meeting</a> in the Town of Poughkeepsie's Town Hall. Page 9 of this presentation included the statement that in Fairview “55% of real property value is tax-exempt”. I was one of a number of people at the public meeting who thought the 55 percent figure seemed out of line with Fairview's recent history of exempt percents, which have all been close to 47.7 percent.<br />
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Still, my last calculation was two years old, and it was theoretically possible, though unlikely, that Genito's figure could be correct for 2012. However, it is not. After independently obtaining the latest tax assessment rolls from Dutchess County's Real Property Tax Service Agency, calculating Fairview's exempt percent, and comparing with Genito's calculations (which he generously provided me), I found that <i>for the 2012 tax year, 51.7 percent of Fairview is tax exempt</i>. I'm pleased to report that as of today, Genito concurs with this result, and plans to update <a href="https://sites.google.com/site/fairviewstudy/">the Pace study website</a> accordingly.<br />
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Genito's primary mistake in calculating Fairview's exempt percent was that he simply added the assessed valuations of Hyde Park with those of Poughkeepsie, without first converting Hyde Park's assessed valuations to market value using the equalization rate. This is the same blunder that <a href="http://firetaxdutchess.blogspot.com/2010/12/poughkeepsie-journal-misstates-property.html">I found</a> committed in another context by the Poughkeepsie Journal. But unlike the Poughkeepsie Journal, Genito immediately recognized his error once it was pointed out. After correcting for this error, Genito's calculation yields an exempt percent of 51.6, almost the correct value. The remaining 0.1 percent is accounted for by a technicality: Genito failed to include $1.75 million of exempt market value from two properties in Hyde Park that are only partially in the Fairview Fire District.<br />
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<b>Fairview's Exempt Percent Has Substantially Increased</b><br />
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Although Fairview's current exempt percent is not as great as claimed in the Pace study's initial findings, it is still nevertheless substantially greater than Fairview's historical value of 47.7 percent. The obvious question is, Why? This topic will be the subject of a forthcoming post.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com1tag:blogger.com,1999:blog-8385941970577961249.post-87402027373245770192012-03-15T22:31:00.000-04:002012-03-15T22:31:13.951-04:00Is a Committee of Two Subject to the NYS Open Meetings Law?<i>I've recently become interested in New York State's powerful open government laws, which provide the public with comprehensive rights of access to government records — the <a href="http://www.dos.ny.gov/coog/foil2.html">Freedom of Information Law</a> (FOIL) — as well as rights of attendance at government meetings — the <a href="http://www.dos.ny.gov/coog/openmeetlaw.html">Open Meetings Law</a>. The nuances of these laws are often unclear to both the public and public officials. For this reason, the <a href="http://www.dos.ny.gov/coog/index.html">NYS Committee on Open Government</a> has published thousands of “advisory opinions” on its website. Even with all this attention to open government laws, I have found that the law is still sometimes ambiguous, and that public officials are not always aware of their responsibilities under these laws. The following post is my first venture into the world of open government. This post happens to come during <a href="http://www.sunshineweek.org/">Sunshine Week</a>, which the Poughkeepsie Journal acknowledged yesterday in an <a href="http://www.poughkeepsiejournal.com/article/20120314/OPINION01/303140038/Put-onus-government-disclosure?odyssey=mod%7Cnewswell%7Ctext%7CPoughkeepsieJournal.com%7Cs&nclick_check=1">unsigned editorial</a>.</i><br />
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Local government “public bodies” such as boards of fire commissioners, town councils, village boards, school boards, city councils, etc. are subject to New York State's <a href="http://www.dos.ny.gov/coog/openmeetlaw.html">open meetings law</a>. This means that these bodies must allow the public to attend their meetings, and must provide various accommodations to make public attendance practical and meaningful. (For example, advance notice of meeting, advance copies of records to be discussed, recording of meeting by public, accessibility by disabled persons, and timely availability of minutes of meeting.)<br />
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What is less well known is that, <i>as a general rule, committees of public bodies are also public bodies</i>, and are therefore subject to all the requirements of the open meetings law. What I mean by “as a general rule” is that <i>a committee comprising three or more members of a public body</i> is a public body, and is therefore subject to the open meetings law. But what about a committee of just two members of a public body? This case is ambiguous at best. <i>Most likely, a committee of two members of a public body is <b>not </b>a public body, and therefore is <b>not </b>subject to the open meetings law.</i> But this conclusion is not dead certain.<br />
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<b>Why does it matter?</b><br />
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It is common for local government public bodies to form various committees for various purposes. For example, the Board of Fairview Fire Commissioners has separate committees for budget, personnel, apparatus, check audit, computer, safety, policy, record retention, and others. These committees typically comprise two commissioners, or two commissioners and the fire chief. In practice, these committees have met in private — not in public. Do these meetings violate the Open Meetings Law?<br />
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<b>What does the law say?</b><br />
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<a href="http://www.dos.ny.gov/coog/openmeetlaw.html#s102">Section 102.2 of the Open Meetings Law</a> defines a <i>public body</i> as:<br />
<blockquote class="tr_bq">
<i>... any entity, for which a quorum is required in order to conduct public business <b>and </b>which consists of two or more members, performing a governmental function ... for a public corporation as defined in section sixty-six of the general construction law, ... or committee ... of such public body. </i>[Elided phrases believed irrelevant to this discussion.]</blockquote>
The term “public corporation” in this context simply means a municipality such as a fire district. A committee comprising two fire commissioners certainly is an entity of two or more members performing a governmental function for a fire district. <i>So it would appear that such a committee is a public body, and therefore subject to the open meetings law.</i> At least, this was my understanding of a phone conversation with Committee on Open Government Executive Director Robert Freeman on February 16. So case closed, right?<br />
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<b>Not so fast</b><br />
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Wait a minute. What about the “quorum” part? The above definition says that a public body is an entity for which a quorum is required. Does a committee of two commissioners even have a quorum? Freeman assured me that it does, and he cited Section 41 of the General Construction Law to prove it. After my conversation with Freeman, I found Section 41 to say the following:<br />
<blockquote class="tr_bq">
<i>Whenever <b>three or more</b> public officers are given any power or authority, or<b> three or more</b> persons are charged with any public duty to be performed or exercised by them jointly ..., <b>a majority</b> of the whole number of such persons or officers ..., <b>shall constitute a quorum</b> .... </i>[Elided phrases believed irrelevant to this discussion.]</blockquote>
The crucial part of Section 41 is that <i>the law does not define a quorum for two persons</i>, only for three or more. But a public body is an entity for which a quorum is required. Therefore, <i>two persons cannot be a public body</i>. And only public bodies are subject to the open meetings law. Conclusion: <i>A committee of two is <b>not </b>subject to the open meetings law.</i> My understanding of a subsequent conversation with Freeman on March 13 is that he agreed with this new conclusion.<br />
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<b>What if this conclusion is wrong?</b><br />
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The fact that the definition of public body mentions <i>two or more</i> rather than <i>three or more</i> adds a certain degree of ambiguity — or some might say contradiction — in the law. Thus there is still a little bit of doubt as to whether a committee of two is subject to the open meetings law. In my view, it would be unduly burdensome for a committee of two to be subject to the open meetings law. For example, the Fairview board of five fire commissioners has about a dozen committees. If each committee comprised two commissioners, then it's quite likely that every commissioner is paired with every other commissioner on some committee. So no commissioner could speak in private with any other commissioner, unless they were careful to avoid talking about the business of the particular committee(s) they comprise. As a practical matter, two commissioners could very easily slip into violating the open meetings law if they spoke with each other at all. If no commissioner can talk in private with any other commissioner, the work of government would be greatly impeded.<br />
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<b>Protecting a committee from the open meetings law</b><br />
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I am a strong supporter of open government, and I would normally look askance at any attempts to circumvent its intent. On the other hand, it would frustrate the workings of government if the open meetings law applied to a committee of two. It turns out that a board of fire commissioners can “protect” itself from any possible applicability of the open meetings law to committees of two by the simple device of adding another official such as the fire chief or District Treasurer to each committee. That's because advisory opinions and legal decisions have held that the definition of a committee as a public body requires <i>every </i>member of the committee to be a member of the public body. Since the fire chief and treasurer cannot be commissioners, their membership on a committee automatically insulates a committee from the open meetings law. It turns out that in Fairview, many committees already include the fire chief or treasurer. My understanding of my conversation with Freeman on March 13 is that this way of circumventing the open meetings law for a committee of two is safe and effective, and does not significantly violate the spirit of the open meetings law.Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0tag:blogger.com,1999:blog-8385941970577961249.post-9473288700939587312012-02-05T18:28:00.000-05:002012-02-05T18:28:10.623-05:00You Can Now Subscribe to this Blog by EmailWould you like to know when I post a new item to this blog? You can now subscribe to this blog by email. Simply enter your email address in the field at the upper right of the main blog page (under my photo), select the <b>Submit</b> button, and follow the directions from there. From then on, you'll receive a copy of any new posts to this blog within 24 hours after their posting.<br />
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<span style="font-size: x-small;">There was a time in the past when some readers received automatic email notification of new posts to this blog. However, this older scheme seems to be permanently broken, for reasons I frankly don't understand. My apologies to readers who've lost automatic email notification. </span><span style="font-size: x-small;">Newsreader subscriptions to this blog (Atom, etc.) continue to be available from the bottom of the blog's main page.</span>Bill Rubinhttp://www.blogger.com/profile/16139253202894399632noreply@blogger.com0