Poughkeepsie Journal's Mistakes in Gathering Tax Data

This is the third of three blog posts on the Poughkeepsie Journal's January 11 feature story Most cities, towns cut spending, raise taxes to balance the books by reporter John Davis.  That story contained a city/town tax table and sidebar (in the print edition only, unfortunately) with mistakes in each of these three steps:

1. Get accurate data.
2. Determine the correct way to analyze the data.
3. Do the arithmetic correctly.

My first blog post, Poughkeepsie Journal's Incorrect Tax Rate Analysis, discussed a serious error in Item 2 — Determining the correct way to analyze the data.  My second post discussed mistakes in Item 3 — Doing the arithmetic correctly.  This post discusses mistakes in Item 1 — Getting accurate data.

What Is the Most Authoritative Source for Property Tax Data?

According to the Dutchess County Charter, the county government's Real Property Tax Service Agency (RPTSA) is responsible for preparing tax rates for the county, towns, and special districts.  RPTSA also prepares property tax bills and tax rolls.  The fact that the RPTSA prepares all these documents means that the tax data published each year by the RPTSA corresponds exactly to the taxes paid by property owners.  So if you want the tax rate increases actually paid by property owners in any Dutchess County town or city, you use the RPTSA data.

Town/City Tax Rates Using RPTSA Data

I've used the RPTSA data to compile a table of tax rate changes for towns and cities in Dutchess County.  My table is here.  It wasn't hard to make.  You can easily make one yourself, or use the RPTSA website to check my work.  Here's what I did:

1. I copied the 2009 and 2010 tax levy, assessed value, and equalization rate data (orange column headings) from the RPTSA tax rate pamphlets.  
2. I calculated each tax rate per $K of assessed value by dividing the tax levy by the assessed value.  Next, I calculated the tax rate per $K of market value by multiplying the tax rate per $K of assessed value by the equalization rate.  Finally, I calculated the percent change in tax rate from the 2009 and 2010 tax rates per $K of market value. All my calculations (grey column headings) are to 15 significant figures, but results are displayed to only 3 or 4 significant figures for presentation.
3. I copied the Poughkeepsie Journal's tax rate increase (blue column heading) from their table.
4. I calculated the difference between my tax rate increase and the Poughkeepsie Journal's (grey column heading).

Note that I did not copy the tax rates from the RPTSA tax rate pamphlets, because the pamphlets only display these rates to the nearest cent.  By recalculating the tax rates from tax levies and assessed values, I got the high-precision tax rates necessary for accurate tax rate increases (and also necessary for accurate tax bills!).

Eight towns in Dutchess County contain villages with separate tax rates.  I've followed the Poughkeepsie Journal's lead in showing only the rates for outside the villages, marked with suffix “- o”.  (The Journal has only marked two of them.) Two towns and two cities have separate tax rates for homestead and non-homestead (commercial) properties.  I've shown only the homestead rates, marked with suffix “- h”.

Poughkeepsie Journal's Tax Data Is at Variance with RPTSA

There is little in common between the Poughkeepsie Journal's figures and the RPTSA figures.  The Journal's tax levy figures fail to match the RPTSA tax levy figures in all but two towns (Pine Plains and Stanford).  More importantly, the Journal's tax rate figures differ noticeably from the RPTSA tax rate figures in all but five towns (Beekman, Fishkill, LaGrange, North East, and Poughkeepsie).

It should be noted that the RPTSA had not yet published the 2010 tax rate pamphlet before the Poughkeepsie Journal's January 11 story was written.  However, the RPTSA had published the 2010 tax rolls, which contain the same high-precision 2010 tax rates.  So the essential data was available.

What Were the Sources of the Poughkeepsie Journal's Tax Data?

As noted in my previous two posts on this story, I have not been able to determine for sure where the Poughkeepsie Journal got its data, because Journal management has denied my request to speak with whoever prepared the story's tax table.  But the fact that there's so little in common between the Poughkeepsie Journal's table and the RPTSA's figures leads one to suspect that the Journal used other sources.

Other sources may include the websites of towns, which sometimes display property tax data.  In my experience, this data tends to be different from the RPTSA data, sometimes markedly.  There can be many legitimate reasons for these differences.  As just one example, the RPTSA sometimes must adjust tax levies submitted by towns to account for tax delinquencies from the previous year.

Cost Shifting

For a few towns, a formal comparison between 2009 and 2010 tax rates, as in my table, is misleading, because of cost shifting between town budgets and other government budgets.  When looking at tax rate increases, it makes more sense to take this cost shifting into account.  To the Poughkeepsie Journal's credit, its figures appear to take this cost shifting into account for the Town of Red Hook.  However, the Town of Beekman also has a significant cost shifting issue, which the Journal does not seem to have taken into account.

Summary of My Critiques

The Poughkeepsie Journal's January 11 feature story provided a table of tax rate and tax rate change information for all 20 of Dutchess County's towns as well as the cities of Beacon and Poughkeepsie (in the print edition only).  It's great that the Poughkeepsie Journal seeks to focus so much attention on these parameters, which are key to informing property taxpayers and government officials about what's happening with their taxes.  Unfortunately, the story's tax table is deeply flawed, so that the figures in the tax table cannot be relied upon.  My three posts about this story describe three different kinds of flaws.  This post describes the Poughkeepsie Journal's failure to start with authoritative tax data, my first post describes its failure to take into account changes in equalization rate, and my second post describes its failure to use high-precision arithmetic.  The cumulative effect of these mistakes is that almost every tax rate change in the Poughkeepsie Journal's story is inaccurate, in many cases by a large amount.  A different Poughkeepsie Journal reporter also failed to use high-precision arithmetic in a story a month earlier, as noted in this blog.  There would seem to be a need to improve the oversight of property tax reporting at the Poughkeepsie Journal.  I would certainly like to encourage this outcome.

Fairview Fire District Granted $45K for Consolidation Study

New York Secretary of State Lorraine Cortés-Vázquez today announced that the Fairview Fire District has been awarded a $45,000 Local Government Efficiency grant to study the feasibility of potential consolidation, merger, or cooperative agreement with one or more of its adjacent fire districts.  This grant is the latest in a series of initiatives at the state level in recent years designed to streamline local governments and reduce property taxes.  Cortés-Vázquez concurrently announced similar grants to four other local governments, none of which are fire districts.

Recent History of State Initiatives on Improving Local Governments

The recent state initiatives began in April 2007 with the creation of the New York State Commission on Local Government Efficiency and Competitiveness by Gov. Eliot Spitzer.  The final report of this Commision, in April 2008, emphasized local government consolidation as a principal means to improve efficiency and reduce costs.  New York State law at that time made it almost impossible for local governments to consolidate.  Since then, New York State Attorney General Andrew Cuomo began promoting changes to state law to facilitate consolidation and dissolution of local governments.  Last summer, a new state law — the New N.Y. Government Reorganization and Citizen Empowerment Act — was enacted, making it substantially easier for fire districts like Fairview to consolidate or dissolve.  This law goes into effect in March 21, 2010.

Good News for Fairview Taxpayers

Today's announcement is good news for the Fairview Fire District, which has the highest fire tax rate in Dutchess County, and possibly the highest fire tax rate in New York State.  Many Fairview officials and taxpayers have been receptive to the idea of consolidation and improved efficiency.  The study which this grant will support is a necessary and significant step towards achieving some kind of restructuring that could significantly lower fire taxes for Fairview property owners.

Many thanks to Virginia Buechele for alerting me to today's announcement.

Poughkeepsie Journal Commits Roundoff Error — Again

This is the second of three blog posts on the Poughkeepsie Journal's January 11 feature story Most cities, towns cut spending, raise taxes to balance the books by reporter John Davis.  That story contained a tax table and sidebar (in the print edition only, unfortunately) with mistakes in each of these three steps:

1. Get accurate data.
2. Determine the correct way to analyze the data.
3. Do the arithmetic correctly.

My first blog post, Poughkeepsie Journal's Incorrect Tax Rate Analysis, discussed a serious error in Item 2 — Determining the correct way to analyze the data.  This post discusses a mistake in Item 3 — Doing the arithmetic correctly.  A third post on Item 1 — Getting accurate data — is in preparation.

Round-Off Error

The last column of the story's tax table lists the percent change in the tax rate of Towns and Cities from 2009 to 2010.  The percent change in the tax rate is the key measure of whether taxpayers' property is being taxed at a higher or lower rate, and by how much.  For example, in the Town of Fishkill, the Poughkeepsie Journal's story lists the tax rate increase as 4.13 percent.  Unfortunately, this figure is inaccurate because the Poughkeepsie Journal calculated the tax rate increase using the rounded tax rates of $1.21 and $1.26 per thousand for 2009 and 2010.  If they'd used the more precise tax rates of $1.213139 and $1.260599 per thousand — the rates used to compute individual tax bills, they would have found the tax rate increase for the Town of Fishkill to be “only” 3.91 percent.  The small difference between 4.13 and 3.91 probably matters to Fishkill government officials, who might prefer to say that the tax increase is “only 3.9 percent”, rather than “over 4 percent”.

Round-off errors like this appear not just for the Town of Fishkill, but appear systematically for every one of the 25 towns and cities in the story's table.  The round-off errors are random in direction, and can just as well understate the tax rate increase as overstate it.

Last Two Significant Figures are Garbage

Another way to characterize the Poughkeepsie Journal's mistake is to say that the table displayed more significant figures for tax rate changes than can be supported by their input data.  The table displayed tax rate changes to one hundredth of a percent, while the accuracy of the tax rates only supports tax rate changes to the nearest percent.  In other words, the last two digits in the table's display of tax rate change are garbage.

This Is Not the First Time

This is not the first time the Poughkeepsie Journal has used rounded tax rates to calculate inaccurate tax rate changes, and not the first time I've written about it.  On December 11 — one month to the day before the towns-and-cities story — the Journal published a story on the Dutchess County tax rate stating that the tax rate increase was 14.6 percent, when it was actually 14.3 percent.  Reporter Jenny Lee-Adrian confirmed that her calculation used rounded tax rates.  My post Poughkeepsie Journal Gets It Almost Right discussed the problem of using rounded tax rates, and described two ways the mistake could be avoided in the future.

Restricted Contact with Poughkeepsie Journal

Every tax rate change listed in the Journal's table is consistent with the interpretation that it was calculated using the rounded tax rates displayed in the table.  However, I haven't been able to confirm with the Journal exactly what they did.  As noted in my previous post, Poughkeepsie Journal management stands by their figures, and has denied my request to speak with whoever prepared the story's tax table.  Without direct confirmation, there is always the risk that my interpretation of the Poughkeepsie Journal's table is incorrect.  I'm frankly surprised and disappointed that the Poughkeepsie Journal would choose such an oppositional response.  I would have much preferred a collaborative dialog in which all parties focus on how best to inform property taxpayers and residents about tax issues.

Poughkeepsie Journal's Incorrect Tax Rate Analysis

I hoped last month that my series of posts on Truth-in-Taxing was finished.  However, yesterday's front page feature story in the Poughkeepsie Journal, Most cities, towns cut spending, raise taxes to balance the books, by reporter John Davis, grabbed my attention for two opposing reasons:

First, the positive reason:  This story clearly shows that property taxes in most Dutchess County communities are going up significantly, even as spending is decreasing.  A table on the page 2 continuation lists every city and town in Dutchess County (and even three towns in Ulster County), and shows that most 2010 budgets are going down compared with 2009, while most tax rates are going up.  The “At a glance” sidebar scorecard on page 1 states that only 4 communities in Dutchess will have decreasing tax rates, 16 will increase, and 2 will be unchanged.  It’s great to see this comprehensive town-by-town listing, and to show the dire trend that I predicted months ago.  (Note to web surfers:  Unfortunately, the table and sidebar appear only in the story’s print edition – not on the Journal’s website.)

Now the negative reason:  The story is marred by a series of mistakes in collecting and analyzing the tax data.  The most serious of these mistakes causes the tax rate increases in seven towns to be substantially understated.  In other words, the situation for taxpayers is even worse than the Poughkeepsie Journal claims.

Mistakes?  What Mistakes?

There are three steps to compiling a table such as the one in this story:

1. Get accurate data.
2. Determine the correct way to analyze the data.
3. Do the arithmetic correctly.

Unfortunately, the Poughkeepsie Journal seems to have made mistakes in all three of these steps.  This post will limit itself to discussing the most serious of these mistakes – Item 2 – Determining the correct way to analyze the data.  In a subsequent post I’ll discuss mistakes in Items 1 and 3.

The Analytical Mistake

In order to compare two tax rates, such as for example the Town of Clinton’s 2009 and 2010 tax rates, the two tax rates must first be expressed in comparable units.  When tax rates are expressed in dollars per thousand dollars of assessed value, as they are in the story’s table, the units are comparable only if the equalization rates corresponding to the two tax years are the same.  For the Town of Clinton, and for six other towns in Dutchess County, the equalization rates changed (in fact, all went up) from 2009 to 2010.  For these seven towns, the tax rates first need to be converted to comparable units (typically, dollars per thousand dollars of market value) by multiplying them by their respective equalization rates.  Only then does it make sense to calculate the percent change between the two tax rates.  The Poughkeepsie Journal failed to make this necessary conversion.  Therefore, the table's tax rate changes for these towns are too small, by an amount proportional to the equalization rate change.

Tax Rate Increases

The following table lists the seven Dutchess County towns for which the equalization rate changed from 2009 to 2010, together with the tax rate increases calculated by the Poughkeepsie Journal, and by my analysis:

Town	Pok. Journal	My Analysis
Clinton	-37.32%	3.8%
Dover	0.00%	5.6%
Hyde Park	9.77%	12.2%
Pawling (Out)	22.82%	28.4%
Pine Plains	6.49%	9.0%
Pleasant Valley	8.29%	17.2%
Stanford	-0.88%	3.1%

In the most extreme case, the Poughkeepsie Journal reported a very unlikely 37 percent tax rate decrease for the Town of Clinton, whereas the actual change was an almost 4 percent tax rate increase.   Similarly, the actual tax rate increase in the Town of Pleasant Valley is more than twice what the Poughkeepsie Journal reported.  More generally, two tax rate changes reported as negative, and one as zero, are all actually positive.  Thus, the scorecard for Dutchess County is that only 2 communities in Dutchess have decreasing tax rates, 19 have increases, and 1 remains unchanged.

Poughkeepsie Journal's Response

In preparing this post, I attempted to check first with the Poughkeepsie Journal regarding my findings.  My hope was to be able to report here that the Poughkeepsie Journal acknowledged their mistake, and will presumably avoid it in the future.  Unfortunately, Poughkeepsie Journal management stands by their figures, and has denied my request to speak with whoever prepared the story's tax table.

 

Acknowledgment

Many thanks to the excellent staff at the Dutchess County Real Property Tax Service Agency for assistance in this investigation.