Friday, September 23, 2011

Arlington Fire District Proposes 10.1 Percent Tax Rate Increase

The Arlington Fire District's 2012 tax rate will be $4.87 per thousand dollars of market (or assessed ) value, up 10.1 percent from 2011, according to Arlington's proposed budget, which was finalized September 19.  But you won't find the 10.1 percent tax rate increase mentioned anywhere in Arlington's proposed budget, making it difficult for taxpayers, residents, and even Arlington Fire District officials to understand what's going on.  I'll have more to say about this omission in a subsequent post.  Meanwhile, this post is just about Arlington's proposed 2012 fire taxes in historical perspective, and in relation to the Fairview Fire District.

The proposed $4.87 tax rate would be the highest for Arlington in this millennium.  Arlington's proposed 2012 tax levy of $15.4 million would be the highest in its history.  The corresponding tax levy increase of 3.1 percent exceeds New York's “two percent tax cap” by 1.1 percent.  (The tax cap doesn't really affect fire districts, as I note here.)  Arlington's tax situation can be seen in historical perspective as follows:

Another useful way to see the big picture is by displaying columns of the above table as bar charts, such as this one for tax rate:

The true value tax rates shown in this chart express how steeply a property owner's wealth, as measured by the market value of his property, is taxed.  For this reason, the true value tax rate is the most important property tax parameter, in my view.  The above chart clearly shows the effect of the 2008 economic meltdown:  From 2003 to 2008, Arlington's true value tax rate held fairly steady in the approximate range $3.15 to $3.45.  But beginning in 2009, Arlington's tax rate reached a new historical high every year.  The 2012 data is in yellow, because it is only proposed.  You can find charts of the other five columns of the above table, and more commentary, in my report Arlington Fire District Property Tax Data.

Comparison with Fairview

The Fairview Fire District is famous for having the highest true value fire tax rate in Dutchess County, and one of the highest in New York State.  Until recently, Arlington has been a not-very-close second in Dutchess County.  Fairview's tax rate has hovered in the neighborhood of $5.00 per thousand dollars of market value for nearly a decade, while Arlington's has been well below $4.00 until as recently as 2010.  But with Arlington's double-digit tax rate increases in 2009, 2010, and now 2012 (proposed), it might appear that Arlington will soon pass Fairview for the “honor” of highest fire tax rate in Dutchess County.

But not to worry.  Fairview has kept its tax rate artificially low the last few years by failing to contribute to its reserve funds.  There's every reason to believe that Fairview's board will now begin to make up for these past lapses by increasing its tax rate well above $5.00 in 2012.  In fact, according to a preliminary estimate of Fairview's 2012 tax base, Fairview's 2012 tax rate will rise to $5.25 even in the unlikely event it doesn't increase its tax levy at all.  These considerations should keep Fairview safely in first place for the next few years.

It's worth noting here that if it weren't for the fact that nonprofit institutions escape fire taxes, Fairview would have had a lower fire tax rate than Arlington in recent years.  My report The Big Three Fire Districts of Dutchess County shows that Arlington's 2010 universal fire tax rate — the tax rate if exempt properties paid fire tax — is 30 percent greater than Fairview's.  As Arlington has been “catching up”with Fairview's tax rate since then, its cost for services is becoming even less favorable, compared with Fairview.  This is particularly surprising because economies of scale should have favored Arlington, which is four times larger than Fairview, both in total market value and number of fire stations.

Why Can't I Find Tax Rate Increase Percents in Arlington's Proposed Budget?

Have you actually looked at Arlington's proposed 2012 budget document?  If so, you might have noticed that its last row, labeled “Percentage increase of Tax Bills going out Jan 1”, contains percent values that one might reasonably think are tax rate increase amounts for each year.  If one thought that, one would be wrong.  There's a whole story behind this surprise, which I plan to tell in a forthcoming post.

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