Pawling School District Promulgates Misleading Tax Information — Again

On August 24, 2015, Pawling School District Assistant Superintendent for Finance Neysa Sensenig presented 2015-2016 Tax Rates 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, this year's tax levy increase is zero. This sounds like good news.  However, Sensenig's presentation omitted the bad news about this year's Pawling School District tax:

• The 2015 aggregate tax rate is $26.77 per thousand dollars of market value, the highest for the District in this century.
• This tax rate will most likely be the second highest 2015 tax rate of any school district in Dutchess County (after Spackenkill).
• The 2015 tax rate increase is 12.17 percent, the second highest tax rate increase for the District in the last decade. (The 2010 tax rate increase was 19.0 percent.)  

In my view, the public is mislead by the omission of this crucial bad news. It's especially ironic that a presentation entitled 2015-2016 Tax Rates 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.

Aggregate Tax Rate — Missing

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 The Tax Rate Is All That Matters.)

In fairness, the 2015-2016 Tax Rates presentation actually does 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 dollars per thousand dollars of market value (what Sensenig calls “full value assessment”). A glance at the Pawling School District Tax History shows that this is the highest tax rate for the District in over a decade. In fact, it's actually the highest tax rate for the Pawling School District in this century.

Aggregate Tax Rate Increase — Missing

Next question: How does the Pawling School District's 2015 tax rate of $26.77 compare with that of last year? That is, what is the percent increase in the tax rate? The 2015-2016 Tax Rates presentation does not answer this question.

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 the given 2014 aggregate tax rate (the TOTALS line of column 10) is the wrong value. 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 Pawling School District Tax History. Comparing the correct tax rates shows that the Pawling School tax rate has increased a whopping 12.17 percent for the 2015-2016 year. 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 any school district in Dutchess County last year. (Spackenkill had the greatest tax rate increase last year, at “only” 6.9 percent.) See 2014 School District Tax Rate Rankings.

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 taxpayers' wealth — measured by the taxable market value of property — 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.

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 the Town of Pawling's equalization rate has been steadily increasing since 2009, and it incurred a dramatic increase this year, from 44.86 percent to 50.69 percent. Market value is assessed value divided by equalization rate.

One must understand that property tax in New York State (and in most other states) is based on market value, not on assessed value, 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 Full Value versus Fractional Value Assessing — A Comparison. Unfortunately, the Town of Pawling is still one of the few remaining towns in Dutchess County which practices fractional value assessing.

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 decrease — makes no sense. When the tax levy remains constant and the taxable market value decreases, the tax rate must increase.

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 The Dirty Little Secret of Property Taxes.

Municipal Segment Tax Rate Increases Are Wrong

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 increase is also the tax rate increase 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 2014 School District Tax Rate Rankings.)

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 increase, while all other taxpayers saw a high-ball tax rate increase. All this is explained in detail here.

The good news is that the 2015-2016 Tax Rates 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.

The bad news is that the 2015-2016 Tax Rates presentation for municipal segments' tax rates (table on page 6) is misleading, and its tax rate increases are just plain wrong. (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 assessed 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:

Pawling School District Tax Rate Increases
Municipal Segment	Tax Rate per $K of Market Value		Percent Tax Rate Increase
	2014	2015	Correct Value	Presentation
Beekman	$26.88	$23.68	-11.93%	-11.93%
Dover	$26.88	$23.75	-11.66%	-11.27%
East Fishkill	$26.88	$23.66	-11.97%	-11.97%
Pawling	$23.65	$27.01	14.24%	1.10%
Patterson	$26.88	$23.67	-11.93%	-11.07%
Aggregate	$23.86	$26.77	12.17%	-0.43%

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.)

Overconfident Officials Unintentionally Mislead a Gullible Public

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 blog post, 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. The public interest is not well served by the Pawling School District's 2015-2016 Tax Rates 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 wish I could report that the Pawling School District is the only local taxing jurisdiction in Dutchess County to misunderstand fractional value assessing, resulting in the promulgation of misleading tax information. Unfortunately, the Hyde Park School District, the Town of Hyde Park, the Town of Pleasant Valley, the Fairview Fire District, and even the Poughkeepsie Journal 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 numeracy 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 Dutchess County Real Property Tax Service Agency or the New York State Department of Taxation and Finance. Now overconfident officials at the Pawling School District have joined this list of errant number crunchers.

Pawling School District's 2014 Tax Apportionment Mistake — School District Viewpoint

This third of three posts on the Pawling School District describes the immediate cause of the 2014 tax apportionment mistake by the Pawling School District. But looking deeper, the Pawling School Board's 8/29/2014 Resolution to confirm tax rolls and authorize tax levy provides evidence that the District's Assistant Superintendent for Finance and possibly also the School Board misunderstands some property tax concepts. Suggestions to improve the Resolution for this year are provided at the end of this post. The first post presents the recent history of the Pawling School District's property taxes. The second post describes in detail how the District's mistake affected taxpayers.

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.

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 equalization rate. 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 Full Value versus Fractional Value Assessing — A Comparison, to which I will refer frequently in what follows.

Equalization Rate Versus Level of Assessment

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.

Pawling's History of Level of Assessment and Equalization Rate

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 — except for 2013 and 2014, which are shown in the following table:

Town of Pawling
Year	Level of Assessment	Equalization Rate	Date Established
2013	48.92%	43.31%	7/23/2013
2014	51.00%	44.86%	7/28/2014

(Pawling's equalization rate history can be found in the ORPS database by selecting Dutchess, then Town of Pawling, then Current equalization information.) 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.

Pawling School District Apportionment Calculation

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. My analysis shows that the Pawling School District has had a flawless record in this regard for every year between 2004 and 2013, 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.

Equalization Rate Not Used in 2014

My analysis also shows that in 2014, the state equalization rate of 44.86 percent for Pawling was not 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 8/28/2014 Resolution to confirm tax rolls and authorize tax levy, 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 my previous post.

8/29/2014 Resolution is Flawed

These remedies are good news — as far as they go. However, the Pawling School Board's 8/29/2014 Resolution 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.

Resolution Table Heading Phrase “By Towns” is Gratuitous

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.

Total Assessed Valuations — NOT

The heading for Column 3 is labeled “Total Assessed Valuations”, but that's not what the values are. The values are Taxable 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”.

Equalized Tax Rate — NOT

The heading for Column 4 is labeled “Equalized Tax Rate”, but that's not what the values are. Equalized tax rate is just another way of saying true value tax rate, full value tax rate, etc. If the values had been equalized tax rates, they would all be equal to $26.88217 per thousand dollars of market value. The values in Column 4 are actually un-equalized, or conventional tax rate, measured in dollars per thousand dollars of assessed value. The difference between market value and assessed value is exactly the difference between equalized tax rate and un-equalized tax rate. For further clarification, see my assessing post.

Total for “Taxable Assessed Valuations” is Garbage

There just isn't a polite way to say this: The value 594,770,851 in the last row of column 3 is garbage, or to borrow a phrase, it's not even wrong. Yes, the numbers are added correctly. The problem is that adding these numbers doesn't make any sense. Referring again to my assessing post, 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?

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 discounted dollars 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 market value, which is assessed value divided by equalization rate.

Summary of Suggested Changes

The above suggested improvements in the table of the Pawling School Board's 8/29/2014 Resolution can be summarized as follows:

1. Change the heading for Column 3 to Taxable Assessed Valuations.
2. Change the heading for Column 4 to Tax Rate, or even better, Tax Rate Per Thousand Dollars of Assessed Value. While you're at it, you might as well get rid of the word “equalized” in the line beginning “Therefore be it resolved ...”.
3. Simplify the heading for Column 4 as simply Tax Levy.
4. Get rid of the total value in the last row of Column 3. Just get rid of it. 

Pawling School District's 2014 Tax Apportionment Mistake — Taxpayer Viewpoint

This second of three posts on the Pawling School District (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. 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 first post 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.

When Pawling School District taxpayers examined their tax bills in September, 2014, a few of them were surprised to find that their true value tax rates had increased a whopping 18.6 percent since 2013. But most others found that their true value tax rates had only increased a more modest 4.4 percent. Both these increases were mistakes. Although the District's total tax levy of $29,799,211 is as intended by the school board, the distribution of this tax among taxpayers was incorrect for all taxpayers. All taxpayers should have seen a true value tax rate increase of 5.3 percent. This post describes in detail the effect of this mistake on taxpayers.

Municipal Segments

The first thing to understand is that, like most school districts in Dutchess County, the Pawling School District comprises portions of more than one town. In addition to most of the Town of Pawling, the Pawling School District includes small portions of the Towns of Beekman, Dover, East Fishkill, and even the Town of Patterson in Putnam County. One might think that all of the Town of Pawling is included in the Pawling School District, but even that isn't true. Fully $6.3 million of taxable market value in the Town of Pawling (as of the July 1, 2014 assessments) is in the Arlington School District — not the Pawling School District. For taxing purposes, the various portions of Towns within a school district are sometimes referred to as municipal segments.

Tax Levy Should Be Proportional to Taxable Market Value

The second thing to understand is that New York State Real Property Tax Law requires the Pawling School District to distribute or apportion its tax levy (the amount it bills property taxpayers) among its municipal segments in such a way that all taxpayers are billed at the same true value tax rate. True value tax rate is simply the tax levy divided by the taxable market value of the property (not the taxable assessed value). Another way of saying this is that all taxpayers are to be billed in proportion to the value of their property on the open market (after accounting for STAR and other similar exemptions), with the same proportion being used everywhere in the District.

Town of Pawling Versus Other Towns

The following table shows what happened in 2014 with apportionment in the Pawling School District. Most of the data for Columns 2,  3, and 5 was derived from the tax rate pamphlets provided by Dutchess County's Real Property Tax Service Agency. However, data for the Patterson municipal segment is not available from this source. Pawling School District Assistant Superintendent for Finance Neysa Sensenig graciously provided me with the Patterson assessed value and tax levy data needed for these columns.

2014 Pawling School District Tax Levy Apportionment
Municipal Segments	Percent Taxable Market Value	Percent Tax Levy	Tax Rate Per $K of Market Value	Percent Tax Rate Increase	Excess Tax Rate Per $K of Market Value	Excess Tax Levy	Percent Excess Tax
Pawling	93.3%	92.4%	$23.65	4.4%	-$0.22	-$253,697	-0.9%
all others	6.7%	7.6%	$26.88	18.6%	$3.02	$253,697	12.6%
All	100%	100%	$23.86	5.3%	$0	$0	0%

As might be expected, most of the Pawling School District's tax base — in fact 93.3 percent — is in the Town of Pawling, with the remainder — 6.7 percent — divided among the 4 other municipal segments, as shown in Column 2 of the above table. If the Pawling School District's apportionment had been figured correctly, the percentages of tax levy billed to the Town of Pawling versus the other municipal segments (Column 3) would have been the same as in Column 2, namely 93.3 percent and 6.7 percent, respectively.

Tax Levy Mismatch With Taxable Market Value Shows Apportionment Mistake

But Column 3 is not the same as Column 2, indicating an apportionment mistake in violation of New York State Real Property Tax Law. Only 92.4 percent of the tax levy was distributed to the Pawling municipal segment, with the remaining 7.6 percent distributed to the other municipal segments. It turns out that within these other municipal segments, all taxpayers were billed at the same true value tax rate — they just weren't billed at the same tax rate as the Town of Pawling's taxpayers.

When a Dog Wags Its Tail ...

So instead of all taxpayers being billed at the aggregate $23.86 rate (last row of Column 4), the Pawling taxpayers were billed at only $23.65, while all others were billed at $26.88 (Column 4). Column 5 shows that instead of all taxpayers seeing a 5.3 percent tax rate increase, Pawling taxpayers saw only a 4.4 percent tax rate increase, while all others saw a whopping 18.6 percent increase. Why this disproportionate effect? When a dog wags its tail, the dog shakes a little bit, but the tail shakes a whole lot. The Town of Pawling is the dog; the other municipal segments are the tail.

Excess Tax Rate

Another way to look at the disproportionate effect of the apportionment mistake is to compare the true value tax rates of the municipal segments to what they should have been. Column 6 shows that Town of Pawling taxpayers got a small break of $0.22 off their tax rate, whereas all the other municipal segments saw an extra tax based on a rate of $3.02 per thousand dollars of market value. This extra tax can be compared with the 2014 $3.65 tax rate for the Dutchess County Government, which all these property taxpayers paid the previous spring. So it's as if these taxpayers had to pay the equivalent of 83 percent of a second Dutchess County Government tax in the same year.

Excess Tax Levy

Column 7 shows yet another way to measure the mistake: $253,697 — fully a quarter million dollars of tax — was mistakenly shifted from the many (Town of Pawling) to the few (other municipal segments). This shift represents only 0.9 percent of the tax in the Town of Pawling, but 12.6 percent of the tax in the other municipal segments, as shown in Column 8. Just more manifestations of the dog wagging its tail.

What would correct apportionment have looked like?

Had it not been for the apportionment mistake, that is, if Column 3 were equal to Column 2, then all the entries in Columns 4 through 8 for “Pawling” and “all others” would have been the same as in the last row (“All”) of those columns.

OK, so how did this mistake come about in the first place? That is the subject of a forthcoming post.

Pawling School District Tax History

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.

The following table summarizes the Pawling School District's recent tax history. Most of the data for this table was derived from the tax rate pamphlets provided by Dutchess County's Real Property Tax Service Agency. 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.

Pawling School District
Year of Tax Bill	Taxable Market Value		Tax Levy		Tax Rate
	Market Value	Percent Increase	Tax Levy	Percent Increase	Tax Rate per $K of Market Value	Percent Increase
2004	$1,217,637,391		$19,689,971		$16.17
2005	$1,404,750,438	15.4%	$21,805,618	10.7%	$15.52	-4.0%
2006	$1,556,342,677	10.8%	$23,219,196	6.5%	$14.92	-3.9%
2007	$1,717,266,533	10.3%	$24,787,813	6.8%	$14.43	-3.2%
2008	$1,794,131,769	4.5%	$26,262,727	6.0%	$14.64	1.4%
2009	$1,708,746,526	-4.8%	$27,545,191	4.9%	$16.12	10.1%
2010	$1,457,903,591	-14.7%	$27,975,658	1.6%	$19.19	19.0%
2011	$1,399,836,368	-4.0%	$29,338,567	4.9%	$20.96	9.2%
2012	$1,381,982,151	-1.3%	$29,629,238	1.0%	$21.44	2.3%
2013	$1,289,459,789	-6.7%	$29,219,136	-1.4%	$22.66	5.7%
2014	$1,248,731,004	-3.2%	$29,799,211	2.0%	$23.86	5.3%

Taxable Market Value

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 Dutchess County Gov't Tax Rate Keeps Climbing), 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.

This same data can be visualized in terms of the yearly increase in taxable market value (column 3 of the above table):

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.

Tax Levy

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:

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):

Tax Rate

As I have written many times before in this space, tax rate, that is, true value tax rate expressed in dollars per thousand dollars of market value, is a useful way of comparing taxes among jurisdictions, among years, and even among different kinds of property taxes. For a given year, tax rate (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: 

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 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. The following chart (column 7 of the above table) shows the tax rate changes in more detail:

All tax rates in this post describe both how steeply the Pawling School District taxes its tax base and how steeply property owners are taxed (after accounting for STAR 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 2014 School District Tax Rate Rankings).

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.

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 2014 School District Tax Rate Rankings). 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.

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.

School District Tax Rate Rankings

In 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 School District Tax Rate Comparisons.

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.

My new 19-page report, 2014 School District Tax Rate Rankings, updates the tax rate comparisons of four years ago with the most recent school tax information. Main results:

• School tax rates have dramatically increased since four years ago, due to both tax levy increases and property value decreases.
• Relative rankings of school tax rates have hardly changed since four years ago.
• 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.

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.

Dutchess County Gov't Tax Rate Keeps Climbing

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

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

Dutchess County
Year of Tax Bill	Taxable Market Value		Tax Levy		Tax Rate
	Market Value	Percent Increase	Tax Levy	Percent Increase	Tax Rate per $K of Market Value	Percent Increase
2001	$15,147,440,406		$50,863,720		$3.36
2002	$16,854,441,164	11.3%	$50,880,267	0.0%	$3.02	-10.1%
2003	$20,230,555,948	20.0%	$53,280,192	4.7%	$2.63	-12.8%
2004	$22,867,185,642	13.0%	$59,627,595	11.9%	$2.61	-1.0%
2005	$24,880,843,137	8.8%	$70,935,416	19.0%	$2.85	9.3%
2006	$29,588,132,874	18.9%	$75,959,089	7.1%	$2.57	-10.0%
2007	$33,964,774,405	14.8%	$87,276,185	14.9%	$2.57	0.1%
2008	$38,431,929,924	13.2%	$88,057,802	0.9%	$2.29	-10.8%
2009	$37,215,425,247	-3.2%	$94,565,391	7.4%	$2.54	10.9%
2010	$35,565,853,486	-4.4%	$100,781,716	6.6%	$2.83	11.5%
2011	$32,811,057,769	-7.7%	$100,535,544	-0.2%	$3.06	8.1%
2012	$31,895,759,238	-2.8%	$103,754,080	3.2%	$3.25	6.2%
2013	$30,653,742,121	-3.9%	$105,853,037	2.0%	$3.45	6.2%
2014	$29,575,302,089	-3.5%	$107,939,386	2.0%	$3.65	5.7%
2015	$29,224,529,259	-1.2%	$107,577,696	-0.3%	$3.68	0.9%

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

Taxable Market Value

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

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

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

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

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

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

Tax Levy

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

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

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

Tax Rate

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

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

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

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

Rubin Resigns as Fairview Fire Commissioner

Your 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 Board's January 6, 2015, meeting minutes.

Rubin Elected Fairview Fire Commissioner; Second Race Is Tied

This post was originally published on December 15, 2012 at 7:40 PM, but has been updated three times, as indicated below.

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.

Three-Year Commissioner Slot

Out of 92 ballots cast, each of the two candidates in the three-year contest received 46 votes. Buechele, former leader of the Fairness for Fairview 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 2008, 2009, and 2011 elections, 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.

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.

Five-Year Commissioner Slot

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.

Fairview Still Won't Have a Full Board

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.

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!

This Blog Will Change

When I take office as Fairview Fire Commissioner on January 8, this blog will change in three ways:

1. 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.
2. 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 Fairview Fire District website.
3. The frequency of posts will diminish because I will have less time to conduct property tax investigations.

UPDATE 1/1/2013 - Tied Race To Be Contested in Court

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.

UPDATE 5/20/2013 - Court Rules Against Buechele; Appeal is Planned

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.

UPDATE 6/25/2013 - Buechele Loses Appeal, but Wins Run-Off Election

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.

Fairview Versus Fairview

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.

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.

I'm obviously describing the Fairview Fire District in Dutchess County, right? Right?!?

Nope. I fooled you! Although all of the above well describes Fairview in Dutchess, the above narrative just as well describes the Fairview Fire District in Westchester County. 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.

Similarities Between the Two Fairviews

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.

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.

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”.

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.

Differences Between the Two Fairviews

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.

Full Value versus Fractional Value Assessing — A Comparison

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 full market value, while others are assessed at a fraction 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.

An assessing unit 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 assessor, whose job is to estimate the current market value of every property in her assessing unit, and to publish these determinations in a list of properties called the assessment roll. The reason for the focus on market value is that property tax is fundamentally based on market value. For each property in the yearly assessment roll, the assessor includes the assessment of that property for that year. The assessment is not necessarily the market value itself, but it is always a measure of the market value. 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.

Market Value Depends on Condition of the Property

The market value 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.

The condition of most properties generally does not significantly change over relatively short periods of time. 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.

Economic Forces Cause Market Values to Trend Up or Down

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.

Assessors employ “trend analysis” or trending 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.

What about Equalization Rate, Full Value, and Fractional Value?

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, 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.

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 expresses the market values of properties.

Assessing at Full Value

The term full value 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 assessed value. So in an assessing unit assessed at full value, assessed value is market value.

Assessing at Fractional Value Was Illegal For Centuries

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?

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 uniform fraction of market value 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.

Requirements for Fair Fractional Value Assessing

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:

1. 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.
2. 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.

With fractional value assessing, the fraction of market value in an assessing unit is called the equalization rate or the level of assessment, depending on who’s specifying it.

Why Is Fractional Value Assessment Problematic?

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.

Assessing at Fractional Value Became Legal

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.

Fractional Value Assessing Is Still a Bad Idea

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 descriptions of the taxation. See, for example, Hyde Park School District Promulgates Misleading Tax Information. 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.

Currency Analogy

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.

I’d like to thank three anonymous reviewers with knowledge of the assessing process for previewing this post.

Hyde Park School District Promulgates Misleading Tax Information

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 here, here, and here. Now the Hyde Park School District can be added to this list of notoriety.

On August 23, 2012, Hyde Park School District Assistant Superintendent for Business Wayne Kurlander presented Tax Levy Calculations, Rates 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.

Tax Rate Change Calculation Mistake

Kurlander's “Tax Rate Changes” table on page 5 of his presentation calculates a year-to-year difference of $0.78 (column 4) between Hyde Park's tax rates per thousand dollars of assessed value. This calculation makes no sense, because Hyde Park's equalization rates are different (54% versus 56%) for the two years being compared. It would be like subtracting 50 miles per hour from 100 kilometers per hour, and getting 50 “something” per hour. A meaningful calculation requires that the two tax rates first be converted to comparable units before subtraction. An obvious way to do this is to multiply each tax rate by its corresponding equalization rate, thus yielding true value tax rates.

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!

The Poughkeepsie Journal took Kurlander's flawed calculation to formulate a misleading headline, Some in Hyde Park face 6% tax hike (August 30, page 1 of Mid-Hudson section). In reality, it's not “some”, it's “all”. The story's subtitle is also misleading: Assessed value drop forces school board to hike 4 towns' rates. 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.” This statement is flat out false. 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.

Superintendent's Statement is Incorrect

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.”

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. In other words, every property owner in the District pays the same proportion of his property’s taxable market value, regardless of Town. 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: Two properties in different Towns with the same taxable market value will pay the same Hyde Park school tax. 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 Hyde Park School District Tax Rate Is Highest in Millennium lists only one tax rate and only one tax rate change for each year.

Assessed Value Change Calculation Mistake

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%.

Meaningful Tax Information is Essential

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.

UPDATE 11/5/2012 - District May Change Tax Message

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.

Hyde Park School District Tax Rate Is Highest in Millennium

Five 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 average yearly drop of the last four years. So the trend of falling property values continues unabated.

My recent post Dutchess County Gov't 2013 Tax Rate Likely To Be Highest in Millennium 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). High tax rates are burdensome for property taxpayers 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.

Hyde Park School District's Market Value

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.

District's Tax Levy

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. 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. Not only that, but the following chart shows that the District's 2012 tax levy increase of 2.7 percent is the second highest since the meltdown began.

Data for 2012 is from a presentation Tax Levy Calculations, Rates 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 tax rate pamphlets published by the Dutchess County Real Property Tax Service Agency.

District's Tax Rate

Here's the really bad news: 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 — exceeding $20 for the first time — as shown in the following chart:

This means that Hyde Park School District taxpayers are paying a greater proportion of their wealth, as measured by the taxable market value of their property, than at any previous time in this millennium. The second highest tax rate occurred in 2000, when property values were only about half of what they are now.

The following chart shows that the 2012 Hyde Park School District's tax rate increase of 6.0 percent is the second highest in this millennium. (The highest, in 2010, was mainly caused by a whopping 13.1 decrease in the District's taxable market value.)

If you find these charts useful, you can find more of them and the accompanying numerical data in my report Hyde Park School District Tax Data.

Hyde Park School District's Tax Presentation is Misleading

The Hyde Park School District has not explained its current tax parameters in historical perspective, at least not according to the Tax Levy Calculations, Rates 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.

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.

I will have more to say about Kurlander's presentation in a forthcoming post.