Thursday, December 31, 2009

Apology to Poughkeepsie Journal

I’ve written three blog posts this month critical of Poughkeepsie Journal reporter Jenny Lee-Adrian's coverage of the 2010 Dutchess County budget.  These three posts were in response to Lee-Adrian’s stories of December 10, 11, and 17.  The last of my three posts, Poughkeepsie Journal's Fuzzy Math, accused Lee-Adrian of imprecise arithmetic resulting in the publication of inaccurate tax rate increases.  It turns out that the math in the December 17 story was not fuzzy, and the numbers in the December 17 story are accurate after all.  I'm truly sorry to have mistakenly accused the Journal and Lee-Adrian of these errors.

How Did My Mistake Happen?

Short answer:  Faulty assumptions and failure to check them; a chance editorial simplification.
Long answer:  Keep reading.

December 10 Story

The first of my three posts, County Legislature Increases Tax Rate 14.3 Percent, criticized Lee-Adrian’s December 10 story because it didn’t mention tax rates or tax rate increases at all.  This post was very similar to half a dozen earlier posts I'd written on other local government jurisdictions, advocating for prominent coverage of tax rate increases by the Poughkeepsie Journal

December 11 Story

Lee-Adrian’s December 11 story included tax rates and the tax rate increase for the December 8 amendments by the Dutchess County Legislature.  The second of my three posts, Poughkeepsie Journal Gets It Almost Right, criticized this story because the included 14.6 percent tax rate increase was inaccurate.  Lee-Adrian had used rounded tax rates for her calculation of the tax rate increase, thus introducing errors.  In my conversation with Lee-Adrian before writing my second post, I suggested that she should use high precision tax data for her rate calculations, and to only round off for presentation, in order to avoid inaccuracies.  My suggestion was not accepted, and our conversation ended awkwardly.

Authoritative Source for Tax Levy

It’s worth noting that Lee-Adrian and I had both obtained the tax levy related to the legislative amendments from the same source:  Fred Knapp, assistant to Legislative Chairman Roger Higgins. Knapp is keeper of the numbers for the Legislature, according to Higgins.  In other words, our source for the tax levy was the key staff person designated by the Legislative Chairman as maintaining the tax data for the legislative branch of Dutchess County Government.  Since the tax levy pertains to the legislative amendments, for which the legislature is presumably the final arbiter, I assumed that the County Legislature is the most authoritative official source for the tax levy resulting from the legislative amendments.

My assumption was faulty.  The budget office in the executive branch of county government is much better equipped than the legislature to account for the detailed implications of legislative amendments to the budget.  It turns out the tax levy increase given to me by Knapp, though expressed to the exact dollar, was actually inaccurate by about $400,000, or 5 percent.  This fact comes into play in act three.

December 17 Story

Lee-Adrian’s December 17 story included tax levy and the tax rate increase for the December 8 legislative amendments, just as did the December 11 story, but there were some obvious differences in the numbers.  While the December 11 story stated the tax rate increase as being 14.6 percent, the December 17 story stated that the increase was 13.9 percent.  While the December 11 story gave the tax levy as “$103.4 million”, the December 17 story gave the tax levy as “103 million”.

My Incorrect Assumptions

Upon reviewing the December 17 story before writing the third of my three posts, Poughkeepsie Journal's Fuzzy Math, I assumed that Lee-Adrian was continuing to use rounded arithmetic on the same tax levy we’d both obtained from Knapp.  All the numbers in her December 17 story seemed consistent with these assumptions.  For example, I assumed that the “$103 million” tax levy was just Knapp’s $103,412,049 rounded to three significant figures.

My assumptions were wrong, despite the fact that they yielded a self-consistent explanation of Lee-Adrian’s December 17 story.  Lee-Adrian was no longer using the tax levy of $103,412,049 with which we’d both started, but a more authoritative tax levy of $102,996,772 provided by the budget office a few days earlier.  She also used high precision arithmetic on this new data.

The new tax levy displayed to four significant figures would have been “$103.0 million”.  If it had been displayed this way, I would have seen right away that she was using a different tax levy than the “$103.4 million” of her previous story.  This would have completely changed my understanding of what Lee-Adrian was doing.  It wasn’t until Lee-Adrian published a follow-up story on December 19 with the exact tax levy that I learned of my mistaken assumptions.  But it’s understandable that “$103.0 million” could have been edited to read “$103 million”.  The chance for such an editorial simplification arises only once in ten times.

Lessons Learned
  1. I should have attempted to check my assumptions with Lee-Adrian before posting my incorrect analysis of her December 17 story.  I should not have allowed my discomfort with our earlier conversation to govern my decision to bypass this important step.
  2. The budget office is a more authoritative source for county tax levy information than the county legislature.

Saturday, December 26, 2009

Time to Declare Victory?

I've written over a dozen posts since September on the subject of Truth in Taxing, arguing that from the viewpoint of property taxpayers and other members of the public, the most important measure of property taxes is the tax rate and changes in the tax rate.  In this time of declining property values, government officials will strenuously avoid mentioning tax rates, because changes in the tax rate would show their budgets in the worst possible light.  I've suggested that news sources such as the Poughkeepsie Journal should make the importance of tax rate changes clear to their readers.  This can be accomplished by putting the tax rate increase in the headline, in the lead sentence, and in the sidebar information — not burying it in the tenth paragraph, or omitting it entirely.

Noticeable Improvement in Poughkeepsie Journal's Coverage
When I wrote Poughkeepsie Journal Fails Truth-in-Taxing Test two months ago, most recent Poughkeepsie Journal stories related to property taxes had not provided truth in taxing disclosures.  Since then, there's been a noticeable improvement.  Two weeks ago, reporter Jenny Lee-Adrian's stories on the Dutchess County's budget began to prominently mention tax rates and changes in tax rates.  Yesterday, reporter Michael Woyton's story, “Beacon tax rate up by 10% despite cuts in spending”, makes the tax rate increase the main story.  Even readers who just glance at these two stories can't miss the fact that taxes for Dutchess County and City of Beacon are going up.  My hearty congratulations to the Poughkeepsie Journal, Lee-Adrian, and Woyton for doing a great job of informing the public about what's really happening with property taxes.  I'm very pleased to see what's looking like a trend of significantly improved coverage.

Minor Criticism

Just one small criticism of Woyton's story:  Some readers may be puzzled that the Beacon tax rate could be going up while spending is down.  If the story had mentioned the fact that property values are going down, these readers might have understood better.

Should I Take Credit for Poughkeepsie Journal's Improved Coverage?

Short answer:  I haven't the faintest idea.
Long answer:  I wouldn't even be asking this question, except that I received a serious inquiry about this.  I have had a relatively small amount of direct communication with some Poughkeepsie Journal reporters.  Most of their responses to my critiques of the Journal's coverage were ambivalent at best.  I certainly haven't received any indication that my arguments would affect their reporting.

My view is that this is not an important question to answer.  To me, the important thing is that the Poughkeepsie Journal seems to have made a significant improvement in coverage of property tax matters.  Although this occurred after many of my blog posts, correlation does not imply causation.

Do I Owe the Poughkeepsie Journal an Apology?
My most recent post, Poughkeepsie Journal's Fuzzy Math, accused reporter Jenny Lee-Adrian of using a rounded tax levy to calculate an inaccurate tax rate and tax rate increase in a December 17 story on the County budget.  It turns out that the math was not fuzzy, and the numbers in this story may be accurate after all.  So I owe the Poughkeepsie Journal (and Lee-Adrian) an apology, right?

Maybe.  Like most things in life, the reality is more complicated than these simple facts would suggest.  I'm currently investigating how it happened that I got it wrong.  I will post an explanation to this blog as soon as possible.  Hopefully, that will be the last post I'll be moved to write on the subject of Truth in Taxing.

Thursday, December 17, 2009

Poughkeepsie Journal's Fuzzy Math

The criticisms of the Poughkeepsie Journal and of reporter Jenny Lee-Adrian in this post are incorrect, and are hereby retracted.  For details, see Apology to Poughkeepsie Journal.

Be careful what you wish for. 

These words came to mind when I read today's front page story by Jenny Lee-Adrian in the Poughkeepsie Journal, “Steinhaus, Legislature plans differ on tax rates” (Online headline differs from print edition.)  There it is, right on the front page!  Everything I've been advocating for!  Tax rates in the headline.  Tax rate increase in the lead sentence.  And tax rates even in the caption of a photo of Dutchess County Executive William Steinhaus, the caption informing readers that property tax would increase even under his original budget.  Best of all, the print edition includes a large table comparing the Legislature's amended budget with the result of recent Steinhaus vetoes. The column titles feature the tax rate increases in huge typefont, so they can't be missed, even by the casual reader.  You can hardly pick up the paper without seeing “13.9%” and “9.2%”.

This is just what I've been advocating for many months now in this blog (and in direct communications with Poughkeepsie Journal reporters).  The tax rate and the tax rate increase is the story, and I'm very glad that the Poughkeepsie Journal finally gets it.

Lee-Adrian's Calculations Are Inaccurate — Again

I wish I could stop here, with congratulations to the Poughkeepsie Journal, and drinks all around.  Unfortunately, the story is marred by inaccurate tax rate calculations by the Poughkeepsie Journal.  When I advocated for reporting on tax rate increases, it never occurred to me to say, “And by the way, when you publish those tax rate increases, consider publishing accurate ones.”  But I guess I should have.

Actually, I did.  I had a long telephone conversation on December 14 with Lee-Adrian regarding her December 11 story containing an amended county tax rate increase of 14.6 percent.  This rate increase is inaccurate because she used rounded tax rates.  I encouraged Lee-Adrian to use high precision tax data for her rate calculations, and to only round off for presentation, in order to avoid inaccuracies.  My recent post Poughkeepsie Journal Gets It Almost Right documents my analysis in more detail.

For today's story, Lee-Adrian apparently decided to recalculate the amended tax information already published.  This time, instead of using rounded tax rates, she used a rounded tax levy of $103,000,000, instead of the actual value of $103,412,049.  This made matters worse than before.

The thing is, when you start your calculation with rounded values, you introduce an error proportional to the difference between the rounded value and the unrounded value.  In this particular case, the rounded tax levy is nearly half a percent different from the exact value, thus introducing considerable inaccuracy.  Lee-Adrian's calculations using the rounded tax levy resulted in the following inaccuracies, all of which appear in today's story:
  1. “The Legislature budget's property tax levy would increase 8.9 percent.”  The correct value is 9.3 percent.
  2. “Under that budget, the property tax rate could increase 13.9 percent in 2010 ...”  The correct value is 14.3 percent, as I stated in this blog a week ago.
  3. “... to $2.89 per $1,000 of assessed value.”  The correct value is $2.91.  Lee-Adrian had already published this correct value in her December 11 story.  Why did she think she should change it?
Today's Story Gets Some Tax Information Right — By Accident

Today's story also contains corresponding tax information regarding the effect of the Steinhaus vetoes, culminating in the statement that “the property tax rate could increase 9.2 percent”.  Are all these numbers inaccurate also?  No.  Although Lee-Adrian presumably used the rounded tax levy of $98.8 million, it just so happens that the rounded tax levy differs from the true tax levy in this case by less than one part in ten thousand.  This good luck allows all the published results regarding the Steinhaus vetoes to be correct.

Who Is Responsible For the Calculated Tax Information?

The December 11 story stated that the (inaccurate) 14.6 percent tax rate increase was provided by the Legislative staff, but Lee-Adrian confirmed to me that she calculated it herself.  Today's story states the following:
The Journal calculated the 2010 property-tax rates for the Legislature budget and a budget with vetoes based on numbers Steinhaus released Tuesday. Legislature staff confirmed the 2010 tax rates were correct. The County Executive's Office did not respond.
I spoke today with Fred Knapp, assistant to Legislative Chairman Roger Higgins.  My understanding of our conversation is that Knapp had indeed spoken with Lee-Adrian about these tax numbers, but that he did not confirm the correctness of her calculations.  Knapp seemed to be well aware of the necessity of preserving precision in tax rate calculations, and he graciously provided me with the exact tax levy changes needed to perform the high-precision calculations.

Credibility Gap

It hardly needs saying that the credibility of the Poughkeepsie Journal suffers if it publishes two different tax rate increases (14.6 percent and 13.9 percent) for the same amended budget, and both numbers are wrong.  This is especially true since it just isn't that hard to get it right.  I'm extremely pleased to see that the Poughkeepsie Journal has finally published the County tax rate increase information.  But is it too much to ask that they publish the correct numbers?

Monday, December 14, 2009

Poughkeepsie Journal Gets It Almost Right

A front-page story in the December 11-th Poughkeepsie Journal by reporter Jenny Lee-Adrian, headlined “Taxpayers fume over planned rate hike,” on property taxes for Dutchess County Government, focuses attention where it belongs:  On the tax rate and the tax rate increase.  This story is a marked improvement over most of the Poughkeepsie Journal's past coverage of local property tax issues, of which I have been highly critical.  In my post Poughkeepsie Journal Fails Truth-in-Taxing Test, I state:
Readers of the Poughkeepsie Journal need the tax rate and change in tax rate in order to understand the essence of what's happening. This means they need the change in the tax rate in the headline itself, in the lead sentence, and possibly also in the sidebar information — not buried in the tenth paragraph, or omitted entirely.
Lee-Adrian's story comes closer to meeting this standard than any other local property tax story I've seen in the Poughkeepsie Journal in recent months, though there is still some room for improvement.
  1. The headline alludes to the fact that the planned tax rate would increase.  Good.  Even better would be to mention the amount (percent) of tax rate increase in the headline.
  2. The lead sentence is, “Amid an economy in crisis, Dutchess County residents are outraged their county property tax rate would increase by 14.6 percent next year.” [emphasis added]  Lee-Adrian gets full credit for stating the tax rate increase in the lead sentence.  Unfortunately for readers, the actual percent increase is 14.3.  Although her story claims that the 14.6 value was provided by “the Legislative staff,” Lee-Adrian has confirmed that she calculated the percent increase herself, and that she used rounded tax rates.  Using rounded tax rates introduces noticeable inaccuracies.  This is why the tax rate increase in her story is inaccurate.  My calculation uses the high-precision tax rates that would be used to compute individual tax bills.
  3. The sidebar information (in the print edition) displays the property tax rates, not only for 2009 and the amended 2010 tax years, but even for tax years going back to 2006.  It even displays the budgets and property tax levies for all years.  Good, and good.  Even better would be to display the tax rate increases (percents) from one year to the next.  In my view, the tax rate increases are more important than, for example, the tax levy information that is included in the sidebar.
  4. The story mentions the fact that the original Steinhaus budget increases the tax rate “... from $2.54 in 2009 to $2.66 per $1,000 of assessed value in 2010.”  This is a key piece of information when comparing to the county legislature's amendments, and it's good that it appears in the story.  Unfortunately, this quote is buried in the 14-th paragraph of the story, on the second page continuation in both the print and web editions.  Even more important than this quote is the fact that the Steinhaus budget represents a 4.6 percent increase in the tax rate.  This crucial fact appears nowhere in this story (and as far as I know, in no other Poughkeepsie Journal story).   In my view, readers should have been informed upfront that while the legislative amendments yield a tax rate increase of 14.3 percent, Steinhaus' original budget yields a tax rate increase of 4.6 percent.
How To Encourage Publication of Tax Rate Increases?
    A possible outcome of my criticism of Lee-Adrian's tax rate increase calculation (Item 2 above) is that Poughkeepsie Journal reporters (if they read my blog) will be discouraged from publishing property tax rate increases.  This would achieve the exact opposite of my purpose.  I can think of two obvious ways to avoid this outcome:
    1. Reporters can calculate tax rate increases correctly, just by using high-precision tax rates.  A high-precision tax rate is simply the exact tax levy divided by the exact market value.  And be sure to retain all significant figures in the quotient!
    2. Reporters can request public officials to do this calculation for them.  However, reporters should be prepared for significant resistance on the part of public officials, because the officials know that tax rate information puts the tax situation in the most unfavorable light in a time of decreasing property values.  Officials much prefer to focus on tax levies and typical tax bills, which make the tax situation seem not as bad as it really is.
    My hope is that the Poughkeepsie Journal will employ some combination of the above methods to provide its readers with tax rate increase data essential to an informed public.

    Thursday, December 10, 2009

    County Legislature Increases Tax Rate 14.3 Percent

    A front-page story in today's Poughkeepsie Journal by reporter Jenny Lee-Adrian, headlined “Legislature OKs Budget, Raises Property Tax Levy”, features a prominent diagram (in the print edition) with the following contents:
    • What Steinhaus Proposed:  0% property tax levy increase
    • What County Legislature Changed:  9.4% property tax levy increase
    So why does the title of this post say “14.3 percent”?  If you've been following this blog the last few months, you already know the answer.  It's because the Poughkeepsie Journal (and Steinhaus, and the legislators) are talking about tax levy, and I'm talking about tax rate.  As I've argued repeatedly in this blog, the most important thing for taxpayers is the tax rate.  The tax levy is just smoke, designed to make the increase seem smaller than it really is.  If I were writing this news story, my diagram would say:
    • What Steinhaus Proposed:  4.6% property tax rate increase
    • What County Legislature Changed:  14.3% property tax rate increase
    Both property tax rate increases are with respect to the 2009 tax rate of $2.54 per thousand dollars of market value.  Steinhaus' proposed 2010 tax rate is $2.66, and the legislature's is $2.91.  These numbers are easy to compute from the property tax levies mentioned in the story.  As I mentioned in my earlier post on this subject, the reason the tax rates increase more than the tax levies is that the market value of Dutchess County has decreased by four and a half percent in the last year.

    One can hardly blame the politicians for trying to put the best face on a bad situation, but the Poughkeepsie Journal could do a better job of informing its readers.  Property taxpayers are in for a lot worse news than they'd think by reading the Poughkeepsie Journal.

    Tuesday, December 8, 2009

    Gephard Elected Fairview Fire Commissioner

    The election held today for commissioner in the Fairview Fire District was officially uncontested, in the sense that only one name was on the ballot (Bob Gephard).  However, there have been persistent rumors of a secret write-in campaign, and the results appear to validate this rumor:  Of the 141 votes cast, Gephard received 110 votes, or 78 percent, and write-in “candidate” John Anspach received 29 votes, or 21 percent.  Of the remaining 2 votes, one was blank and the other was written in as “Robert L. Rogers”.  I obtained these results this evening as an official poll watcher for Gephard.

    In my view, what is significant about these results is the large number of votes cast in an uncontested election, and the relatively large percentage of the votes for a single write-in “candidate”.  To better understand these results, it's necessary to know the recent history of the Fairview Fire District.

    2008 Election
    Fire district elections typically have very small turnouts, and the Fairview Fire District has been no exception — until 2008.  In early 2008, an advocacy group called Fairness for Fairview formed, and became instrumental in bringing over 400 angry residents and taxpayers to the April 24, 2008, Fairview Fire Commissioners meeting.  Most of these residents and taxpayers had no previous knowledge about fire district governance.  All they knew was that their taxes were sky high. (I was one of these residents/taxpayers.)  In the months following the April 24 meeting, some of the more outspoken residents and taxpayers continued to show up at commissioners meetings.  These newly interested residents/taxpayers continued to challenge the commissioners, who were all veterans with years or decades of experience running the fire district.  These challenges culminated in the 2008 election between incumbent Dick Martineau and resident/taxpayer Jill Line.  Line was seen as representing “newcomers” to Fairview Fire District (FFD) governance, that is, residents not previously associated with FFD.

    To put the 2008 election into perspective, you need to understand that in 2007, Fairview had an uncontested election in which only 22 voters turned out. These voters tended to be the 5 commissioners and many of the firefighters and officers of the district. In the 2008 election, incumbent Martineau received 79 votes — more than three and a half times the entire voter turnout the previous year.  Martineau's total represented a concerted effort by supporters of the veteran commissioners to prevent a shift in power to the newcomers. But Martineau's support was no match for the wrath of the newcomers. A massive outpouring of voters gave Line 190 votes, or 70 percent of all votes cast.  Line's total almost certainly would have been even greater, except for the fact that dozens of voters turned away upon encountering long lines.  Many who stayed to vote stood on line for an hour or more.

    2009 Election

    In my view, the 2009 election shows a continuation of the conflicts between supporters of veteran commissioners and supporters of the newcomers.  Gephard is seen as representing the newcomers, while Anspach is seen as representing the veterans.  Indeed, Anspach has served on the board of fire commissioners for 30 years, including at least the last 5 as chairman.  For me and many others who've come to learn about FFD only recently, Anspach represents the heart and soul of the old guard, for better or for worse, depending on your point of view.  With Anspach leaving the board, there will be a significant power vacuum.  (Anspach plans to continue his dedicated service as Fairview volunteer and chief safety officer.)

    Some may theorize from the election results that Anspach has attempted to engineer a secret campaign to win reelection.  This theory makes no sense to me.  In the first place, if Anspach had wanted to continue as commissioner, the first thing he would have done would have been to get on the ballot.  As incumbent chairman of the board, he would have had a much better chance of reelection than as a write-in candidate.  In the second place, Anspach has consistently stated throughout the campaign that he will not challenge Gephard.  And in the third place, Anspach told me after the polls closed that he did not vote for himself!  Case closed.  In effect, Anspach has given Gephard his blessing to take over as a commissioner.

    Still, the 29 votes for Anspach as a write-in candidate demands an explanation.  This number of votes is considerably more than the total number of votes in the uncontested 2007 election. In my view, these votes come from the same supporters of the veteran commissioners who attempted to reelect Martineau last year, and who fear the shift in power to the newcomers.  These supporters of the status quo agreed to write in Anspach's name despite his non-candidacy.  They could reasonably have hoped that with so many votes for Anspach, Gephard could fail to gain a majority.  After all, it is this group which controlled the election until 2008.

    Gephard had the political sense to be wary that he might lose this election even though he was the only candidate on the ballot.  In my view, it is only because Gephard conducted an aggressive campaign, distributing fliers to most Fairview residents, and working hard to get out the vote, that he assured himself of victory.  I can believe that many of those who showed up to vote for Gephard today didn't know that the election was “uncontested”.  Considering the secret write-in campaign, maybe it wasn't.

    2010 Election

    In the contest between the veterans and the newcomers, the handwriting is on the wall. In the last two elections, it's newcomers 2, veterans 0.  Next year, Commissioner Tom Ashline's term expires.  If Ashline seeks reelection and is challenged by a newcomer, he might have a difficult time winning, simply because he will be seen as representing the veterans.  His best strategy may be to show voters now that he represents their interests, in hopes that no newcomer will become a candidate to challenge him.

    Monday, December 7, 2009

    Proposed County Budget Increases Tax Rate 4.6 Percent

    If you've been following reports about the Dutchess County 2010 Tentative Budget, you probably know that Dutchess County Executive William Steinhaus' plan freezes the 2010 property tax levy at the 2009 level.  This plan makes it sound as though taxes won't be going up. Great news for property taxpayers in these difficult economic times, right?
    Wrong! In reality, the plan calls for a 4.6 percent increase in the property tax rate, from $2.54 to $2.66 per thousand dollars of market value.  And the tax rate is all that matters.  You can verify the 2009 and projected 2010 tax rates yourself from the County's table, Property Tax Levy & Rate.  (For details, see below.)  The tax rate increase occurs because even though the tax levy holds steady, the market value of Dutchess County has fallen four and a half percent in the last year.

    Why haven't you heard about the Dutchess County tax rate increase before?  Because government officials don't want to talk about it.  Better to talk about the tax levy, or the typical tax bill, since they make the tax hike sound smaller than it really is.  It's just one more example of the dirty little secret of property taxes. I've written about this secret so many times in this blog that I've lost count.  For a summary of how the Poughkeepsie Journal has failed to pick up on this story in half a dozen local jurisdictions (each of which I've blogged about separately), see Poughkeepsie Journal Fails Truth-in-Taxing Test.

    Steinhaus Press Release Misleads

    It's understandable that Steinhaus would not want to mention the 4.6 percent tax rate increase in his budget.    But it's disingenuous for him to introduce tax rates into a misleading characterization of opponents' proposals.  In a December 4 press release, Steinhaus is quoted  as saying:
    County legislators must now make the final choice either to focus on satisfying requests for more spending from special interest groups and raise county property taxes nearly 22 percent to fund all of these programs, or they can choose to control spending to keep property taxes flat.
    This statement is more than a little misleading.  The 22 percent number is correct only if it refers to the total increase in the property tax rate from 2009, including both the 4.6 percent increase in the Steinhaus budget and the legislators' additions, which alone comprise only a 16 percent increase.  The “keep property taxes flat” cannot refer to any tax rate, because the tax rate is not flat under Steinhaus' budget. So it's not 22 versus zero.  It's either 22 versus 4.6, or 16 versus zero.  Take your pick.

    The Steinhaus press release concludes with the following statement:
    Last year, the Democrat Majority adopted a budget that raised county property taxes an unprecedented 11% to respond to special interest demands.  County property taxpayers simply cannot afford a 22% tax increase again this year.
    One can determine from the Property Tax Levy & Rate that the county property tax rate increased 11 percent from 2008 to 2009.  Whether county taxpayers can afford a 22 percent tax (rate) increase again this year is debatable.  However, Steinhaus apparently thinks they can afford a 4.6 percent tax rate increase, because that's what he's proposing.

    Verifying the Tax Rate Increase:  In the table, Property Tax Levy & Rate, note that “True Value Assessments” is another name for “market value”.  The property tax rate is simply the property tax levy divided by the market value and multiplied by $1,000.  The property tax rates in this table are measured in dollars per thousand dollars of market value.  You should ignore the misleading note at the bottom of this table, 
    Comparisons of rates from year to year are not valid because of equalization rate adjustments.  
    Comparisons of these county property tax rates from year to year are perfectly valid. Furthermore, equalization rate adjustments have no effect on any of the numbers in this table.  I have determined that this misleading statement has appeared in County budget documents for many years, unchallenged until my conversations today with County officials.  I am happy to report that Dutchess County Director of Real Property Tax Service Agency Kathy Myers has assured me she will work with the Budget Office to “clarify” this statement in future years.

    Wednesday, November 18, 2009

    Fairview Fire Tax Dollars at Work

    The Fairview Firefighters Union, IAFF Local 2623, invited me to participate in a live fire training drill at the Dutchess County Fire Training Center on November 12. I had the opportunity to go into a burning building to rescue a victim (fortunately, a dummy), and to fight the fire.  A respirator — and very close supervision by Fairview's finest — kept my body and soul together.  I also got to climb the Department's 100 foot ladder.  The photo shows me flanked by my two excellent guides, Fire Captain Chris Maeder and Union President Rob Ridley.
    Safety and Risk

    Although I felt pretty safe in the controlled training situation, it was obvious that firefighters could be at significant risk in a real emergency.  For me, the training session was only an adventure, but for firefighters, it's a way to lower their risk and increase their effectiveness when on a call.  Participating in these exercises increased my respect for the dangerous job firefighters do every day.

    What Does All This Have To Do With Fire Taxes?

    Two things:
    1. Fairview firefighters are highly trained professionals (or in some cases highly trained volunteers).  Their compensation is the main component of the fire tax levy in predominantly career fire districts such as Fairview.  Our fire tax dollars primarily pay the people who save our lives and property.
    2. Fairview firefighters use a great deal of specialized equipment to fight fires, to rescue victims, and to keep firefighters safe.  On any given call, only a small fraction of this equipment is used, but different calls will use different equipment.  The effectiveness of the fire department on a given call depends in part on having the right tool for the job at hand, as well as knowing how to use it. These tools cost money.  Most of this money comes from the local fire tax levy, although some expensive equipment, such as the “jaws of life”, is paid by other sources, such as federal or state grants. 
    House Fire

    By chance, I happened to witness a Fairview Fire Department team responding to a house fire last evening.  It took only 3 minutes after dispatch for this team to appear at the house with a fire truck, and only a few more minutes to get the fire under control.  This rapid response prevented major damage to the residence.  The rapid response was possible only because the team was already at the fire house, ready to go.  In other words, it was only because of Fairview's 24x7 career (paid) staff that this house incurred minor damage.  If it were necessary to wait for volunteers to arrive from other locations, this house would most likely have suffered major damage.

    What Do Our Fire Tax Dollars Buy?

    Fire tax is a hopelessly dry and geeky topic.  It's just a bunch of numbers on a piece of paper, or in cyberspace.  My report advocating consolidation shows dramatic differences in fire tax rates among fire districts in Dutchess County, with Fairview having the highest fire tax rate.  But what do the dramatically different fire tax rates buy?  Do higher fire tax rates tend to provide better protection than lower ones?  How much better?  What does “better protection” really mean?  The training drill and the house fire allowed me to touch and feel what the Fairview fire tax dollars buy:  Fairview fire taxes buy the ability to contain some fires in their early stages, limiting the threat to human life and the damage to property. 

    Based on what I've seen and experienced, it is quite plausible to me that fire districts with low tax rates (typically staffed predominantly by volunteers) may tend to have longer response times to emergencies, and therefore less favorable outcomes.  In other words, you get what you pay for.  Is the high level of service in Fairview worth the high cost?  Undoubtedly, different taxpayers will answer this question differently.  This is the beginning of a new aspect of learning about fire districts for me.  I would like to see how things work in a predominantly volunteer fire district, in order to compare and contrast.

    Friday, October 30, 2009

    Beekman Taxpayers Face 10 Percent Tax Rate Increase

    Q: What tax rate increase can Beekman taxpayers expect to see in 2010?
    Short Answer: Just read the title of this post.
    Long Answer: Read this whole post.

    The answer is complicated by the fact that the Town of Beekman has proposed to transfer its $319,800 ambulance contract to the Beekman Fire District. This cost-shifting makes the Town of Beekman tax rate increase smaller than it would otherwise be, and it makes the Beekman Fire District tax rate increase larger than it would otherwise be. From the taxpayer's viewpoint, what matters is the combined effect of the Town's rate increase and the Fire District's rate increase. That's because, as I've written so many times before, the tax rate is all that matters.

    One cannot simply add the two rate increases, because they pertain to different tax levies. Instead, one must first sum the tax levies, then calculate a combined tax rate, and then compare these rates for 2009 and 2010. Two factors make it even more complicated to compute the overall Beekman tax rate increase:
    1. The tax base for the Town of Beekman is approximately 4 percent smaller than that for the Beekman Fire District, because of special exemptions (such as for veterans) that apply only to the Town tax. This means that about 4 percent of Beekman's assessed value pays only fire tax, no town tax.
    2. The Beekman Fire District's tentative 2010 budget has very recently been modified to reduce the fire tax levy by $107,000, as I learned today from Beekman Town Supervisor John Adams.
    Beekman Tax Bills

    Taking all the above into account, Beekman property taxpayers can expect to see the following on their 2010 property tax bills:
    1. Town of Beekman tax rate of $1.32 per thousand dollars of assessed valuation, representing a 0.7 percent decrease from 2009. This 0.7 percent decrease represents a correction of the blunder I reported yesterday, and which Adams has graciously confirmed.
    2. Beekman Fire District tax rate of $0.65 per thousand dollars of assessed valuation, representing a 42.0 percent increase from 2009. (Without the recent $107,000 tax levy reduction, the tax rate increase would have been 56.3 percent.)
    3. The combined effect of the above two taxes is an effective tax rate of $1.97 per thousand dollars of assessed valuation, representing a 10.2 percent increase from 2009. (Without the recent $107,000 fire tax levy reduction, the tax rate increase would have been 14.0 percent. None of the numbers in this item will appear explicitly on the tax bill.)
    4. Possible additional taxes for properties in Pawling Lake Estates and Dover Ridge (water/sewer). These additional taxes are separate from the Town and Fire District taxes, and are not considered in this analysis.
    The key number from the taxpayer's viewpoint is the 10.2 percent effective tax rate increase, combining the Town of Beekman tax and the Beekman Fire District tax. (Item 3) This number gives the best measure of how much more heavily each taxpayer's wealth — as measured by the market value of his property — is being taxed by the Town of Beekman and the Beekman Fire District.

    Response from Beekman Town Supervisor

    I'm pleased that Adams has added a comment to my previous Beekman post, and that we now agree about the effective Beekman tax rate increase. I'm also glad that Adams has chosen to publicly state the effective tax rate increase for Beekman. As I've said many times before in this blog, from the taxpayer viewpoint the tax rate is all that matters. On the other hand, Adams couldn't resist adding:
    Keep in mind that the valuation of the Town dropped by about 6% so the effective change in dollars paid will be about 4%.
    Although these are true facts, taxpayers are advised to disregard them. The main purpose of such statements is to make tax increases sound not as bad as they really are. I've written about this extensively in The Dirty Little Secret of Property Taxes.

    Disclaimer: All of the above numbers are based on proposed budgets, and are subject to final approval of these budgets by the Town of Beekman and the Beekman Fire District.

    Acknowledgments: My thanks to Beekman Town Supervisor John Adams, Beekman Town Budget Officer William Brady, and Beekman Town Councilman Daniel French for graciously providing information essential to this analysis.

    Thursday, October 29, 2009

    Town of Beekman Blunder Overstates Tax Rate Increase

    A blunder has caused Town of Beekman Supervisor John Adams to significantly overstate the proposed 2010 Town tax rate increase. A letter from Adams to Beekman Town Clerk Virginia Ward on October 19 includes figures indicating that the projected 2010 Town of Beekman property tax rate would increase 10.09 percent. Also, a Poughkeepsie Journal story on October 14 states that Adams is proposing a 10 percent tax rate increase. In reality, the projected 2010 Town of Beekman property tax rate would decrease 0.7 percent.

    Town of Beekman Budget Officer William Brady has confirmed this blunder, which I discovered by examining Beekman's preliminary budget. The blunder was caused by mistakenly comparing the projected tax rate with the corresponding 2008 tax rate. The comparison should have been made with the 2009 tax rate, which is substantially higher. The net size of the tax rate error is 10.8 percent.

    Effect on Property Taxpayers

    Beekman property taxpayers will presumably be glad to know that their Town of Beekman taxes will decrease slightly, rather than increasing significantly. The bad news is that the Town of Beekman has held down its tax rate only by transferring a $319,000 ambulence-contract cost to the Beekman Fire District, thus raising the Beekman Fire District tax rate by a whopping 56 percent, from $0.46 per thousand dollars of assessed valuation to $0.72. Thus, the same taxpayers will be paying higher taxes out of another pocket. The dirty little secret of property taxes strikes again.

    Saturday, October 24, 2009

    Poughkeepsie Journal Fails Truth-in-Taxing Test

    The Poughkeepsie Journal has failed, in its recent stories about property taxes, to properly inform the public about what's really going on. Most readers of the Journal stories on property taxes in the City of Poughkeepsie and the Town of East Fishkill likely think that projected 2010 property taxes are going down substantially. The truth is that they're projected to go up from 5 to 9 percent. Most readers of the Journal stories on property taxes in the Town of LaGrange, the Town of Poughkeepsie, and the Arlington School District likely think that projected 2010 property taxes are going up by single-digit percentages. The truth is that they're projected to go up by double-digit percentages. The only recent Poughkeepsie Journal story that gets it pretty-much right is the one on the Town of Red Hook, where property taxes are projected to increase 25 percent.

    Poughkeepsie Journal Parrots Government PR

    In every one of these stories, the Poughkeepsie Journal has done nothing more than to rephrase the press releases and statements of government officials, even when those statements are deliberately misleading. None of the Journal stories has given any hint that there might be a different interpretation of the property tax situation than the government spin. The only reason the Town of Red Hook story is not misleading is that the government officials themselves were candid enough to provide the tax rate and tax rate increase.

    The Tax Rate is All That Matters

    From the viewpoint of property taxpayers and other members of the public (who pay property taxes indirectly through their rent), the most important measure of property taxes is the tax rate, and changes in the tax rate. In today's declining real estate market, property tax assessments are trending downward by single-digit or in some cases even double-digit percentages. In other words, the wealth of property owners — as measured by the market value of their properties — has diminished by these percentages. Under these conditions, property tax rates will tend to rise, even if the tax levy does not. And if the tax levy does rise, the tax rate will tend to rise even more. This is exactly what's been happening.

    The Big Story is Being Missed

    An increase in the tax rate is Really Bad News, because it means that our wealth is being taxed at a higher rate. Furthermore, it's likely that local governments will find it difficult to lower this rate to “normal” levels in the future, when the real estate market improves. In other words, the current dramatic increases in local property tax rates may result in permanent increases in the rate at which our wealth is taxed. This is a big story, and it's being played out in almost every local government jurisdiction. But you'd never know it from reading the Poughkeepsie Journal.

    Government Officials are Just Doing Their Jobs

    You won't hear this story from most government officials. When government officials discuss property tax issues in today's economic climate, it is to their advantage to deemphasize — or even omit — the tax rate and the change in the tax rate. Instead, they focus on the tax levy and/or the typical tax bill. In today's declining real estate market, increases in the tax levy and in the typical tax bill will be smaller than increases in the tax rate. By focusing on tax levies and typical tax bills, officials can make the tax situation seem not as bad as it really is, without actually lying. Putting the best face on a bad situation is what any good politician needs to do.

    Truth in Taxing

    Prominent disclosure of the tax rate and the change in tax rate is what I call truth-in-taxing. We cannot expect government officials to provide truth in taxing, because of their obvious conflict of interest. However, news sources such as the Poughkeepsie Journal have as a key purpose to inform the public about the workings of government. For stories related to property tax, such reporting means going beyond simply parroting the PR of government officials, especially when it is known that this PR is deliberately misleading. In property tax stories, the key issue is the tax rate and changes in the tax rate. This is always what the story is about, whether government officials wish to talk about it or not. Readers of the Poughkeepsie Journal need the tax rate and change in tax rate in order to understand the essence of what's happening. This means they need the change in the tax rate in the headline itself, in the lead sentence, and possibly also in the sidebar information — not buried in the tenth paragraph, or omitted entirely. The change in the tax rate is the story. Most recent Poughkeepsie Journal stories related to property taxes have failed to provide truth in taxing disclosures. I would very much like truth in taxing to become standard policy in the Poughkeepsie Journal's property tax reporting.

    Sunday, October 18, 2009

    Truth in Taxing

    Before 1968, consumers had very little protection in credit transactions. Lenders often used misleading figures to describe loan offers, so that it was impossible for most consumers to know whether a loan offer was good, bad, or indifferent, or to compare different loan offers. Lenders were not required to clearly disclose the cost of a loan. The truth in lending act, which became a federal law in 1968, changed all that. Now, lenders are required by law to disclose the annual percentage rate, or APR. The APR gives a standard measure of the cost of a loan, and allows direct comparison among loan offers.

    In a sense, property taxpayers live in a pre-1968 world. Government officials often use misleading figures to describe property taxes, so that it is impossible for most property taxpayers to know whether a proposed property tax is good, bad, or indifferent, or to compare property taxes from one year to the next, or among municipal jurisdictions.

    Truth in Taxing

    Property taxpayers need something like truth in lending. I call it truth in taxing. And just as truth in lending has the APR, a standard measure of how much a loan costs you, truth in taxing has the tax rate as a standard measure of how steeply your wealth, measured by the market value of your property, is being taxed. For example, a tax rate of $2.00 per thousand dollars of market value means that you get to pay $2.00 for every $1,000 of market value of your property. If your property is worth $100,000 in the market (as determined by the tax assessor), then your tax is $200. If your property tax rate last year was $2.00 per thousand dollars of market value, and this year it's $2.20 per thousand dollars of market value, then your tax rate has increased $0.20, or 10 percent. Truth-in-taxing means that changes in property taxes are expressed as percentage changes in the tax rate. Other measures of changes such as changes in the tax levy or changes in the the average tax bill may be of some interest (no pun intended), but do not directly disclose how heavily a property owner's wealth is taxed. Only the tax rate expresses directly how heavily a property owner's wealth is taxed, and only changes in the tax rate measure how much more heavily (or less heavily) that wealth is taxed.

    Your Property Tax Bill Implements Truth-in-Taxing

    Under New York State law, property tax bills are required to display truth-in-taxing information, or at least come pretty close to displaying it. This fact indicates to me that New York State law recognizes the utility of the truth-in-taxing concept. Tax bills are required to display:
    • The tax rate for each taxing purpose (such as town tax, county tax, fire tax, etc.). Unfortunately, the tax rate is given in dollars per thousand dollars of assessed value, rather than of market value. More on this below.
    • The market value of your property.
    • The equalization rate, confusingly called the uniform percentage of value on your bill.
    When the equalization rate is 100 percent, all assessed value numbers are the same as market value numbers. For example, tax rates per thousand dollars of assessed value are numerically equal to tax rates per thousand dollars of market value. In this case, your tax bill directly displays the tax rates determining how steeply your wealth is taxed.

    When the equalization rate is not 100 percent, one can convert tax rate in dollars per thousand dollars of assessed valuation to dollars per thousand dollars of market value simply by multiplying the former by the equalization rate.

    Who Should Be Responsible for Truth-in-Taxing Disclosures?

    I'm not suggesting that truth in taxing should be a law, as truth in lending is. I'm just suggesting that truth-in-taxing is a convenient label for disclosures which clearly state the meaning of property taxes for taxpayers. It would be asking too much of government officials to focus their press releases on truth-in-taxing. They simply have too strong a conflicting interest in obscuring this information, especially in a declining real estate market. But news sources intending to inform the public about property tax matters, rather than to promote a partisan view, would do well to focus on tax rate as the key component of truth-in-taxing. More on this in a subsequent post.

    Friday, October 16, 2009

    City of Poughkeepsie Proposes 5 to 7 Percent Tax Increase

    If you've been reading this blog lately, you've read posts like this one too many times already. Well, I think five times is too many. For at least the sixth time in recent weeks, the Poughkeepsie Journal has reported a story related to property taxes in which the most important part of the story is obscured or omitted entirely. The most important part of a story on property taxes is the tax rate, and changes in the tax rate.

    In this case, the story about the City of Poughkeepsie by reporter Michael Valkys in today's web edition of the Poughkeepsie Journal is entitled “Budget plan avoids layoffs, may cut taxes for some.” In the print edition, the front page title in the Mid-Hudson section reads, “City budget plan avoids layoffs,” with the title on the page 2 continuation reading, “CITY: Some would pay less in taxes.” The second sentence in the story describes a budget “that officials said calls for property tax decreases for many homeowners ... ”. City officials have gone about as far as they can go without actually lying, to make it seem as though taxes are going down. Their message is not technically false, but is totally misleading.

    The Real Story

    The real story is that the City of Poughkeepsie property tax rate would increase 5 to 7 percent, as I've titled this post. That's 5 percent for homesteads and 7 percent for non-homestead (commercial) properties. The 5 percent number actually appears in Tkazyik's 4-page letter to the Common Council as 4.79 percent, though it's buried at the bottom of the third page. The 7 percent number can be computed from the non-homestead tax rates mentioned in a side-bar to the story. Neither number is mentioned in the Poughkeepsie Journal story.

    Ironically, the only tax rate changes mentioned in the story are those of “competing” cities in other counties: The story claims that the City of Newburgh proposed an 82.5 percent property tax increase for homeowners, and the City of Kingston a 10 percent increase. Why didn't the story mention the 5 percent increase for Poughkeepsie? Once again, the Poughkeepsie Journal has followed a fairly consistent pattern of obscuring the main story about property taxes, and instead has parroted the congratulatory PR of government officials.

    Government Officials Are Just Doing Their Job

    It is not my intent at all to bash City of Poughkeepsie Mayor John Tkazyik or his budget. I take no position on whether his budget is good, bad, or indifferent. But Tkazyik is doing what any good politician needs to do: Put the best face on a bad situation. And don't kid yourself, the situation is bad, not just in the City of Poughkeepsie, but throughout Dutchess County, New York State, and indeed the nation. When government officials discuss property tax issues in today's economic climate, it is to their advantage to deemphasize — or even omit — the tax rate and the change in the tax rate.

    Poughkeepsie Journal Fails its Readers — Again

    In my view, it is the Poughkeepsie Journal that has been serving its readers poorly by not presenting the real story — the increase in the tax rate. This has been a consistent pattern with the Poughkeepsie Journal. This story on the City of Poughkeepsie is just the latest example.

    Tuesday, October 13, 2009

    Perfect Calm Averts Major Fairview Fire Tax Increase

    You've heard of a perfect storm, and the calm before the storm, right? I figure a perfect calm must be the opposite of a perfect storm.

    The Perfect Calm in Fairview

    Earlier this year, Fairview Fire District Treasurer James Passikoff announced that the District had a $600,000 fund balance at the end of 2008. This amount represents roughly 20 percent of the 2008 budget. When asked how it was possible that such a large fraction of the 2008 budget went unspent, Passikoff explained that a combination of factors were involved. Many major uncertainties in cost estimates for 2008 all ended up on the low end of their range. Passikoff agreed that what happened in 2008 was “the opposite of a perfect storm”. In other words, a perfect calm. (No, I don't mean the perfume or the relaxation exercises.)

    Tax Rate Remains Constant

    The proposed 2010 budget for the Fairview Fire District allocates $450,000 of this $600,000 fund balance to reduce the tax levy for 2010 to $2,832,000. Since Fairview's market value for the 2010 tax year is $566,452,002, the result is a projected fire tax rate of $5.00 per thousand dollars of market value. This tax rate is almost 2 percent lower than Fairview's 2009 fire tax rate of $5.09. In summary, Fairview's projected 2010 fire tax rate continues a trend begun in 2003, in which Fairview's fire tax rate is essentially constant, within just a few percent of $5.00 per thousand dollars of market value.

    Perfect Calm Averts Tax Rate Increase

    But the continuation of this trend of constant fire tax rate into 2010 is due only to the infusion of $450,000 from 2008's perfect calm. Without this infusion, Fairview's tax levy would have been $3,282,000, resulting a tax rate of $5.79 per thousand dollars of market value. This tax rate is almost 14 percent higher than Fairview's 2009 fire tax rate of $5.09. In summary, without the perfect calm of 2008, Fairview's 2010 fire tax rate would have increased nearly 14 percent.

    Future Tax Rate Increases Expected

    It is reasonable to assume that the Fairview Fire District will not see another perfect calm anytime soon. In addition, market values in Fairview are continuing to drop, following a national trend. Therefore, in the absence of dramatic changes, Fairview fire tax rate seems destined for significant increases in future years. This prediction is consistent with the dirty little secret of property taxes.

    Fairview already has the highest fire tax rate in Dutchess County, and possibly the highest in New York State. The current analysis suggests that without some dramatic changes, Fairview taxpayers will continue to suffer this burden for at least the next few years.

    Acknowledgement: My thanks to Ginny Buechele for calculating the tax rate that would result without the $450,000 infusion.

    Sunday, October 11, 2009

    Poughkeepsie Journal Opposes Cost Shifting

    The unsigned editorial in today's Poughkeepsie Journal, Cost shifts do nothing to help taxpayers, declares cost shifting among governments to be “outrageous”, and calls on governments to “look for efficiencies and savings and to share services better.” Though the focus of the Poughkeepsie Journal editorial is primarily on shifting costs among New York State, counties and towns, fire districts are also mentioned. These sentiments are in alignment with my own view of Joel Miller's cost-shifting proposals for fire districts.

    I've commented numerous times in this blog about how Poughkeepsie Journal news stories about property taxes have presented the viewpoints of government officials, and have neglected the taxpayer perspective. I'm pleased that the Poughkeepsie Journal editor is taking the taxpayer's viewpoint on cost shifting. Cost shifting just wastes motion at best, and adds complexity — and further cost — to the system at worst.

    Joel Miller Responds to Criticism of His Fire Tax Proposals

    It is gratifying to learn that New York State Assemblyman Joel Miller agrees with much of my recent blog post, Joel Miller's Flawed Proposals for Funding Fire Districts. In a lengthy phone conversation on October 7, Miller agreed that his three proposals do not reduce the costs of providing fire protection and emergency services, but only shift these costs around. He also agreed that consolidation is the right approach for reducing the cost of these services — in the long run.

    However, Miller's position is that consolidation is not politically feasible in the short run so long as there are great disparities in fire tax rates among consolidating fire districts. Districts with low fire tax rates will simply not be willing to consolidate with high tax rate districts, thereby increasing their own taxes for no apparent gain. Miller claims his proposals would tend to reduce the disparities in tax rates among fire districts. Once the disparities have been reduced, fire districts will be more willing to consolidate, thereby achieving cost savings.

    Miller's Response Prompts More Questions

    As I see it, Miller's viewpoint is worth further discussion. His proposals would tend to reduce the disparities in tax rates among fire districts. But would more equal fire tax rates make consolidation — and the resultant savings to taxpayers — easier to achieve, or more difficult? On the one hand, low-tax fire districts would be less likely to object to consolidation, since their tax rates would not increase as much. But on the other hand, the political pressure to consolidate would be decreased as well, since this pressure comes mainly from the high tax fire districts. If the symptom — high fire taxes — is alleviated, how willing will stakeholders be to attack the sickness — waste and inefficiency in fire protection and emergency services?

    Also, to what extent would Miller's proposals add complexity and therefore further cost to a tax system that is already overly complex? Miller downplayed this effect, but in my view, the cost of complex systems is under-appreciated. Do we really want to move our tax system in the direction of the health care industry, where administrative costs are already a major problem? (Hmmm, we're already there, but that's not a reason to make it worse.)

    Your Views Wanted

    These questions don't have easy answers. I'd like to hear from readers who can add to the discussion. You are invited to post your comments.

    Friday, October 9, 2009

    East Fishkill Might See 9 Percent Tax Increase

    A story in today's Poughkeepsie Journal by reporter Michael Woyton (print edition) was headlined “East Fishkill property tax could drop a bit in 2010”. The subtitle says, "Town proposes 1.3% less spending, 8.87% lower homeowner levy". The web edition's headline is “East Fishkill might see slight tax decrease”. Sounds like everything is down. Great news for property taxpayers in these difficult economic times, right?

    Wrong! The real story, buried in the tenth paragraph, is that the tax rate would increase by 8.87 percent (essentially 9 percent). And the tax rate is all that matters. That's why this blog post says “9 percent tax increase”. All those other statistics are just spin, intended by East Fishkill Town Supervisor John Hickman to mislead the public into thinking that things aren't as bad as they really are.

    East Fishkill is now the fifth local jurisdiction I've commented on in recent weeks for which the Poughkeepsie Journal's stories on property taxes are misleading. As I predicted in The Dirty Little Secret of Property Taxes, it is in the interests of local government officials to downplay the tax rate increases in times of falling property values. And for at least the fifth time, a Poughkeepsie Journal reporter fell for — or has gone along with — this deception. Most readers, especially those that only read the headlines, won't recognize the true story either.

    To Hickman's credit, he clearly explained why tax bills are slightly decreasing even though the tax rate is increasing 9 percent: It's primarily because taxpayer wealth, as measured by property values in East Fishkill, has decreased by 8.3 percent ($500,000 house is now worth $458,650). A considerably less important reason is that the tax levy shows a slight (under 0.1 percent) decrease. These facts are exactly in line with my predictions, as discussed in detail in The Dirty Little Secret of Property Taxes.

    In my view, readers of the Poughkeepsie Journal are not well served by stories like this which simply parrot the PR of local government officials.

    Thursday, October 8, 2009

    Town of Red Hook Gets It Almost Right

    After my previous posts about how the Arlington School District, the Town of Poughkeepsie, and the Town of LaGrange have tried to mislead the public about the true extent of property tax increases, it's a pleasure to report that the Town of Red Hook has made a serious attempt to tell it like it is. This is especially commendable since the news is very bad: In a press release dated September 30, 2009, Red Hook Town Supervisor Sue Crane announced a 25 percent property tax increase in the Town's proposed 2010 budget.

    Unfortunately, the press release does not specifically say exactly what “25 percent property tax increase” really means. Does it mean a 25 percent increase in the tax rate? In the tax levy? In the typical tax bill? There's no way to know from reading the press release. If you've been reading my recent blog posts on this subject, it really makes a difference. The tax rate is all that matters. What's needed is the percent increase in the tax rate. With all the deception commonly practiced by other jurisdictions, as reported in this blog, one can't assume that “25 percent property tax increase” necessarily means “25 percent property tax rate increase”.

    But I'm happy to report that it does mean exactly that. Town of Red Hook Deputy Supervisor Jim Ross confirmed this fact in a recent phone conversation. Ross and I agreed that it would have been more informative for the press release to have explicitly mentioned that the 25 percent increase is in the tax rate. The omission of this information is the only issue I found with the tax increase announcement, and is the reason for my “almost right” qualification.

    Poughkeepsie Journal Echos Officials — Again

    A story by reporter Rasheed Oluwa appeared in the Poughkeepsie Journal's October 5 edition under the headline “Red Hook weighs 25% tax hike”. Unfortunately, this story is nothing more than a paraphrase of the Town of Red Hook's press release. The same ambiguity about the meaning of “25 percent” that appears in the press release is simply repeated in the Poughkeepsie Journal's story. It would have better served readers if the reporter had investigated sufficiently to clarify this important matter. Regrettably, this is not the first time that a Poughkeepsie Journal story has comprised nothing more than a parroting of government officials.

    Wednesday, October 7, 2009

    Valerie Hail Responds to Charges of Deceit

    If you believe Valerie Hail, the falsehood on her reelection campaign website really isn't her fault! In a phone conversation with me this morning, she said the website was crafted — without her awareness — by other high-ranking officials of the Town of Hyde Park, two of whom she named. I will withhold their names out of pity for them.

    Hail takes the charges of deceit as being not a very serious matter, and she expressed surprise that others do. Her email response to me yesterday expressed a flippant attitude:
    Great blog by the way, printed it out so I could read it on the road..also forwarded the letter two weeks ago .from their attorney to our atorney. We had quite a chukle. (Would like to FOIL that invoice and see how much we taxpayers had to pay for that)..
    Hail told me — but only after I pressed her — that she will work with other Hyde Park officials to revise her campaign materials, and presumably to take down the offending falsehood. But this plan didn't sound as if it was a high priority.

    Voters Will Judge

    It hardly needs mentioning that even young children are taught to take responsibility for their own words. In attempting to blame others for her own campaign website, Valerie Hail seems not to have learned this lesson.

    Hail probably thinks I'm doing her a favor by writing this post. Her first words to me were, “Bad press is better than no press.” She didn't sound as if she were joking. It remains to be seen whether Hyde Park voters in Ward 2 will agree with her.

    Tuesday, October 6, 2009

    Valerie Hail Versus the Fairview Fire District

    There are no winners here, folks, in the battle between Hyde Park Town Councilwoman Valerie Hail and the Commissioners of the Fairview Fire District. Their dispute is about who should take credit for the dramatic (over 14 percent) drop in the fire tax rate in 2009 in the Hyde Park portion of the Fairview Fire District. Councilwoman Hail claims on her re-election web page that her primary accomplishment is that she “reduced 2009 Fairview Fire District taxes by 14.3%”. The Fairview Fire Commissioners, through their attorney, sent her a vehement — and I mean really vehement — open letter insisting that she had no hand in doing that.

    The Commissioners are certainly right about Councilwoman Hail's role. Councilwoman Hail's claim is false, false, and false. There's no other way to say it, except maybe “baseless”. Her blatant fabrication deserves full denunciation.

    That said, the irony for the Commissioners is that in calling attention to Councilwoman Hail's deceit, they must also confront their own embarrassing role in the 14 percent drop in fire tax rate. The lawyer's letter handles this artfully, by saying, “It was not you who reduced taxes. It was not you who reapportioned the valuations leading to the reduction in fire taxes in the Fairview Fire District portion of Hyde Park.”

    More Blame than Credit

    This carefully-worded statement is factually correct, but might lead many readers to the mistaken conclusion that whoever “reapportioned the valuations leading to the reduction in fire taxes” must be the person to be commended for the 14 percent drop in fire tax rate. The person who “reapportioned the valuations” for at least the last decade is James Passikoff, CPA, Treasurer of the Fairview Fire District. The lawyer's letter was careful not to state that Passikoff should be credited with the 14 percent drop in Hyde Park's tax rate, and for good reason: Not only is this conclusion wrong, it's backwards! Passikoff is to blame for overcharging Hyde Park taxpayers 15 percent in 2008, and lesser percentages in previous years, probably in violation of New York State's real property tax law. For 2009, Passikoff did not overcharge Hyde Park taxpayers, resulting in a 14 percent drop in Hyde Park's fire tax rate. The 2009 Hyde Park fire tax did not in any way compensate for Passikoff's previous mistakes; it merely meant that Passikoff did not make additional mistakes for the 2009 tax apportionment calculation. In other words, the 14 percent drop in Hyde Park's fire tax rate is due to the fact that fire tax overcharges stopped for Hyde Park in 2009.

    Fire Commissioners' Role in Apportionment Mistakes

    Under New York State law, the Fairview Fire Commissioners are ultimately responsible for everything that goes on in the Fairview Fire District. As is typical in fire districts, the Fairview Fire Commissioners delegate the responsibility for all financial and tax matters to the Treasurer of the Fire District. The Commissioners are responsible for electing or re-electing a Treasurer of the Fairview Fire District at the beginning of each year, and for setting his compensation during the fall budget process. When the Fairview Fire Commissioners learned of James Passikoff's apportionment mistakes in September 2008, they unanimously agreed not to re-elect him as Treasurer for 2009. Just kidding! What they actually did was to award him an 8.7 percent raise in the 2009 proposed budget. It was only after objections by taxpayer Beverly Allyn during the public hearing that Passikoff's raise was lowered to a smaller percentage in the final 2009 budget. (Full disclosure: Beverly Allyn is my wife.) The Commissioners unanimously voted to re-elect James Passikoff as Treasurer for 2009.

    My Role in Uncovering This Mess

    My own role in uncovering this mess, and in the 14 percent drop in Hyde Park's fire tax, has been publicly known for more than a year, and is documented in the Unfair Apportionment section of my companion website. Here's a brief summary: On July 29, 2008, after months of my own investigation, Beverly Allyn and I met with James Passikoff and Fairview Fire Chief Tory Gallante, in order for Passikoff to explain Fairview's 2008 apportionment calculation. Beverly and I documented a large number of separate mistakes of reasoning in Passikoff's procedure. On August 4, 2008, Beverly and I met with John Anspach, Chairman of the Board of Fairview Fire Commissioners to discuss our findings. Commissioner Anspach assured us at that meeting that the apportionment mistakes would no longer occur. I published my initial report, Unfairness in Fairview -- Inequitable Apportionment of the Fire Tax Levy, on September 11, 2008, (Document #5). A subsequent report predicted a 14.7 percent decrease in Hyde Park's 2009 fire tax rate.

    Although my investigations revealed that responsibility for fair apportionment lies with the Fairview Fire District Board of Commissioners and its Treasurer, and that the inequitable apportionment was probably in violation of New York State's real property law, Commissioner Anspach made repeated public statements denying these findings, eventually insisting that his denials were based on advice from Fairview Fire District attorney Bill Spampinato. Commissioner Anspach's denials ended only after I documented my own conversation with Spampinato on October 23.

    Why This Rant Now?

    Valerie Hail's blatant falsehood in claiming credit for a 14 percent drop in Hyde Park's taxes gave the Fairview Fire Commissioners an opportunity to set the record straight, or at least to not further distort the record. Unfortunately, the commissioners chose a statement that's at best ambiguous:
    “It was not you who reduced taxes. It was not you who reapportioned the valuations leading to the reduction in fire taxes in the Fairview Fire District portion of Hyde Park.”
    This statement points not to a creditworthy party, as one would reasonably suppose, but to the blameworthy party, James Passikoff, Treasurer of the Fairview Fire District, whom the Commissioners have continued to support and even to reward. In my view, it is long past due for the Fairview Fire Commissioners to take responsibility for mistakes made on their watch, and to correct them — not to cover them up.

    Monday, October 5, 2009

    Joel Miller's Flawed Proposals for Funding Fire Districts

    New York State Assemblyman Joel Miller's latest attempt to alleviate the burdens of property taxpayers in high-tax fire districts comprises three legislative proposals:
    1. Allow fire districts to bill insurance companies.
    2. Subsidize fire districts through county sales tax.
    3. Subsidize fire districts by introducing a college student safety fee, whose cost would be passed through to New York State.
    These proposals, documented in Miller's letter to New York State Assembly Minority Leader Brian Kolb, with cover letter to Mark Bendel, Vice President of the Fairview firefighters' union, are fundamentally flawed. Miller's proposals do not address the basic problem with fire and emergency services, which is that these services cost more than they need to. New York State's current system of fire districts and fire protection districts is inefficient and wasteful. At the same time, evolution of this system since its origin nearly a century ago has resulted in great disparities among districts in both costs to taxpayers and levels of service, with costs and service levels often not related.

    Consolidation Provides Efficiency and Fairness

    Many government officials and thoughtful observers have come to recognize that levels of service can be increased, total costs can be reduced, and costs can be distributed more equitably by consolidating small fire districts into larger ones. In today's economy, larger enterprises have substantial advantages over smaller ones. The businesses of fire protection and emergency service can benefit greatly from economies of scale. By consolidating fire districts, the region as a whole wins with better and more consistent levels of service, and more equitable funding of fire protection and emergency services. Property taxpayers also win with lower fire taxes on average, because the total cost of these services is less.

    Although consolidation of fire districts has great public benefit, restrictive New York State laws have made consolidation an impractical option — until now. As part of an initiative to reform local governments by Attorney General Andrew Cuomo, revisions to New York State laws were put in place a few months ago, so that it is now feasible for local governments such as fire districts to consolidate. It has never been easier for fire districts to consolidate than it is now.

    Miller's Proposals Simply Shift Costs

    None of Miller's proposals reduce the actual cost of providing fire and emergency services, but simply shift current costs away from property taxpayers to other parties. But who are these “other parties”? With Miller's proposals, it is insurance companies, county governments, and New York State. Where do all these other parties get their money? From us, homeowners (insurance), consumers (sales tax), and wage earners (state income tax). So if Miller's proposals shift costs to these other parties, we will pay for them, one way or another, even if we see our fire tax rates decrease.

    Miller's Proposals Add Costs

    Not only do Miller's proposals not reduce costs for fire and emergency services, but they add costs for other parties. The administrative costs of billing insurance companies for health care is already a significant (and, many say, needless) drain on patient resources. If fire districts billed insurance companies as Miller proposes, another layer of unneeded complexity and extra expense is introduced. The same holds for Miller's safety fee proposal. Saying that the insurance companies and the State pay these extra costs is just saying that we're paying them indirectly.

    County-Wide Consolidation

    Regarding Miller's proposal to subsidize fire districts from the county sales tax, it's worth considering the logical extreme of this policy: Suppose that Dutchess County didn't just subsidize its fire districts, but instead paid the full amount of all fire taxes for all 30 fire districts in the county! In such case, the County would be wise to conclude that since it was paying for everything in the fire districts, it should control everything in the fire districts. (“Where money goes, power flows.”) That way, the County could make changes which would reduce costs and improve levels of service at the same time. In effect, we would have one county-wide system for fire and emergency services under the county executive.

    But there's no need for a new law to achieve a county-wide system for fire and emergency services. Under current law, it would be feasible — and much preferable — to simply consolidate all 30 fire districts of Dutchess County into a single county-wide fire district under a set of fire commissioners.

    Miller Should Facilitate Consolidation

    Consolidation of all 30 fire districts — or even consolidation of a few fire districts — will take time and effort. But the end result will be reduction of waste, improvement of service, and alleviation of inequitable fire taxes. Instead of working to prop up the current byzantine system of fire districts by making it even more convoluted, Miller should use his influence to facilitate consolidation.