Saturday, October 3, 2009

Town of LaGrange Proposes 14 Percent Tax Increase

A story in today's Poughkeepsie Journal (web edition) by reporter John Davis was headlined “LaGrange homeowners face 6 percent tax hike”. So why does this blog post say “14 percent increase”? Because the tax rate for homeowners would increase by 14 percent, and the tax rate is all that matters.

If you've been following my blog lately, this story should sound familiar. Once again, as I predicted in The Dirty Little Secret of Property Taxes, local government officials are attempting to mislead property taxpayers by focusing their public statements on tax levies, budgets, and tax bills. In today's economy, with falling real estate values, changes in tax levies, budgets, and tax bills all understate the true cost to taxpayers. That's why these officials prefer to focus on them. They can talk about tax levies, budgets, and tax bills all they want without making any false statements, and can leave the impression that things aren't as bad as they really are.

It's the Tax Rate, Stupid

As repeated many times already in this blog, the way to know how bad things are, and how much better or worse they're getting, is by looking at the tax rate, and changes in the tax rate. You already know things are getting worse. The thing is, they're getting worse faster than many of you think. How else can I say it? You've got to look at the tax rate.

Reporting Becomes a Little More Balanced

At this point, I'm pleased to credit reporter John Davis for some noticeable improvements in coverage, compared with both his previous story on the Arlington School District, and reporter Michael Valkys' story on the Town of Poughkeepsie. Unlike in those previous stories, Davis' story on LaGrange actually contains the key piece of information — the 14 percent increase in the tax rate — though it's buried in the seventh paragraph.

More Balanced Reporting Still Needed

There's still a great deal of room for improvement in coverage of property tax issues by the Poughkeepsie Journal: It's great that the most important part of the LaGrange story — the 14 percent increase in the tax rate — at least appears in the story, but it deserves more prominence. Ideally, it should be in the headline. But as a minimum, it should appear in the “Impact” statistics, along with less important measures like the budget and tax levy. It would also help to explain to readers how the tax rate relates to an example property whose assessed value decreases. See below.

Interpreting the Town of LaGrange PR

The LaGrange story describes an example home assessed at $400,000 whose owner would pay “only” $42 more (6 percent more) in tax next year. But this example also assumes that the home is assessed 7 percent lower next year. Ordinarily, if your wealth, as measured by your home value, decreased by 7 percent, you'd hope to pay 7 percent less in tax. Instead, you're paying 6 percent more. This is just another way of saying that the right way to look at it is that your wealth is being taxed at a 14 percent higher rate. It would have been helpful to readers of the LaGrange story to explain this simple fact.

LaGrange Town Councilman Ed Jessup is quoted in the story as saying, “A 6 percent increase in these times is pretty good.” Well, a 6 percent increase in these times may or may not be “pretty good”. The problem is that it's really a 14 percent increase. How good is that?

1 comment:

  1. Today's Poughkeepsie Journal contains another story about the Town of LaGrange budget. This time, reporter John Davis includes the new tax rate increase of 12.3 percent right in the first sentence. In addition, the "Impact" column shows the 2009 and 2010 tax rates, and the 12.3 percent tax rate increase. In my view, this is a significant improvement in reporting, which should well serve readers of this newspaper.


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