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.

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