Thursday, April 26, 2012

Joel Miller Combats Incestuously Elected Fire Commissioners

New York State Assemblyman Joel Miller has introduced legislation to provide for election of fire commissioners in the November general election. Under current New York State law, election of fire commissioners is held on the second Tuesday of December from 6:00 P.M. to 9:00 P.M., often at a different polling place than for the November general election. According to my recent conversation with Miller, he had intended to mention this initiative, called the Fire District Community Participation Act, in his April 22, 2012, Valley Views article in the Poughkeepsie Journal, but it was somehow omitted.

I heartily support Miller's initiative.

Why should fire districts be any different from other local governments?

Fire districts are just one more kind of local government in New York State, along with towns, cities, villages, and counties. I know of no reason why fire districts should live by different rules than any of these other local governments. In my recent post Joel Miller's Flawed Legislation for Fire District Budget Empowerment, I used this reasoning to oppose Miller's initiative for popular vote on fire district budgets. Here, the same reasoning argues in favor of Miller's initiative to make the fire commissioner election process the same as that in other local governments. My view in both cases upholds the basic principle that fire districts should live by the same rules as other local governments.

Current law for fire district elections distorts the voice of the people

Although fire commissioners — the representatives in our representative democracy — are nominally elected by popular vote, New York State law provides that this vote must take place on a different day from the general election, usually at greatly restricted hours, and often at a different polling place from the general election. The practical result is that most voters who bother to vote in fire district elections are those with a substantial personal stake in the outcome — firefighters, fire district officials, and their families. Miller, in the Valley View article, describes the resulting distortion of the people's voice in his usual restrained way as “incestuously elected commissioners.”

How low is voter turnout in fire district elections?

Voter turnout in fire district elections can be put into perspective by comparing it with that in the general election. An article in the New York Times of November 16, 2010, asserts that New York ranked dead last among all 50 states in voter turnout in that year's general election. How low was dead last? Only 32.1 percent of registered voters voted. But that was in the general election. In the Arlington Fire District's election of December 13, 2011, voter turnout was 0.44 percent, according to data in Miller's Valley View article. So in the general election, one out of three registered voters actually voted, but in the Arlington Fire District's election, it was one out of 230. Such a minuscule voter turnout is probably typical for fire district elections in New York State. It is clear that representative democracy is not working effectively for fire districts in New York State.

Abolish taxation with slanted representation

In decades past, fire districts were mostly volunteer, and their tax rates were correspondingly low. It could be argued that fire district “taxation with slanted representation” didn't matter too much in the past, because little money was at stake. Those days are long past. In many districts, volunteerism has dropped off dramatically, and been replaced by career firefighters. Like paid employees in any other field, career firefighters are expensive. Fire tax rates have soared. In some fire districts in Dutchess County, fire taxes are the second largest item of property tax, bested only by school taxes. There is no place in today's world for fire district taxation with slanted representation. Fire district taxation should have the same standard of representation as other local governments do. This means that fire commissioner elections should be part of the general election, as Miller proposes.

As always, I welcome your reasoned comments to this opinion piece.

Wednesday, April 25, 2012

Joel Miller's Flawed Legislation for Fire District Budget Empowerment

New York State Assemblyman Joel Miller has introduced legislation to provide for public vote on fire district budgets in the November general election. Under current New York State law, fire district budgets are controlled by the district's board of fire commissioners. Miller's legislation A9762A, called the Fire District Budget Empowerment Act, shifts the approval of fire district budgets from the fire commissioners to the general public. Miller announced his popular vote initiative in an April 22, 2012, Valley Views article in the Poughkeepsie Journal.

Popular Vote on Budget Is Inconsistent With Other Local Governments

As I see it, popular vote on fire district budgets is a risky departure from most governance in this country. There is no public vote on the federal budget, there is no public vote on the New York State budget, there is no public vote on the Dutchess County budget, or on city or village budgets. Instead, the general public votes for representatives (government officials such as legislators, councilmen, etc.) who in turn decide on agency budgets. This is the principle of representative democracy, one of the foundations of this country. In the case of fire districts, the people vote for fire commissioners, who in turn control the budget.

Direct Democracy Is Seldom Used But Often Problematic

Miller's initiative is an example of direct democracy, in which policy decisions are made by popular vote, bypassing or overriding government officials. Direct democracy for economic decisions is used only sparingly in the United States. In California, many major economic decisions beginning with the infamous Proposition 13 have been made by popular vote, with disastrous results.

The founding fathers were very much opposed to direct democracy (also called “pure democracy”), according to Wikipedia. John Witherspoon, a signer of the Declaration of Independence, said, “Pure democracy cannot subsist long nor be carried far into the departments of state – it is very subject to caprice and the madness of popular rage.” The American colonists favored representative democracy — not direct democracy. That's why they said “No taxation without representation.” They didn't say “No taxation without popular vote.”

Why should fire districts be any different from other local governments?

Fire districts are just one more kind of local government taxing authority in New York State, along with Towns, cities, villages, and counties. I know of no reason why fire districts should be governed differently than any of these other taxing authorities. In my view, fire districts should continue to use the same budget approval process as most other local taxing authorities.

Incorrect and Misleading Statements in Valley View Article

Miller's Valley View article contains misleading statements, and at least one statement that is just plain wrong. In the context of the Fairview Fire District's high fire tax rate, Miller writes:
Fairview alone had fire district tax rates nearly 10 times higher than 27 other towns in Dutchess County in 2010.
This statement is absurd, since there are only 20 towns in Dutchess County. Well, perhaps Miller meant “fire districts” instead of “towns”, since there are about 31 fire districts in Dutchess County. I checked with Miller's office, and was assured that yes, that's what he meant. Well, wrong again! My tax rate analysis from 2009 shows (page 14) that Fairview's tax rate was 10 times higher than 13 other fire districts — not 27 other fire districts. Miller's research staffer has conceded that the Valley Views statement — even after changing “towns” to fire districts” — is incorrect.

Miller misleadingly writes, “This legislation will permit public participation in fire district budgets ...,” as if public participation in the fire district budget process doesn't already exist. But New York State law already requires a fire district to publicize its tentative budget and to hold a public hearing on the budget, during which public input is received. In this way again, state law provides for public participation in the fire district budget process just as it does in most other kinds of local government, including counties, cities, villages, and schools.

This Is My Opinion

Most of my previous posts have been nonpartisan, focusing on objective facts. This post (except for the last section) is clearly my own opinion. Therefore, it's marked with an “Opinion” label. As always, I welcome your reasoned comments.

Saturday, April 14, 2012

Fairview Fire District's Exempt Percent Is Misstated — Again

Property taxes are not billed to all real properties, only to taxable properties. Some properties are exempt from taxes because they belong to the government or to not-for-profit institutions such as schools, hospitals, and churches. In most jurisdictions, exempt properties comprise only a small fraction of the total market value of the jurisdiction. Not so in the Fairview Fire District. Fairview is home to three large not-for-profit (NFP) institutions (Marist College, St. Frances Hospital, and Dutchess Community College) in addition to numerous smaller government and private institutions. For more details, see page 11 of The Big Three Fire Districts of Dutchess County. This might not be a problem for a large fire district, but Fairview is a very small district, comprising only 4.5 square miles. Therefore, the percent of Fairview's market value that is exempt from fire tax — Fairview's exempt percent — is large.

Although the NFPs pay no fire tax, they still account for about half of the fire and emergency service calls of the Fairview Fire District. Property taxpayers in Fairview pay not only their own share of fire tax, but they also pay the “NFP share”. Fairview's large exempt percent is a major factor in Fairview's high fire tax rate. Fairview has the highest fire tax rate in Dutchess County, and possibly the highest fire tax rate in New York State. Many property taxpayers in Fairview are understandably resentful of their high fire taxes, and they correctly attribute much of the cause to the fact that they are paying the NFP share. How large is the NFP share? That is, what percent of the Fairview Fire District's total market value is exempt from property tax? Briefly, how much is Fairview's exempt percent?

History of Exempt Percent Misstatement

Unfortunately, there has been a long history of misstatement of Fairview's exempt percent. I have traced these misstatements to two documents. The first document is a single-page undated anonymous sheet, probably from around 2005, claiming that Fairview is 77 percent exempt. All likely parties have disclaimed authorship of this document, and there seems no way to trace its conclusions to primary sources. Therefore, this document cannot be relied upon.

The second document is a 5-volume report, Land Use Analysis & Assessment Report, prepared for the Fairview Fire District by consultant company C. T. Male Associates in 2006. Only two sentences in this report refer to Fairview's exempt percent, and even these sentences discuss its value in quite a roundabout way. Unfortunately, Fairview officials incorrectly interpreted the circumlocutory language in the report to mean that Fairview is 73 percent exempt.

And so it was that by April of 2008, an urban legend had become established that 70 to 80 percent of Fairview's market value is tax exempt. Numbers in this range were widely quoted by Fairview officials, by residents, by the Poughkeepsie Journal, and even by state and county officials. By June of 2008, State Senator Stephen Saland, State Assemblyman Joel Miller, and Dutchess County legislator Jim Doxsey were all in the process of submitting legislation intended to alleviate the burden on property taxpayers in Fairview and any other fire districts with exempt percents of 50 or more. Fairview's exempt percent had clearly become a potent political weapon in attempts to obtain tax relief.

Busting the Urban Legend

It was at this time that I began my own investigation of Fairview's exempt percent. On June 18, 2008, I posted a 25-page report Tax Exempt Properties in Fairview to my newly-created website Fairview Fire Tax. This report showed that Fairview is 41.7 percent exempt. My result was independently confirmed in a memo issued by Dutchess County Real Property Tax Director Kathleen Myers. Thus, none of the state and county initiatives would have benefited Fairview as intended, because Fairview's exempt percent was not nearly so high.

Sen. Saland, Assemblyman Miller, and Legislator Doxsey were quick to recognize the legitimacy of my analysis and withdraw their bills. Although some local advocates initially responded to my report with skepticism and even hostility, my result eventually became generally accepted, and the urban legend gradually died away. But local officials were clearly embarrassed by their acceptance and promotion of wildly inaccurate exempt percents for Fairview, and they have become highly sensitive to any misstatements of Fairview's exempt percent.

Busting the Corrected Exempt Percent

Upon calculating Fairview's exempt percent for tax years 2009 and 2010, I found that the value had jumped up dramatically to 47.5 and 47.9 percent, respectively. Then in March 2010, I made a remarkable discovery: Fairview's exempt percent of 41.7 that I had calculated in 2008 is wrong! Well, 41.7 percent is still the “official” number since it is based on the official assessment roll for 2007. Therefore it is “right” by definition. However, it is still wrong by any reasonable judgment. That's because a blunder by the Town of Poughkeepsie Assessor's Office had caused $120 million in exempt property to be omitted from the official assessment roll for 2007! Correcting for this blunder causes Fairview's effective 2008 exempt percent to be 47.9.

Assuming this correction, Fairview's exempt percent has been about 47.7 percent plus or minus 0.2 percent for tax years 2008, 2009, and 2010. That's where things have stood ... until last month.

Pace Study Misstatement

The Fairview Fire District has contracted with Pace University's Michaelian Institute for Public Policy and Management to study the feasibility of Fairview consolidating with one or more neighboring fire districts. New York State awarded Fairview a $45,000 grant two years ago to pay for this study, known locally as “the Pace study”. On March 22, 2012, the study's Principal Investigator, Michael Genito, presented the Study's initial findings at a public meeting in the Town of Poughkeepsie's Town Hall. Page 9 of this presentation included the statement that in Fairview “55% of real property value is tax-exempt”. I was one of a number of people at the public meeting who thought the 55 percent figure seemed out of line with Fairview's recent history of exempt percents, which have all been close to 47.7 percent.

Still, my last calculation was two years old, and it was theoretically possible, though unlikely, that Genito's figure could be correct for 2012. However, it is not. After independently obtaining the latest tax assessment rolls from Dutchess County's Real Property Tax Service Agency, calculating Fairview's exempt percent, and comparing with Genito's calculations (which he generously provided me), I found that for the 2012 tax year, 51.7 percent of Fairview is tax exempt. I'm pleased to report that as of today, Genito concurs with this result, and plans to update the Pace study website accordingly.

Genito's primary mistake in calculating Fairview's exempt percent was that he simply added the assessed valuations of  Hyde Park with those of Poughkeepsie, without first converting Hyde Park's assessed valuations to market value using the equalization rate. This is the same blunder that I found committed in another context by the Poughkeepsie Journal. But unlike the Poughkeepsie Journal, Genito immediately recognized his error once it was pointed out. After correcting for this error, Genito's calculation yields an exempt percent of 51.6, almost the correct value. The remaining 0.1 percent is accounted for by a technicality: Genito failed to include $1.75 million of exempt market value from two properties in Hyde Park that are only partially in the Fairview Fire District.

Fairview's Exempt Percent Has Substantially Increased

Although Fairview's current exempt percent is not as great as claimed in the Pace study's initial findings, it is still nevertheless substantially greater than Fairview's historical value of 47.7 percent. The obvious question is, Why? This topic will be the subject of a forthcoming post.