Wednesday, January 25, 2012

Dutchess County 2012 Tax Rate Is Highest In Decade

Just over a year ago, I posted Dutchess County 2011 Tax Rate Is Highest In Decade. For 2012, the property tax rate for Dutchess County government has increased an additional 6.2 percent, making it once again the highest tax rate in the last ten years. The rising tax rate means that property taxpayers are paying a larger and larger proportion of their wealth — measured by the market value of their property — in taxes. As I've written many times in this blog, the tax rate is the most meaningful way to compare taxes between different years, and between different jurisdictions.

Since the economic meltdown began in 2008, public officials, particularly County Executive William Steinhaus, have focused on the tax levy and changes in the tax levy, while downplaying the tax rate. That's because they know that in a declining real estate market, changes in the tax levy don't sound as bad as changes in the tax rate. But in my view, it's really the tax rate that describes how burdensome your taxes are — not the tax levy.

Let's look at the data:

Alert readers will notice very small differences between the above table and that in last year's post. That's because the above table comprises data from the taxpayer's viewpoint, while that in last year's post comprises data from  the budget viewpoint. The differences between these viewpoints are explained in Tax Rate Viewpoints — Taxpayer Versus Budget. All the data in the above table was derived from the tax rate pamphlets published by the Dutchess County Real Property Tax Service Agency. This data matches that on property tax bills.

We can look at this data more easily in graphical form. Dutchess County's taxable market value has continued to drop for the fourth straight year, since the meltdown began:

The above chart shows that Dutchess County's real estate market has been getting worse for each of the last four years. However, a three-year trend of ever-faster declines has reversed itself in 2012, as we can see clearly in the chart of changes in the market value:

This chart shows that Dutchess County's market value isn't falling as fast as it has been:  The 2012 decline is smaller than in any of the three previous years. If this new trend continues, 2013 may not be worse than 2012. In the years since the meltdown began, this is what passes for good news.

As real estate values decline, government officials focus on the tax levy, rather than on the tax rate. That way, the news won't sound as bad as it really is. Steinhaus has been a master at this.

Changes in the tax levy are more clearly seen below:

This year is the first for which New York State's famous two percent tax cap kicks in. This law has been widely touted as helping to reign in escalating property taxes. The law limits local government tax levy increases to 2 percent, with some exceptions. So naturally, Dutchess County's 2012 tax levy increase is only ... um ... 3.2 percent. Surprised? Well, I guess you didn't read the fine print — the part of the law about “some exceptions”. It turns out, according to Steinhaus' 2012 budget message, that the state's property tax cap formula includes exceptions which allow Dutchess County's tax levy to increase up to 3.3 percent. If you think the tax cap law is ineffectual, note that even at 3.2 percent, Dutchess County's 2012 tax levy increase is smaller than in all but three of the last 11 years.

The fact that Dutchess County's tax base has decreased, but its tax levy has not, means that Dutchess County's tax rate is bound to increase. Here it is:

For 2012, Dutchess County's tax rate is $3.25 per thousand dollars of market value, a 6.2 percent increase over last year's $3.06. This tax rate information is useful to property owners who want to understand how high their property taxes are compared with their personal wealth, as measured by the market value of their home. That’s exactly what this true value tax rate measures.

For what it's worth, Dutchess County's 2012 tax rate is not yet at an all-time high. In 2001, the first year for which coherent data is available, the County's tax rate was $3.36.

Changes in the tax rate again show increases every year since the 2008 meltdown:

As we begin 2012, we can compare our situation today with that in 2008, when the economic meltdown hit. Property values in Dutchess County (as measured by taxable market value) have now dropped 17.0 percent since 2008, despite any new construction. At the same time that property owners' wealth has been decreasing, Dutchess County government is billing 17.8 percent more dollars in tax levy than in 2008. These two detrimental effects combine to yield a whopping 42.0 percent increase in the true value tax rate since 2008. So 42 percent more of taxpayers' current wealth goes to Dutchess County than in 2008.

This Bad News is by no means unique to Dutchess County government. On the contrary, the story is qualitatively similar for all property taxes in Dutchess County — for towns, cities, villages, school districts, fire districts, etc.


  1. @joenamath1: I'm responding here to your comment mistakenly posted to my 2/4/2012 post "Which Fire District Has the Highest Tax Rate in New York State?"

    The math is pretty simple, really. Tax rate is nothing more nor less than tax levy divided by market value. So if the tax levy stays the same, but the market value drops, the tax rate will increase. Or if the tax levy goes up (as has happened almost every year in Dutchess County), and the market value drops (as has happened each of the last four years), the tax rate will go up a lot.

    I'm not sure I understand your reference to Towns, such as Wappinger. Towns have their own budgets, their own tax levies, and their own tax rates, separate from those of Dutchess County government.

  2. Hi Bill, yes indeed I am a new member to your blogsite and found getting my post navigated and "kicked off" somewhat of a start up issue. But I am fine now :) . Anyway, yes, it is very apparent that what the county has done is to create an overall constant in the tax amount "formula". Meaning your assessed market value on the property decreases, but lo and behold, they keep the "level" by increasing the tax rate. What I am asking is: given this tax rate increase and the fact that the estimated state aid is decreased by 9.34% and Mr. Steinhaus's November 2011 statement that : Going forward, based on our financial advisor’s economic outlook, the 2012 budget reflects a modest 2% increase over the projected 2011 to $133.9M...Why do most of us see still see an individual increase in the county tax alone? of anything for that matter? If overall he is increasing the overall budget expenditure by that 2%, the county tax rate should increase by no more than - I also saw an increase in the Rombout sewer and water by 16%. This after a few years ago a new treatment plant was built which was touted to save Millions?

  3. The table in my post shows that the county tax levy is actually up 3.2 percent, not 2 percent. The NYS tax cap law allows certain kinds of expenditures to waive the 2 percent limit.

    Your county tax bill will have increased by 3.2 percent only if your individual property's market value decreased by the county's average of 2.8 percent. If your property's value decreased by less than that, you'll see a higher bill.

    Sorry for the delayed response. I was out of town for over a week, and only received your comment just now.


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