Big Three Fire Districts Continue Divergent Tax Strategies

This post updates one I posted a year ago, adding data for the 2013 proposed budgets.

Each of the Big Three Fire Districts of Dutchess County — Arlington, LaGrange, and Fairview — seems to have employed its own tax strategy for meeting the continuing fiscal challenges of the 2008 economic meltdown.  LaGrange's strategy seems a relatively moderate reflection of the economic meltdown, Arlington appears to be on a spending spree, while Fairview appears to be starving the District of resources.  This viewpoint about Fairview is consistent with the fact that Fairview has not been contributing adequately to its reserve funds in recent years, as described here and here.

The following chart gives one way to see the dramatic differences among the three strategies:

Each bar in the above chart shows the cumulative increase in tax levy, compared with the 2008 tax levy.  That is, each bar shows how much more money has been collected between 2008 and that year than would have been collected if every tax levy to that point were equal to the 2008 tax levy.  For example, a 2009 bar shows the difference between the 2009 tax levy and the corresponding 2008 tax levy, expressed as a percent of the 2008 tax levy; a 2010 bar shows the difference between the 2009 tax levy and the corresponding 2008 tax levy plus the difference between the 2010 tax levy and the 2008 tax levy, expressed as a percent of the 2008 tax levy. In other words, this chart illustrates the effect over time of deviating from a strategy of holding the tax levy flat at the 2008 level.  Because all changes are normalized relative to each District's 2008 tax levy, this chart makes it possible to directly compare each of the Big Three fire districts with each other.

Strategies of the Big Three — Tax Levy Viewpoint

The LaGrange Fire District has taken the moderate strategy of maintaining its tax levy relatively close to its 2008 level.  Thus, its bars are barely visible until 2012.  The amount of additional tax money LaGrange will have collected through 2013 is just 6.7 percent of LaGrange's 2008 tax levy, or $331,000.  That's the meaning of LaGrange's 2013 bar of 6.7 percent.

The Arlington Fire District has taken the strategy of significantly increasing the tax levy almost every year, so that the cumulative increase in Arlington's fire tax levy from 2008 until 2013 (proposed budget) is 82 percent.  Thus, the amount of additional tax money Arlington will have collected through 2013 is 82 percent of Arlington's 2008 tax levy, or about $10.6 million.

Now we come to poor Fairview. And I mean poor. The Fairview Fire District has taken the opposite strategy from Arlington by decreasing its tax levy every year until 2012.  The cumulative decrease in Fairview's fire tax levy from 2008 until 2013 (proposed budget) is 18.6 percent.  This means that the amount of tax money Fairview has failed to collect through 2013 is 18.6 percent of Fairview's 2008 tax levy, or about $563,000. Fairview's 2013 proposed tax levy is the first time Fairview has exceeded its 2008 tax levy. That's why Fairview's 2013 bar is shorter than its 2012 bar.

Strategies of the Big Three — Tax Rate Viewpoint

Taxable market values in the big three fire districts have fallen every year since 2008.  For the period 2008 to 2013, they fell a total of about 27 percent in LaGrange and Arlington, but only 16 percent in Fairview.  Fairview's shallower decline means that Fairview's tax rate has taken less of a hit than LaGrange and Arlington have incurred.  Nevertheless, the differing strategies of the Big Three are starkly evident in this chart of cumulative tax rate increase since 2008:

The above chart is easier to explain than the previous one.  Each bar is simply the percent increase in the true value tax rate for the year, compared with the corresponding 2008 tax rate (rather than compared with the previous year's tax rate).  Because all tax rates are normalized relative to each District's 2008 tax rate, this chart makes it possible to directly compare the strategies of each of the Big Three fire districts.

The true value tax rate is a good measure of how steeply taxpayers' wealth — measured by the market value of their properties — is taxed.  Therefore, the above chart shows, for each fire district, how much more steeply taxpayers are being taxed compared with the meltdown year of 2008.  Looking at the proposed 2013 budgets, Arlington will tax 66 percent more steeply; LaGrange will tax 42 percent more steeply; poor Fairview will only tax 28 percent more steeply.

The Proposed 2013 Budgets Continue These Divergent Strategies

The proposed 2013 budgets for Arlington and LaGrange are not isolated decisions, but are continuations of strategies that have been followed by these district since the economic meltdown of 2008. Fairview, however, appears to be changing its strategy in the last year or so, with two double-digit tax rate increases in a row. Even so, the above charts show that Fairview still hasn't caught up with LaGrange regarding its response to the economic meltdown.