Friday, October 2, 2009

Town of Poughkeepsie Proposes 12.5% Tax Increase

Today's lead story in the Poughkeepsie Journal by reporter Michael Valkys was headlined “Town weighs 8.9% hike in tax levy”. So why does this blog post say “12.5% increase”? Because the tax rate for homeowners would increase by 12.5 percent, and the tax rate is all that matters. Actually, it's even worse for commercial properties. The tax rate for commercial properties would increase by a whopping 20.6 percent!

Balanced Reporting?

Unfortunately, you won't find these higher percentages in the story. (But you can compute them yourself from the 2009 tax rates and the projected 2010 tax rates, which are mentioned in the story.) If the tax rate increases are so important, why aren't they mentioned in the story? Two reasons:

1. Town of Poughkeepsie officials probably did not explicitly provide the tax rate increase numbers, because it is to their advantage not to do so. By focusing on tax levy instead of tax rate, the increase is made to appear smaller than it really is.

2. The Poughkeepsie Journal story presented the information that Town of Poughkeepsie officials wanted to publicize, which is fine. However, the story contained no hint that there might exist a different interpretation of the Town of Poughkeepsie tax situation than the one Town officials provided. Not so fine. Poughkeepsie Journal readers would be better served by more balanced reporting, so that they can hope to understand what's really going on.

If you've been following my blog, you may notice that the above reads almost exactly like my last post, which discussed the Arlington School District. This is no accident. A corollary to the dirty little secret of property taxes is that in a declining real estate market, property tax rates will tend to rise more than the tax levy. That's exactly what's happening in the Town of Poughkeepsie.

Interpreting the Town of Poughkeepsie PR

The second sentence of the Poughkeepsie Journal story is extremely misleading: “Officials estimated town tax bills for owners of homes assessed at $365,000 would increase $82 next year to $1,200.” The $82 increase (which represents a mere 6.9 percent increase in the amount of tax) is true only under the assumption that the home's assessed value drops 5 percent to $346,750. Poughkeepsie Town officials are well aware that most homes in the Town have in fact dropped 5 percent in assessed value. (I reported the 5 percent decrease for the Fairview portion of Poughkeepsie on May 8.) Although Town officials used the 5 percent decrease in assessed value in the calculation of the $82, this key fact is mentioned nowhere in the story. In summary, you'd pay “only” 6.9 percent more because your house is worth 5 percent less! All this is just another way of saying that your true increase is 12.5 percent.

Just as with the Arlington School District, Town of Poughkeepsie officials are exploiting taxpayers' generally weak understanding of property taxes to hide the true size of the proposed tax increase. If I sound like I'm repeating myself, it's because it's really just the same story as in my last post. And you can count on hearing this story again from government officials in other local jurisdictions. That's because the motive for misleading taxpayers as to the true cost represented by their property tax dollars is driven by the nation-wide decrease in market values of properties.


  1. A story by reporter Michael Valkys on the front page of today's Poughkeepsie Journal reports on reduced spending in the final 2010 budget. This time, the tax rate increase (8.5 percent for homestead and 16 percent for commercial) is explicitly stated, though it's buried in the 5-th paragraph. Still, this is an improvement over last month's story. Unfortunately, the headline, "Budget may hike tax levy by 4.9%" continues to mislead the inattentive reader.

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