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.

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