Wednesday, November 24, 2010

Town of Pleasant Valley's Tax Rate Increase Mistake is Entrenched

On Monday I reported that the Town of Pleasant Valley's 2011 property tax rate increase of 9.19 percent, as reported in the Poughkeepsie Journal, is wildly inaccurate, and that the correct rate increase is 23.3 percent.  On Tuesday, I reported that the principle blame for this mistake lies with the Town of Pleasant Valley, rather than with the Poughkeepsie Journal (which has been known to make mistakes of exactly this kind).  Today I've determined that the calculation mistake by the Town of Pleasant Valley is not a single isolated error, but has been a systematic part of the Town's fiscal methodology for at least the last three years.  Pleasant Valley's 2011, 2010, and 2009 Town budgets all show this mistake on the first page.  In other words, the government of the Town of Pleasant Valley has no idea how much it is increasing its tax rate each year.

A Bad Example — Dutchess County Government

To put this mistake into perspective, consider how a more sophisticated government, such as that of Dutchess County, handles tax rates and tax rate increases.  County Executive William Steinhaus' 2011 Budget Message does not even mention tax rates, let alone tax rate increases.  You can be sure of three things:
  1. Steinhaus knows full well exactly what the proposed tax rate and tax rate increase are.  The county has an entire department that is expert at such matters.
  2. The County tax rate will increase in 2011.  That's because the County's taxable market value has decreased, Steinhaus is proposing to freeze the property tax levy at the 2010 level, and the County Legislature is very likely to increase the tax levy.  Even a frozen tax levy guarantees increasing the tax rate if the market value has decreased.
  3. The omission of tax rate information in Steinhaus' budget message is no accident.  The omission is a deliberate attempt to make the situation sound not as bad as it really is, by focusing on the tax levy, and not the tax rate.  Steinhaus is skilled; he did exactly the same thing last year
In summary, Steinhaus avoided making any false statements, and he avoided telling the Really Bad News (a significant tax rate increase), all the while knowing full well what's really going on with County finances.  I'm definitely not recommending Steinhaus' approach for the Town of Pleasant Valley — or for any municipality.  By withholding the most important tax parameters — the tax rate and the change in the tax rate — Steinhaus makes it essentially impossible for his constituents and other stakeholders to sort out what's really happening to property taxes.  This is the opposite of open government, and should be roundly condemned.

A Worse Example — Town of Pleasant Valley

However, Steinhaus' approach is better in two ways than what the Town of Pleasant Valley has been doing:
  1. Steinhaus knows what's really going on regarding changes to the tax rate.  The government of the Town of Pleasant Valley does not.  The Town thinks it's only increasing the tax rate by 9 percent, when it's really increasing the tax rate by 23 percent.  So, unlike the executive branch of Dutchess County Government, the Town of Pleasant Valley is flying blind.
  2. Dutchess County taxpayers and other stakeholders don't know how much Steinhaus is proposing to increase their tax rate.  As bad as this is (and it's Bad!), it's still better than for the taxpayers and other stakeholders of the Town of Pleasant Valley, who think they know, but what they know is wrong!  In my view, not knowing is better than “knowing” something that's wrong.
It is disturbing, to say the least, that the Town of Pleasant Valley and its stakeholders think they know what's happening, when the reality is quite different.  It's probably too late to do much about this for 2011.  However, for the 2012 proposed budget, the Town of Pleasant Valley should publish the correct tax rate increase.

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