Sunday, January 29, 2012

Town of Pleasant Valley Publishes Incorrect Tax Rate Change — Again

For the third year in a row, the Town of Pleasant Valley has calculated its tax rate change incorrectly. The Town's 2012 budget makes the absurd claim that the 2012 tax rate is 42.3 percent lower than the 2011 tax rate. If only it were so, I'm sure many taxpayers would be very happy! But of course this figure is not remotely correct.  Pleasant Valley's 2012 tax rate is just 2.2 percent lower than its 2011 tax rate, not 42.3 percent lower.

The mistake was made by Pleasant Valley Town Supervisor John McNair — who was also the Town Budget Officer for the 2012 budget. McNair's mistake was to compare tax rates based on assessed value, rather than first converting these rates to true value tax rates before comparing. McNair's method is like saying a car slowed from 100 kilometers per hour to 60 miles per hour, so the speed decrease is 40 percent. No, 100 kilometers per hour is “really” 62 miles per hour, so the speed decrease is only 3.2 percent.

McNair failed to take into account the equalization rate changes that have occurred every year since 2010 in Pleasant Valley. He should have divided each tax rate in the budget by the corresponding equalization rate to obtain the true value tax rates before comparing. McNair has been making this same mistake for at least the last three years, with the following results:

Pleasant Valley Tax Rate Increase
Year of Tax BillBudget Entry (incorrect)Correct Value

Note that the Pleasant Valley budget grossly understates the tax rate increase every year.

What were town officials thinking?

Too bad McNair wasn't aware of my analysis, right? Just kidding! Not only has McNair been aware of my analysis for almost two years, but at least three other town officials have been long aware of this issue. Upon my polite and constructive inquiries with all these officials, two of them not only rejected my analysis, but also responded with open hostility. I thought maybe I'd accidentally contacted the Town of Unpleasant Valley. The third official understood my analysis right away and agreed completely with it. This third person is no longer a town official.

What can we expect in the future?

The two hostile people remain as town officials today, but McNair has been replaced as Town Supervisor and budget officer by Carl Tomik. Hopefully, Tomik will encourage his colleagues to represent the town in a more professional manner. Regarding the publication of incorrect tax rate changes, I can confidently predict that this will not happen in future years. Not because town officials have seen the light, but because the revaluation that occurred in 2011 means that Pleasant Valley's equalization rate will stay constant at 100 percent in future years. Therefore, even calculating future tax rate changes the way McNair did will give the right answer in future years.

My predictions have come true

The main new information here is that despite my many attempts to engage McNair and other Pleasant Valley officials in reasoned dialog, McNair still continued to employ his flawed methodology for one last year, resulting in the ridiculous claim that the tax rate fell 42.3 percent in 2012. I'd predicted this outcome last March in Town of Pleasant Valley Revaluation Will Challenge Supervisor's Miscalculation, long before the 2012 budget or even the Town's assessed valuation was precisely known. My post predicted that McNair's flawed methodology would result in a claimed tax rate decrease of 44.3 percent, pretty close to McNair's 42.3 percent. My post predicted a correct tax rate decrease of 5.6 percent, reasonably close to the actual 2.2 percent, considering the unknowns at that time.

Detailed Report on Pleasant Valley's Tax History

My post last March included a link to my report on Pleasant Valley's tax rate history for the last 12 years, including projected 2012 data. I've now updated this report to include the final 2012 data. You can find my updated report at Town of Pleasant Valley Property Tax Rate History.

The current post contains data from a budget viewpoint, since that would be the viewpoint of Pleasant Valley's budget officer. However, my full report contains data from a taxpayer viewpoint, because that data represents what taxpayers have actually paid (or will pay next month). The two sets of numbers are slightly different from each other, as explained in my post Tax Rate Viewpoints — Taxpayer Versus Budget. Either set of numbers can be considered valid, depending upon your point of view.

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