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.

Fairview Fire District's Staffing Crisis Continues

I reported in May that the Fairview Fire District is in crisis.  At a public workshop meeting on May 26, Fairview officials revealed that there is a short-term crisis in under-staffing, and a long-term crisis in financing.  If these crises cannot be resolved, the level of service in Fairview will need to be reduced.  Such a reduction would represent a game-changing dismantling of part of Fairview's mission, resulting in increased risk to life and property, as well as increases in insurance rates for all Fairview property owners.  This post is an update on the staffing crisis.

What is the staffing crisis?

The staffing crisis was explained at the May 26 meeting by Fairview Firefighter Mark Bendel as follows:  The fire station must be staffed by four career firefighters at all times (24x7) in order to maintain Fairview's level of service in the District.  This staffing level requires at least 16 career firefighters to fill all shifts, assuming a “normal” 42 hour work week.  Three firefighters have recently left the District (retirement and transfer), and one more is unavailable because of medical leave.  To continue Fairview's level of service, the remaining 12 firefighters have been working major amounts of overtime (mostly at straight-time pay) for many months.  Although the financial cost of this arrangement to the District is minimal, the stress on firefighters is extreme, and unsustainable.  Firefighters are overworked, morale is low, and additional firefighters are said to be considering leaving the District, which would further exacerbate the crisis.

The District cannot simply reduce the fire station staffing from four per shift to three, even temporarily, without major repercussions.  Bendel explained that having only three firefighters available to fight a structure fire would dramatically reduce the level of service, resulting in significant increases in risk to both life and property.  Not only that, but the reduced level of service would cause all property insurance rates in the fire district to increase considerably.  All stakeholders would be substantially affected by a reduced level of service.

Board of Fire Commissioners Eventually Hires Two Firefighters

The staffing crisis was well known to Fairview's board of fire commissioners even before the May 26 meeting.  At the April 5 commissioners meeting, firefighters union representatives pleaded with the commissioners to authorize the hiring of three additional firefighters, but the commissioners took no action at that time.  However, at the June 7 commissioners meeting, they passed a resolution authorizing the hiring of two firefighters.  Two firefighters were hired at the beginning of July.

So problem solved, or at least alleviated, right?  

Unfortunately, not.  For one thing, the District didn't really hire two firefighters.  It hired two EMTs, who must still be trained in firefighting, at District expense.  (If the District had just hired “off the street”, the employees would have had to be trained in EMT and firefighting, at much greater time and expense.  So hiring EMTs was a big advantage.)

The two EMTs are currently being trained at the New York State Academy of Fire Science in Montour Falls, and cannot be deployed in the department until November.  Meanwhile, Fairview's firefighters have continued to struggle under massive amounts of overtime, since only 12 out of a needed 16 firefighters are available.  On average, firefighters have been working 56 hours per week, every week.  But overtime cannot be distributed evenly, for a variety of reasons.  Some firefighters have been working 70 hours a week for many weeks in a row. 

OK, so in November, problem alleviated, right?

Unfortunately, not so much.  In November, when the two new firefighters are to be deployed in the station,  the staffing shortfall was expected to have been reduced from 4 to 2.  But in an ironic turn of events, it was announced during the September 6 commissioners meeting that yet another firefighter has submitted his resignation, and will be leaving the District by the end of this month.  So the staffing shortfall in October will be an outrageous 5 firefighters out of 16, meaning that the average firefighter will work 61 hours during that month.  Beginning in November when the two new firefighters will be deployed, the staffing shortage will still be 3 out of 16 — almost as bad as it's been since last spring.

It Gets Worse

The irony is increased further by the fact that the resigning firefighter is none other than Mark Bendel, the eloquent spokesman for the firefighters at the May 26 meeting.  Bendel has been a major asset to the District.  His loss will be deeply felt.

And It Could Get Even Worse

As things now stand, Fairview is faced with the need to hire two more firefighters, just to bring staffing up to the minimum of 16 firefighters on staff.  And even then, one of those firefighters is on medical leave, so overtime will still be necessary until he returns.  But the staffing situation could easily get worse.  Four firefighters are eligible to retire, and could do so at any time.  And considering the low morale, other firefighters may transfer to other districts, where they can expect to work only 42 hours a week instead of up to 70.  During the public comment session of the September 6 commissioners meeting, former Fairview Fire Commissioner and Board Chairman (and current volunteer safety officer for the District) John Anspach reprimanded the current board of fire commissioners for not authorizing full staffing, pointing out that the sustained excessive overtime decreases safety for all the firefighters.  At the same meeting, Fairview firefighters union president Tim Gilnack announced that the union was considering filing a formal grievance against the District.  Regardless of the outcome of a grievance filing, it would take time, energy, and money away from solving Fairview's problems.

Fairview's Fundamental Problem

If staffing were Fairview's only problem, it could easily be solved:  Just hire more firefighters.  But as I see it, under-staffing is only a symptom of Fairview's fundamental problem, a shortage of money in the long term.  Most of Fairview's budget pays for firefighters' hourly wages and benefits, and most of Fairview's income comes from the fire tax levy to property owners.  In other words, unless Fairview can acquire a significant new source of income, the number of firefighters per shift that Fairview can support is roughly proportional to Fairview's fire tax levy.

Fairview's fire tax levy is already high compared with Fairview's tax base.  The ratio of the two, which measures how steeply taxpayers' wealth is taxed by the fire district, is called the true value tax rate.  Fairview already has the highest true value fire tax rate in Dutchess County, and one of the highest in New York State.  Significantly increasing this tax rate may not be politically tenable.  Unfortunately, Fairview's tax base is shrinking.  This means that even without increasing Fairview's 2012 tax levy at all, Fairview's 2012 tax rate is projected to increase 2.8 percent to $5.25 per thousand dollars of market value, making it Fairview's highest tax rate in a decade.

What Were the Fire Commissioners Thinking?

My understanding is that Fairview's long-term financial crisis is the reason why some commissioners have been hesitant to increase staffing.  The commissioners say they authorized two new firefighters in June only because of  new concessions by the firefighters union, worth $80,000 over two years.   By taking this action, the commissioners may have allowed the District to limp along a little while longer before the day of reckoning arrives.  But as the staffing situation continues to be unstable, it's difficult to say how much time this action will buy.  If firefighters continue to leave the district, the morale of Fairview's overworked firefighters will continue to deteriorate, accelerating a downward spiral that has already begun.

My thanks to Fairview Fire Chief Chris Maeder and other members of the department for graciously providing me with information about staffing.

Two Percent Tax Cap Does Not Affect Fire Districts

A key part of Andrew Cuomo's successful campaign for Governor of New York was his five-point plan to build a “new NY”.  His second point — controlling government spending — included a local property tax cap. Cuomo signed into law a two percent cap on local property tax levy increases on June 30, 2011.  Since then, all local governments in New York, including fire districts, have been wringing their collective hands, trying to determine how the new law affects them.  I have just learned that as far as fire districts are concerned, it doesn't.

As always, the devil is in the details.  Here they are:  The property tax cap law states that the two percent limit on tax levy increases can be overridden by a vote of “sixty percent of the governing body” of the local government.  In the case of a fire district, the governing body is a board of up to five commissioners.  Sixty percent of that is three commissioners.  OK, so three commissioners are needed to override the tax cap.  But here's the thing:  Three commissioners are needed anyway to pass any budget, regardless of the budget's size.  So a board of fire commissioners needs no more support to exceed the two percent cap than to not exceed it.

Technicalities

To conform with the mechanics of the tax cap law, the board must take two votes instead of one:  The first to override the tax cap law (if needed), and the second to pass the budget.  But this technicality has no practical effect on what boards of fire commissioners can do.  As a political matter, however, boards may be reluctant to be seen as thwarting the intent of Cuomo's pledge to control government spending.  Or maybe not.

Says Who?

The fact that the two percent tax cap does not affect fire districts isn't just my opinion.  It is also the opinion of David B. Garwood, attorney with Scicchitano & Pinsky, PLLC, a law firm marketing itself as “an authority on fire protection and EMS law in New York State”.  Garwood stated his opinion to Fairview's board of fire commissioners at a public meeting last evening.

Fire District Spending Out of Control, or Dodging a Bullet?

So is the inefficacy of the two percent tax cap for fire districts bad news or good news?  It depends who you ask.  For many local property owners hoping for property tax relief, it's bad news.  For boards of fire commissioners, it's good news.  Most local government officials in New York State have fought bitterly against the passage of this law, warning of dire consequences if it is enacted.  Now it seems that fire districts are effectively free from any spending restrictions in the property tax cap law.

Suggestions to Improve Fairview's Fire Tax Projections

As part of my continuing coverage of the crisis in the Fairview Fire District, this post is the third in a series stemming from my attempt to analyze the Budget Projections Spreadsheet presented at Fairview's May 26 meeting.

 As I reported recently, Fairview Fire District Treasurer James Passikoff developed a Budget Projections Spreadsheet which is flawed by some tax data that is incorrect, and some tax data that is meaningless garbage.  These flaws make it more difficult for the general public and even the Board of Fire Commissioners to understand what may happen to Fairview fire taxes in the next few years.  Unfortunately, even if these flaws are corrected, stakeholders will still have a difficult time understanding Fairview's financial status.  That's because the spreadsheet format contains a great deal of extraneous detail, so that it's very difficult to see the big picture.  What's needed is a simpler and cleaner presentation of the financial facts.  This post suggests some specific ways to improve this presentation.

The first order of business, in my view, is to get rid of the single spreadsheet form of presentation, and replace it with multiple tables and charts, each dealing with a major aspect of budgeting, such as income, expenses, reserve funds, taxes.  For now, here are my suggestions for tax-related projections:

• Do not display any data involving assessed values or equalization rates.  This means not only assessed values directly, but also tax rates measured in dollars per thousand dollars of assessed value.  Assessed values and equalization rates are simply artifacts of the legacy way of collecting property taxes, and are not meaningful for planning purposes.  Replace these parameters with market values (also known as home values, true values, full values, etc.) and tax rates measured in dollars per thousand dollars of market value (also known as true value tax rates).  Once this is done, separate tax rates for Poughkeepsie and Hyde Park become redundant (because they're the same).  Replace these separate tax rates by a Fairview Fire District tax rate.
• Do not display any parameters for the Hyde Park and Poughkeepsie portions of Fairview.  None of these parameters affect tax projections.
• Display the year-to-year percent changes in taxable market value and tax levy, just as is done for tax rate.  These parameters are important for seeing trends.
• Transpose the table of projections.  That way, long-term planning can be carried out for any number of years into the future — or past — while keeping a constant table width.

If all the above suggestions are accepted, the resulting table will appear something like this:

but with years extending more into the future and less into the past.  The above table is from page 1 of my May 23, 2011, report Fairview Fire District Property Tax Data.  The last 6 pages of this report display each column of the table in convenient chart form, showing trends at a glance.  For example, Fairview's tax rate trend (page 7) is as follows:

This report was published in conjunction with my blog post Fairview Fire District Tax Base Projected to Drop 2.7 Percent.

Teamwork?

I would be happy to contribute my Microsoft® Excel workbook, used to generate the table and charts, for use by Fairview officials.  It can be modified easily to add future years and remove past years.  I would also be happy to work with Fairview officials to facilitate this.  In my view, the above style of presentation will be easier for may stakeholders to understand than that in the current budget projections spreadsheet.

Fairview Fire District Board Chairperson Withholds Tax Calculations

As part of my continuing coverage of the crisis in the Fairview Fire District, this post is the second in a series stemming from my attempt to analyze the Budget Projections Spreadsheet presented at Fairview's May 26 meeting.

As I reported yesterday, Fairview Fire District Treasurer James Passikoff developed a Budget Projections Spreadsheet which is flawed by some tax data that is incorrect, and some tax data that is meaningless garbage.  These flaws make it more difficult for the general public and even the Board of Fire Commissioners to understand what may happen to Fairview fire taxes in the next few years.  Some stakeholders may have decreased confidence in Fairview officials who develop and present such flawed data.

In attempting to analyze these flaws, I naturally wanted access not just to the tabular data appearing on the Fairview Fire District website, but also to the underlying Microsoft Excel workbook file it was derived from.  That way, I'd be able to see the formulas used to calculate the various entries, and to verify how the calculations were performed.  Accordingly, I asked Fairview Fire District Secretary Cathy Gallinger for this file.

Access Denied

Gallinger informed me that under Fairview's new Freedom of Information Law Policy (FOIL Policy), I can't just ask for this file, but I must submit a written FOIL request to Fairview Fire District Records Officer and Fire Chief Chris Maeder.  No problem.  I emailed my FOIL request to Maeder on 7/8/2011.  Maeder responded that he was on a week's vacation, and was delegating his response to Galllinger.  Still no problem.  Next, Gallinger denied my request, saying, “The requested sheets are not public documents as they are draft worksheets and possibly personal notes.”

Now it's starting to be a problem.  But I wasn't foiled — yet.  I knew that under New York State's FOIL act, an initial denial can be appealed.  In the case of Fairview, the appeals officer is Fairview Board of Fire Commissioners Chairperson Jill Line, who has made openness and avoidance of secrecy a hallmark of her chairpersonship.  Thus, I had some reason to expect a favorable outcome.

Still, in my emailed FOIL appeal to Line, I was careful to state my case as forcefully as I could.  I emphasized that the Fairview Fire District owns the Excel workbook file, that New York's FOIL act provides for the presumption of access, with certain exceptions based on potential for harm.  In the present case, not only is there no potential for harm, but there are benefits of public scrutiny of tax calculations.  But my strongest argument, as I see it, was that the FOIL act is only intended to require government to grant access in most cases.  There is nothing in the FOIL act which prohibits government from granting access to records, if the government chooses to do so.

No matter.  Line's short denial letter, obviously written in the voice of Fairview Fire District Attorney Brad Pinsky, gives two reasons for denial:

1. The spreadsheet formulas I requested are embedded metadata, which is in a grey area of possible FOIL access exceptions.  Line/Pinsky have determined that these formulas “should not” be disclosed.
2. “We further opine that the formulas utilized may constitute a ‘trade secret’ of the accounting firm used to produce the spreadsheets.”

Deconstructing the Line/Pinsky Denial

Reason #1:  It's true that the spreadsheet formulas I requested are embedded metadata.  I don't know whether embedded metadata is in a grey area of possible FOIL access exceptions.  But assuming it is, as Line/Pinsky claim, the letter gives no justification for denying access.  It's just an arbitrary decision.

Reason #2:  The “trade secret of the accounting firm” argument is in my view completely absurd.  In the first place, the spreadsheet was not produced by an accounting firm.  It was produced by James Passikoff acting as a paid officer (Treasurer) of the Fairview Fire District. The fact that Passikoff is also a principal in a CPA firm is irrelevant to his work for the District.  Fire district treasurers are not even required to be CPAs, and most fire district treasurers in New York State are not.  The Fairview Fire District has no contract with Passikoff's accounting firm, as far as I know.  And even if it has, the standard for government contractors regarding FOIL requests is the same as for the government itself.  In other words, a government cannot conceal records from the public just by contracting out the development of these records.  In the second place, the trivial formulas used for calculating property taxes in New York State can be trade secrets?  You gotta be kidding me!

In summary, the denial developed by Pinsky is a contrived legalistic argument of questionable merit.  What I suspect happened is that Passikoff didn't want the Excel workbook released, and Pinsky, as a good lawyer should, found a way to justify not releasing it.

Where was Line in all of this?

In the normal course of human affairs, people in power generally attempt to do what they want, within the various constraints of their office.  That's what it means to have power:  You get to decide.  An outside observer with this understanding of power might reasonably assume that Line wanted to withhold access to the spreadsheet formulas, and she found a way, through Pinsky's contrived legalisms, to do so.

I don't think that's what happened.  I think that, to the contrary, Line wanted to grant access to the spreadsheet formulas.  She just didn't understand how to exercise the power of her office.  Line delegated to Pinsky the task of responding to my FOIL appeal.  That in itself is not a problem.  The problem is that in doing so, Line did not direct Pinsky to attempt to satisfy her wishes.  Instead of saying to Pinsky, “Is there a reasonable way I can grant Rubin's FOIL request?”, she more likely said something passive like, “Please write a response for my signature.”  In the absence of direction from Line, Pinsky did the most reasonable thing under the circumstances:  He executed his task to conform with the wishes of the most manifest source of power:  James Passikoff.

My Appeal Could Have Been Granted

Had Line asserted her authority and directed Pinsky to try to find the outcome she wanted, the dynamics would have been completely different.  Since Passikoff is appointed by the Board, Line's power overrides Passikoff's.  Pinsky, recognizing this, would have tried to execute his task to conform with Line's wishes over Passikoff's.  This would have been easy for him to do in any number of ways.  One way would have been to throw out the ridiculous reason #2, and reverse the arbitrary decision on reason #1.  But even easier would have been to simply throw out the entire FOIL legal question, and just grant access because she can.  To quote from my FOIL appeal to Line, “... if you choose to do so, you can can grant me access to this file, even if FOIL doesn't force you to do so.”

Well, these last two sections are all just speculation on my part, since I don't really know what transpired among the parties.  If the above scenario is incorrect, I'm happy to be corrected.

Fairview Fire District Treasurer Bungles Tax Calculations — Again

As part of my continuing coverage of the crisis in the Fairview Fire District, this post is the first in a series stemming from my attempt to analysis the Budget Projections Spreadsheet presented at Fairview's May 26 meeting.

As I reported in May, Fairview Fire District Commissioner Bob Gephard revealed the dire state of the District's long-term finances at a public workshop meeting on May 26.  Gephard's presentation centered around a spreadsheet of budget projections prepared by Fairview Fire District Treasurer James C. Passikoff and posted on the District's website here.  Although the general thrust of Gephard's presentation — that Fairview has a long-term financial crisis — is undoubtedly correct, the spreadsheet is flawed by some tax data that is incorrect, and some tax data that is meaningless garbage.  These flaws make it more difficult for the general public and even the Board of Fire Commissioners to understand what may happen to Fairview fire taxes in the next few years.  Some stakeholders may have decreased confidence in Fairview officials who develop and present such flawed data.

Garbage Data 

Almost halfway down page 2 of the Budget Projections Spreadsheet is a row labeled “Total Assessed Valuation”.  For each column, the entries in this row can be seen to be the sum of the assessed valuations of the Poughkeepsie and Hyde Park portions of the Fairview Fire District.  These sums are garbage.  There's no polite way to say it. 

For example, consider the 2011 column.  In round numbers, the assessed valuations are $375 million for Poughkeepsie and $75 million for Hyde Park.  Passikoff simply adds these numbers to get the bogus value of $450 million.  The problem is that although Hyde Park's assessed valuation of $75 million is conventionally written in units of dollars, it isn't really dollars as we normally think of dollars, and therefore cannot meaningfully be added to Poughkeepsie's $375 million.  That's because Hyde Park's equalization rate is not 100 percent.  One needs to divide Hyde Park's assessed valuation by its corresponding 2011 equalization rate of 54 percent, thus converting it to market value, before one can add it to Poughkeepsie's, whose equalization rate is 100 percent.  Assessed values corresponding to different equalization rates must be converted to market value (or some other convenient unit) before they can be added.

Passikoff's calculation is like saying, “I delivered 375 pounds of bricks to Poughkeepsie and 75 kilograms of bricks to Hyde Park, for a total of 450 weight of bricks.”  No.  The total is 540 pounds of bricks or 245 kilograms of bricks.  It's not 450 anything of bricks.  Passikoff actually performed the correct calculation in the “Total Full Valuation” row directly below, arriving at $514 million for 2011.  But including correct results doesn't change the fact that the spreadsheet contains garbage.

As it turns out, Passikoff's mistake — not understanding the true significance of assessed value and equalization rate — is unfortunately all too common in Dutchess County among people who should know better.  The most frequent offender is the Poughkeepsie Journal, which made exactly the same mistake last year, as I describe here.

Incorrect Data

The last few rows of the Budget Projection Spreadsheet, labeled “Rate per Thousand of Assessed Valuation” and “Percentage change from last year” for Poughkeepsie and Hyde Park are troubling because they contain data that is not especially relevant for the purposes of budget projection.  I will have more to say about this in a subsequent post.  But for now, the point is that the data in the last row, showing the percent change in Hyde Park's tax rate for each year from 2010 through 2014, appear to have been calculated incorrectly.  In any case, the result is that most of these values are incorrect.

Tax rates expressed in dollars per thousand dollars of assessed value, like those in Passikoff's spreadsheet, cannot be compared with each other (such as by calculating percent changes) unless they correspond to the same equalization rates.  Before comparing such tax rates, they must first be converted to the same equalization rate.  Typically, one would do this by choosing 100 percent equalization rate (so-called true value tax rate).  However, for 2012, Hyde Park's equalization rate happens to be the same as 2011's.  Therefore, the tax rate change for Hyde Park for 2012 (three revisions) is correct by accident.  For all the other years, it's incorrect.

Passikoff's calculation is like saying, “I accelerated from 50 miles per hour to 100 kilometers per hour, so my speed increased by 100 percent.”  No, my speed only increased by 24 percent, because 100 kilometers per hour is “really” 62 miles per hour.  (Or if you prefer, 50 miles per hour is really 80 kilometers per hour.)

Perceptive readers will recognize that the percent change mistake is simply another form of the total assessed valuation mistake.  It's all about not understanding the true significance of assessed value and equalization rate.  This form of the mistake is even more common than the first form among people who should know better.  I've already posted about how officials in the Towns of Hyde Park and Pleasant Valley have been making this form of the mistake for years.  The Poughkeepsie Journal is another chronic offender on this mistake.

If Fairview's Hyde Park percent changes are calculated correctly, they will be the same as the corresponding Poughkeepsie percent changes.  It is therefore pointless to display a separate row for Hyde Park in the Budget Projection Spreadsheet.  More on this in a subsequent post. 

Mistakes Are Part of a Pattern

This is not the first time Passikoff has made mistakes involving tax calculations with assessed values and equalization rates in the Fairview Fire District.  His mistakes in apportioning the fire tax levy between Hyde Park and Poughkeepsie between 2001 and 2008 cost Hyde Park taxpayers more than $200,000 in unfair tax over-billings, as is extensively documented here and especially here.

Feedback from Fairview Officials

The above analysis of the Budget Projections Spreadsheet may be news to many readers of this blog, but it is not news to Fairview's Treasurer James Passikoff or Fairview Commissioners Bob Gephard and Joe Petito.  I emailed the main points of the above analysis to all of them on May 24 — two days before their public meeting.  Both commissioners indicated to me that Passikoff is solely responsible for the spreadsheet.  Unfortunately, I never heard from Passikoff on this matter.  Gephard made a concerted effort to provide me with some material feedback, but ultimately he was not able to answer all my questions.

Many Questions Remain

As I see it, the above analysis of the budget projections spreadsheet only begs more questions:

1. Why do I hedge that the data in the last row “appear to have been calculated incorrectly” rather than just saying straight out that they have been?  (It turns out that there's a whole sad story behind this.)
2. Why couldn't I get a satisfactory response from Commissioner Gephard about the spreadsheet he presented?  Or from Treasurer Passikoff who developed it?
3. How can the budget projections spreadsheet be improved to present a more useful picture of Fairview's long term financial situation?

I plan additional posts to address these questions.

Fairview Fire District Raids Reserve Funds — NOT

As I reported here on May 28, recent Fairview Fire District (FFD) budgets have not set aside sufficient funds for future maintenance and replacement of apparatus and equipment and other obligations.  The money that should have been reserved was used instead to decrease the fire tax levy.  As a result, Fairview is now faced with a long-term financial crisis.  These facts were publicized at the May 26 meeting of FFD's budget and long term planning committees, and are not in dispute.

However, a month ago I learned that this failure to add to the reserve funds may have understated the true problem.  It has been alleged that not only was no money set aside, but money that had previously been set aside in reserve funds was removed and used to lower the fire tax levy.  Such an action would constitute what I call raiding the reserve funds.  I learned of this allegation from what I consider a well-informed and reliable source.  If this allegation were true, then the actions of the Fairview Board of Fire Commissioners were even more ill-advised than previously assumed.  But this allegation is not true.

How Can One Determine Whether Reserve Funds Were Raided?

It would seem a simple matter to determine whether Fairview's reserve funds have been raided.  I found quite the contrary.  Satisfying myself that the reserve funds were not raided was actually a long painstaking process involving considerable analysis on my part, as well as back-and-forth with various officials of the fire district. 

My first step was to send a detailed written request to Fairview Fire Chief Chris Maeder, asking for annual data for each reserve fund for the last 5 years.  Within a few days, Chief Maeder forwarded to me a relatively complex spreadsheet he obtained from FFD Treasurer James C. Passikoff.  Upon examining this spreadsheet, containing a myriad of data and cryptic labels, it was by no means obvious to me what was happening with the reserve funds.  Fortunately, Passikoff was willing to spend over an hour on the phone explaining the meaning of the various entries.  Based on these conversations, I was able to develop, with some effort, a simple table showing the flow of money in each reserve fund for each of the last 5 years.  You can find this summary of Fairview's reserve funds here.  The column labeled “Amount Used for Other Purposes” is my polite label for the amount that was raided from each fund.  You can see that this amount is zero in every single case.  In other words, none of the reserve funds have been raided in the last 5 years.

Although this might seem to be the end of the matter, I knew that my work was not finished.  The clearest recent statements about Fairview's financial condition have come not from the Fairview Fire Commissioners or its Treasurer, but from the Fairview Firefighters Union.  The Union made the most professional and most understandable of the presentations at the May 26 meeting of the budget committee.  The Union even went so far as to hire a consultant CPA (Deborah Bailey Brown) to examine Fairview's financial data.  On the other hand, when I asked union president Tim Gilnack by email about the possibility that the reserve funds may have been raided, his initial written response was ambiguous.  Later, I met with Gilnack and other union officials, where it was quickly established that the union does not believe the reserve funds were raided.  Instead, funds unspent at the end of the budget year, which traditionally had been added to reserve funds, were instead diverted to lower the tax levy. 

Why was this question so difficult to answer?

So the question is resolved.  Fairview's reserve funds were not raided. 

But apart from this conclusion, how did the rumor arise that Fairview's reserve funds were raided, and why did it persist?  Why was the union's initial response to my query ambiguous?  Part of the answer, in my view, is that official information about the reserve funds was not readily available.  And the official information I received was not intelligible without considerable verbal explanation.  In other words, there is no straightforward way for an interested stakeholder to determine what was happening with the reserve funds.  In this situation, half-truths and ambiguous statements can easily morph into rumors that cannot easily be confirmed or denied.  If the Fairview Fire District had produced and made public a simple annual summary of its reserve fund activity like the one I developed, it would have avoided a lot of misinformation.  I'll have more to say about this in a subsequent post.

Is There Reason for Hope in Fairview?

 I recently received an email from a veteran of many years of service to the Fairview Fire District, someone whose knowledge and wisdom I respect very highly.  Reflecting on Fairview's dire situation, this veteran lamented the fact that nothing seems to change, despite years and years of effort on the part of many creative people.  “There are still far too many people who have egos, power trips, political aspirations ... for anything to change.”  “... those who should be working together as a team have turned on each other looking for ...  a scapegoat to blame for all of the troubles in the world of Fairview and beyond.”

As an engineer by training, I'm essentially a professional pessimist.  But you don't need to be cynical to understand that Fairview's difficult situation in the past has now become a crisis.  Still, I've found a few reasons to hope that Fairview's problems can be alleviated.  All these reasons are new, appearing within the last three years:

1. A relatively small group of committed people, beginning in 2008, was able to completely transform Fairview's board of fire commissioners by popular vote.  To me, this is an inspiring story of the way democracy is supposed to work.  The new board is not perfect by a long shot, but in my view, it's a big improvement over the old guard.  Private citizens have far greater access to this board than to the old one.
2. William Steinhaus, Dutchess County Executive for the last twenty years, will end his reign in half a year.  Steinhaus has not shown interest in the plight of Fairview and other fire districts. Steinhaus' likely successor, Marc Molinaro, has already been making the correct noises regarding helping the fire districts, including looking at a consolidated county-wide system.
3. As New York State Attorney General, Andrew Cuomo successfully fought for a New N.Y. Government Reorganization and Citizen Empowerment Act making it practical for local governments such as fire districts to consolidate.  This significant new option allows fire services to be provided more efficiently.  A few fire districts in other counties are already taking advantage of this new law.
4. As Governor, Cuomo successfully fought for a two percent property tax cap law.  If nothing else, this controversial law will prevent unbounded increases in property taxes.
5. As I've come to understand what Fairview's firefighters really do (see my Fairview Fire Tax Dollars at Work), it's changed my view somewhat of our high fire taxes:  We pay a lot, but we get a lot too, that others who pay less don't get.  I know this is little comfort to those on a tight budget, that is, to most people.  Perhaps part of the solution to Fairview's high fire tax is to educate people better about what they're getting for their money.  As I see it, Fairview's firefighters union has been doing that for a long time, but Fairview's fire commissioners, not so much.
6. Two of the big three fire districts of Dutchess County, Arlington and LaGrange (the third is Fairview), have seen their tax rates increase dramatically in each of the last three years.  This fact can only increase the pressure for fire district consolidation in Dutchess County.
7. Fairview's crisis might still be eased within Fairview.  Fairview's tax exempt institutions may now want to contribute significant Payments in Lieu of Taxes (PILOTs) in their own self interest, to avoid incurring increased insurance costs and decreased safety.

As I see it, the fact that most politicians have egos, power trips, political aspirations, and scapegoats is not a new thing.  It's been with us since biblical times, probably since civilization began.  Probably since we've been human.  If and when the names and faces of all the politicians change, these facts of life won't change. The best form of government that humans have devised — democracy — is messy, and works imperfectly, as we know only too well.  Yet it does sometimes work, as items 1, 2, 3, and 4 show. 

The other major force in play is our economic system, in which people and institutions tend to act in their own self interest.  Such motives can be viewed as having caused Fairview's problem in the first place.  But as Items 5, 6, and 7 show, economic self-interest can also act in Fairview's favor.

With these seven reasons for hope, things should work out fine for Fairview.  Just kidding!  Nothing I've written above changes the fact that Fairview's situation is dire, and that dramatic actions must be taken for Fairview to avoid safety and/or financial disaster.  It's just that a number of significant political and economic paths for change are now becoming available, paths that weren't on the horizon just three years ago.

The Big Three Tax Exempt Institutions of Fairview

This is the third in a recent series of posts about the crisis in the Fairview Fire District.  Fairview's long-term crisis is that it has not set aside sufficient funds to pay for future obligations.  If Fairview cannot increase its income, it will be forced to take the drastic step of reducing service.  Reducing service would increase risk to life and property in measurable ways, and it would also increase insurance rates for all property owners in Fairview.

Approximately 95 percent of Fairview's income comes from the fire tax levy.  But simply increasing the tax levy is problematic for two reasons:

1. Fairview's fire tax rate is already the highest in Dutchess County, and one of the highest in New York State.  With the continuing drop in property values, Fairview's 2012 fire tax rate is projected to increase 2.8 percent even if the tax levy is held constant.  The resulting true value fire tax rate will be $5.25 per thousand dollars of market value — the highest in a decade.  Fairview property owners have argued that the fire tax is already too high.
2.  If Gov. Cuomo's 2 percent tax cap becomes law, it may be difficult or impossible for Fairview to substantially increase the fire tax levy.

Payments In Lieu Of Taxes (PILOTs)

For these reasons, it makes sense for Fairview to look beyond the tax levy to other sources of income.  A longstanding proposal is to ask Fairview's tax exempt institutions for Payments In Lieu Of Taxes (PILOTs).  Tax exempt institutions represent 48 percent of Fairview's total market value.  Indeed, these exempt properties represent a major reason for Fairview's high tax rate.  Accordingly, this post focuses on Fairview's tax exempt institutions.

The Big Three

The following pie chart shows the components of Fairview's tax exempt market value, which I compiled from the tentative assessment rolls applicable to the 2012 tax bill:

Note that this chart differs only slightly from the 2010 chart published on page 11 of The Big Three Fire Districts of Dutchess County.  Marist College, St. Francis Hospital, and Dutchess Community College can be called the big three tax exempt institutions of Fairview.  Together, they comprise more than three quarters of Fairview's exempt market value:

Institution	Market Value	Percent
Marist College	$218,248,000	42.1%
St. Francis Hospital	$120,114,500	23.2%
Dutchess Community College	$56,007,500	10.8%
all others	$123,527,889	23.9%
Total:	$517,897,889	100%

In the last few years, the general trend of property values in Dutchess County has been downward, and this trend has continued for 2012. Thus, St. Francis Hospital's tax exempt market value is down 9 percent from 2010, and Dutchess Community College's is down 4 percent. Most parcels of Marist College are down 4 to 8 percent; however, one of Marist's parcels increased in value from $274,000 to $17.8 million due to the construction of residence halls.  The net effect is that Marist College's exempt market value has increased by 3 percent from 2010.

Hudson River Psychiatric Center

The fourth largest tax exempt institution in Fairview is the Hudson River Psychiatric Center (HRPC).  However, this is destined to change soon.  The New York State Office of Mental Health has recently announced that it will close Hudson River Psychiatric Center by October 1, 2011.  Once HRPC is gone, the big three tax exempt institutions will dominate Fairview's tax exempt landscape even further.

PILOTs From the Big Three

Marist College has been contributing PILOTs to the Fairview Fire District every year for a number of years.  The yearly contribution amount has been trending upward, with the most recent yearly contribution being $125,000.  But to put this number into perspective, if Marist College were entirely taxable (instead of almost entirely tax exempt), its annual Fairview fire tax would exceed one million dollars.  To the best of my knowledge, St. Francis Hospital has not contributed PILOTs in recent years.  However, it has contributed some services to the fire district with monetary value per year in the low 5-figure range.  I believe Dutchess Community College has occasionally contributed one-time PILOTs to Fairview in the low 5-figure range.

Can the Big Three Save Fairview?

The Fairview Fire District faces a long-term financial crisis which, if not resolved, could result in reduced services to all Fairview property owners and residents.  These reduced services have quantifiable costs:  All property owners would see increased insurance rates.  There are also unquantifiable costs in reduced safety, resulting in greater risk of injuries and deaths.  The Big Three Tax Exempt Institutions of Fairview may feel these costs more than some other stakeholders.  It may be in their self-interest to avoid these costs by bailing out the fire district with new or increased PILOTs.

Fairview Fire District Is in Crisis

On Thursday, May 26, 2011, the Fairview Fire District Board of Fire Commissioners combined Budget and Long Range Planning Committees held a remarkable public workshop meeting at the Fairview Fire House.  The picture of Fairview's status painted at this meeting is nothing short of dire.  This meeting marks a major turning point in Fairview's history.  To put this turning point into perspective, it helps to know Fairview's previous turning point:

Fairview's Previous Turning Point

On April 24, 2008, over 400 residents of the Fairview Fire District attended a meeting of Fairview's Board of Fire Commissioners to express their outrage at the exorbitant Fairview fire tax.  Fairview's fire tax rate had for years been the highest by far of any fire district in Dutchess County, and one of the highest in New York State.  That meeting marked the beginning of increased involvement by Fairview's residents (including me) in Fire District matters.  In the following three years, voters turned out in extraordinary numbers to elect three newcomers to the Board of Fire Commissioners, Jill Line, Bob Gephard, and Joe Petito.  These newcomers replaced veterans who had run Fairview for years, if not decades.  In my view, this is an inspirational story of democracy in action, a counterexample to the common lament that politicians who displease us are entrenched, and that there's nothing we can do about it.  The fact is that a surprisingly small group of dedicated Fairview taxpayers and residents was able to replace the veterans with newcomers who were believed to better represent the interests of Fairview's residents.

Public Workshop Meeting

This week's public workshop meeting was billed as an attempt to “discuss with the residents the status of the District”.  I had commended Mr. Gephard beforehand for initiating and leading the long range planning committee, and for arranging for this public workshop meeting.  As I saw it, openness about long range planning helps all stakeholders see what possible futures may look like, and allows the public to influence decisions before things get really bad.  At worst, this exercise does no harm.  I did not realize beforehand the critical situation that would be revealed at the meeting. That fact, in my view, makes Bob's contributions even more important than I'd originally thought.

Advance publicity for the meeting was minimal, and it gave no clue that two bombshells would be dropped at the meeting.  This is probably why less than a dozen residents attended, mostly the regulars at monthly commissioners meetings.  However, many other stakeholders were present, including career and volunteer firefighters, Fairview Board Chairperson Jill Line, Fairview Treasurer Jim Passikoff, and various other officials.  In the end, perhaps 30 people were there, including about half a dozen presenters.

Commissioner Gephard, Firefighter Mark Bendel, and others presented two hours of detail on the financial and operational status of the district, followed by an hour of questions and comments from the floor.  A serious difficulty, in my view, was that there was precious little in the way of summary of the main points by the presenters, particularly in the financial area.  I have frankly struggled to divine what the main issues are.  What follows is my best understanding of the main points.  I likely haven't got everything right here, and I welcome corrections and clarifications.

So What's the Crisis?

There are actually two crises, an immediate one, and a long-term one:

1. The immediate crisis is that the fire station has become understaffed, and that the firefighters are greatly overstressed.
2. The long-term crisis is that the fire district has not been setting aside sufficient funds for future obligations.  When these costs come due, the District will not have the funds to pay them.

The problem is that it may not be wise to attempt to solve the immediate crisis without knowing how the long-term crisis will be solved.

Short Term Staffing Crisis

Mr. Bendel's presentation on the immediate crisis was particularly effective.  Bendel explained that the fire station must be staffed by 4 career firefighters at all times (24x7) in order to maintain Fairview's level of service in the District.  This staffing level requires at least 16 career firefighters.  Unfortunately, in recent months 3 firefighters have left the District (retirement and transfer), and one more is unavailable because of injury.  To continue Fairview's level of service, the remaining firefighters have been working overtime (mostly at straight-time pay) for a number of months.  Although the financial cost of this arrangement is minimal, the stress on firefighters is extreme, and unsustainable.

The District cannot simply reduce the fire station staffing from 4 per shift to 3, even temporarily, without major repercussions.  Mr. Bendel explained that having only 3 firefighters available to fight a structure fire would dramatically reduce the level of service, resulting in significant increases in risk to both life and property.  Not only that, but the reduced level of service would cause all property insurance rates in the fire district to increase considerably.  All stakeholders would be substantially affected by a reduced level of service.   

A decision to reduce the level of service amounts to a game-changing dismantling of part of Fairview's mission.  The Fairview Fire Commissioners would presumably ask for input from all major stakeholders before authorizing a reduced level of service.  This public meeting appears to be the beginning of such an inquiry.

Long Term Financial Crisis

In recent years, Fairview's budgets have not set aside sufficient funds for future maintenance and replacement of apparatus and equipment and other future obligations.  The money that should have been set aside was used instead to decrease the fire tax burden.  The result is that Fairview's fire tax rate has remained remarkably steady at just over $5.00 per thousand dollars of market value since the economic meltdown of 2008, despite falling property values.  See the chart on page 7 of Fairview Fire District Property Tax Data.  Fairview's steady tax rate on that chart is in sharp contrast to that of the other of the big three fire districts of Dutchess County — Arlington and LaGrange.  The tax rates of both these fire districts have been climbing steadily since 2008.  I had seen Fairview's constant tax rate in recent years as the result of prudent management.  In reality, it has been just the opposite.  Fairview has essentially been “robbing Peter to pay Paul” by not setting aside money for future needs. 

What are Fairview's choices at this point to solving its financial crisis?

1. Decrease the budget.  However, this cannot be done without reducing staffing, because staffing is the primary cost in the budget.  Reducing staffing cannot be done without major safety and insurance repercussions, as described above.
2. Increase the fire tax levy significantly.  However, a strong case can be made that the fire taxes are already as high as can be tolerated.  Many would argue that the tax rate is higher than can be tolerated, although it's been at about the same $5.00 rate for nearly a decade.  On the other hand, Fairview's tax rate was $6.07 in 2001 and $5.73 in 2002.  See Fairview Fire District Property Tax Data. So a painful argument could still be made that there's room to increase the tax rate by almost $1.00.  Even so, would that be enough?  On the third hand, if Gov. Cuomo's two percent tax cap applies to fire districts, this choice is entirely off the table.
3. Obtain significant and sustained funding from sources other than property tax. 

The most obvious place to turn for funding is Marist College, St. Frances Hospital, Dutchess Community College, and the other not-for-profit institutions in Fairview which are exempt from fire tax.  Tax exempt properties make up 48 percent of Fairview's market value.  In the past, these institutions have provided only very limited support.  But the circumstances may be different now.  If these institutions do not contribute substantial payments in lieu of taxes (PILOTs), they may be faced with a substantial degradation in services from Fairview, resulting in increased risk to their property (and the lives of their students, patients, and employees) and increased insurance premiums at the same time.  These considerations may persuade these institutions that it is in their interest to increase their support to Fairview.

Tying the Two Crises Together

How much time does Fairview have to resolve these crises?  The staffing crisis is clearly urgent, and cannot be allowed to continue any longer than necessary.  However, simply adding staff now to solve the immediate crisis would only make sense if the financial crisis can be solved by finding more income, a strategy which is not certain of success at this point.  If Fairview replaces staff now, and then fails to secure more income, Fairview will need to decrease staffing after all.  It might not be prudent for Fairview to bring on more staff now without some assurance that it can be paid for. 

Fairview is indeed in a very difficult position.  It is by no means certain that Fairview can continue to provide the level of service that it has in the past.  Resolving this crisis will require continued openness by the new Board of Fire Commissioners, as well as the cooperation of all other stakeholders.  Even then, it will require skill, creativity, and perhaps even some good luck.

Fairview Fire District Tax Base Projected to Drop 2.7 Percent

The taxable market value of the Fairview Fire District, assessed at $514.3 million for 2011 tax bills, is projected to drop 2.7 percent to $500.5 million for 2012 tax bills, according to my calculations from tentative assessment rolls published in recent weeks by the Dutchess County Real Property Tax Service Agency.  This is the fourth year in a row that Fairview's tax base has decreased, and it is the second largest decrease in that time.  This drop in the tax base will aggravate the difficulty of holding down Fairview's tax rate.

Fairview has had the highest true value tax rate of any fire district in Dutchess County for many years, and one of the highest fire tax rates in New York State, with recent rates hovering just over $5.00 per thousand dollars of market value.  If Fairview's final assessment is unchanged from the tentative assessment, and if Fairview’s 2012 tax levy is unchanged from 2011 (just as a point of reference), then Fairview’s true value tax rate will increase 2.8 percent to $5.25 per thousand dollars of market value, making it Fairview's highest tax rate in a decade, and its second highest tax rate increase in a decade.

For further details, including a history of Fairview's market value, tax levy, and tax rates from 2001 to 2012 (projected) in table and chart form, see Fairview Fire District Property Tax Data.

Upcoming Fairview Public Meeting

In past years, the Fairview Fire District, like many local taxing jurisdictions, has done budgeting and planning mainly year-to-year.  However, the Fairview Board of Fire Commissioners, to its credit, has recently established a long range planning committee to look further into the future than just one year ahead.  This committee, headed by Commissioner Bob Gephard, has scheduled a public workshop meeting for Thursday, May 26, at 6:00 pm at the Fairview Fire House.  The agenda includes discussing goals such as public protection versus risk versus cost, early review of next year's budget, and long range costs.  In looking at the big picture — both short and long term — the tax rate and the change in the tax rate is, in my view, one important measure of the status of the District.  Perhaps the long range planning committee will find my analysis of previous and projected tax information useful.  I plan to attend this meeting, and to report here on what transpires.

BOCES Is Indifferent to the Accuracy of its Property Tax Data

Every year, the Dutchess County Board of Cooperative Educational Services (BOCES) publishes two comprehensive documents, a Contract Analysis book and a Fact Book, both for assisting school district administrators in their budgeting processes and in negotiating with labor unions.  Each document consists almost exclusively of tabulations comparing numerous parameters for the 13 school districts in Dutchess County. 

• Contract Analysis 2010-2011, published January 2011, is a 157-page document, most of whose tables relate to salaries and benefits of school district employees.  However, a 35-page section called Financial contains district-wide tables related to budgets, costs per student, costs per expense category, and, yes, property tax information, including assessed values, tax levies, and tax rates.  Naturally, that's the part I've focused on.
• Dutchess County Fact Book 2005-2006 through 2009-2010, published January 2011, is a 69-page document containing additional financial information, including more extensive property tax tables than appear in the Contract Analysis book.

In examining the above documents, I looked first at the current school district true value tax rates for the 13 school districts in Dutchess County, listed on page 144 of the Contract Analysis PDF (page 32 of the Financial section).  Comparing with my own analysis, I noticed significant discrepancies in 4 districts:  Beacon, Millbrook, Poughkeepsie, and Spackenkill.  The BOCES rates are lower than mine by 5 percent or more in most cases.  My report BOCES Tax Rate Variances documents these discrepancies in detail.  I sent this report to BOCES Assistant Superintendent for Business Services Linda Poleski, with the hope that she would review my analysis and determine whether the issues I raised about the accuracy of BOCES current true value tax rates could be substantiated.  Ms. Poleski graciously accepted my report, and within a few days informed me that BOCES has confirmed that all my tax rates are correct, and has adjusted its records accordingly.

OK, so far so good.  Encouraged by this initial interaction, I examined additional BOCES property tax tables, and found a significant number of additional discrepancies:

• True Tax Rates – Historical table on page 147 (page 35 of the Financial section) of the Contract Analysis book contains tax rates for every school district going back a decade.  Although most of the tax rates in this table agree with my analysis, a significant number did not agree.  I found at least one disagreement in every year, and at least one disagreement in each of 8 school districts.  For the Poughkeepsie school district, there was no agreement in any year.  For the 2000-2001 school year, there was no agreement in any school district.  A number of disagreements exceeded 5 percent.
• Total Property Value on page 19 of the Fact Book PDF (numbered page 13) contains true value taxable assessments for each school district in 2009 and 2010.  Of the 26 assessments, 12 agree with my analysis and 14 do not — more than half.  Most BOCES assessments are a few percent greater than mine, but 4 assessments are over 10 percent greater than mine.  The disagreements are especially puzzling since these numbers are used to compute the true value tax rates, for which we have much more agreement.
• Comparison of Property taxes for 2005-06 to 2009-10 on page 15 of the Fact Book PDF (numbered page 9) contains the tax levies for these years for each school district.  The 2009 tax levies also appear on page 116 of the Contract Analysis PDF (page 4 of the Financial section).  I found no agreement at all between any of this data and my analysis.  Typically, BOCES data was on the order of 10 percent lower than mine, a very large variance.  Once again, this disagreement is especially puzzling since these numbers are used to compute the true value tax rates, for which we have substantial agreement.

I documented these discrepancies in Other BOCES Property Tax Variances, which I sent to Ms. Poleski on April 11.  I had some confidence that these new issues would be taken seriously, since BOCES had already accepted my previous discussion as being both responsible and accurate.  Unfortunately, after a number of conversations with Ms. Poleski it became clear that BOCES will not attempt to determine whether the new issues I raised regarding BOCES property tax tables are valid.  Ms. Poleski also stated that BOCES “will not go back and correct previous years”.  My conclusion from these interactions is that BOCES is indifferent to whether the property tax data in their two publications is accurate.

In summary, BOCES property tax data has been brought into serious question, and these questions have not been answered.  School district administrators may want to avoid relying on this data for their budget processes and union negotiations.

School District Tax Rate Comparisons

I've consolidated my recent posts on Dutchess County's 2010 school district tax rates into an 18-page PDF document, School District Tax Rate Comparisons.  This document includes not only all the information in my last three posts, but it also contains the tax rate information in tabular form.  In addition, it includes information on tax rate increases since 2009, in both chart and tabular form.

School Tax Rate Rankings — Taxpayer Viewpoint

Which property taxpayers in Dutchess County pay the highest school tax rate?  The lowest?  Where does your property stand in the school district rankings?  Here are the answers.

The first thing to understand is that the answers are different for homes (homestead properties) than they are for businesses (non-homestead properties).  That's because 5 of Dutchess County's 13 school districts — Arlington, Beacon, Poughkeepsie, Spackenkill, and Wappingers — tax their home properties at lower true value rates than their business properties.  The second thing to understand is that in the Arlington, Beacon, and Wappingers School Districts, properties are taxed at different rates depending not only upon whether they are homestead properties, but also upon which town the property lies in.  For more details on these points, see School Tax Rate Comparisons — Two Viewpoints.

School Tax Rankings for Homes

The following chart shows the 2010 true value school tax rates for homes in Dutchess County.  For the 5 school districts using the homestead tax option, the homestead tax rates are shown.  The primary data source is the Dutchess County Real Property Tax Service Agency's 2011 Tax Rate Pamphlet.  To improve clarity, I've grouped Arlington's municipal segments (Towns) with nearly the same true value tax rate into a single bar.

As the chart shows, first place for homesteads goes to the Hyde Park segment of the Arlington School District.  Homesteads in this segment pay the highest true value tax rate of any homes in Dutchess County — by far.  Arlington's Hyde Park rate of $22.02 is 15 percent higher than for second place Pawling, and almost double that of “last place” Poughkeepsie.  The reason for the exceptionally high tax rate in the Hyde Park segment of Arlington is that this segment contains a large number of farms with partial tax exemptions.  It turns out that the Hyde Park segment of Arlington contains only a few dozen homestead properties.  Thus, only a few taxpayers are affected, presumably not enough taxpayers to mount an effective complaint.

Apart from the anomalous Hyde Park segment of Arlington, with its exorbitant $22 tax rate, school tax rates for homes in Dutchess County can be seen to be split between high-rate districts (Arlington, Pawling, Hyde Park, Red Hook, Dover, and Spackenkill, in the range of about $17 to $19), and low-rate districts (Rhinebeck, Beacon, Wappingers, Webutuck, Pine Plains, Millbrook, and Poughkeepsie, in the range $11 to $14).

Although Poughkeepsie has the lowest homestead school tax rate in Dutchess County, Poughkeepsie gets a greater proportion of its funding from sources other than school taxes of any school district in Dutchess County.

School Tax Rankings for Businesses

The following chart shows the 2010 true value school tax rates for businesses in Dutchess County.  For the 5 school districts using the homestead tax option, the non-homestead tax rates are shown.  Once again, I've grouped segments with nearly the same true value tax rate into a single bar for clarity:

The chart shows first place for non-homestead tax rates going to Spackenkill by a landslide, with a bank-breaking $38.02 tax rate.  To put Spackenkill's sky-high tax rate in perspective, it is more than double Hyde Park's 4-th place rate of $18.60, and more than triple Webutuck's $11.92.  The primary business properties in the Spackenkill school district have historically belonged to IBM Corp., which has been willing in the past to pay exorbitant school taxes into a district where many of its professional employees lived.

Way “behind” Spackenkill, but still easily capturing second place is Arlington, in the $23.50 to $27 range, depending upon segment.  Trailing considerably after Arlington is a large pack of school districts in the $16.50 to $19 range.  The remaining five school districts — Millbrook, Pine Plains, Webutuck, Poughkeepsie, and Rhinebeck — managed to keep their commercial school tax rates at the low end, between $11 and $14.  Of these five, all except Poughkeepsie have the same tax rate for homes and businesses.

How should these rankings be interpreted?

The rankings in this post compare how steeply homes and businesses are taxed by school districts in Dutchess County.  The first chart can be used to determine the relative school tax bills for homes in Dutchess County in 2010.  For example, if you own a home in the Hyde Park segment of the Arlington School District, your 2010 school tax bill was almost double that of a home with the same taxable market value in the City of Poughkeepsie.  Similarly, the second chart shows that if you own a commercial property in the Spackenkill School District, your 2010 school tax bill was more than triple that of a commercial property with the same taxable market value in the Webutuck, Pine Plains, or Millbrook School Districts.

In summary, these charts show how steeply school districts tax their properties — from the taxpayer's point of view.  These charts are not appropriate for comparing how steeply the various school districts tax their tax base on average, because many school districts tax different properties at different rates.  For this latter comparison, see School Tax Rate Rankings — School District Viewpoint.

Out of County School Districts

A small number of Dutchess County property owners do not pay school taxes to any of the Dutchess County school districts listed above.  Instead, they pay to so-called “out-of-county” school districts Carmel, Haldane, or Taconic Hills.  The 2010 true value tax rate for the Taconic Hills School District is only $10.07, making it the lowest school tax rate for Dutchess County home or business property taxpayers.  At the other extreme, the 2010 true value tax rate for the Carmel School District is $20.34, placing it second only to the Hyde Park segment of Arlington for homes, and third only to Spackenkill and Arlington for businesses.  Finally, the Haldane School District's $14.75 tax rate places it between the low-rate and high-rate districts for both homes and businesses.

School Tax Rate Rankings — School District Viewpoint

Which school district in Dutchess County has the highest tax rate? The lowest? Where does your school district stand in the rankings?  You're about to find out.

The winner by a landslide is the Spackenkill School District, whose 2010 aggregate tax rate of $24.75 per thousand dollars of market value is way “ahead” of second-place Arlington. Before we go any further, it's crucial to understand the meaning of the rankings in this post.  The most important thing to know is that these rankings are from the school district point of view.  The aggregate tax rates in this post measure how steeply each school district taxes its tax base.  These rates are useful to understand how school districts compare with each other, tax-wise.  They are generally not appropriate for comparing the taxes paid by individual taxpayers, because in some school districts, different taxpayers pay at different rates.  Subsequent posts will present rankings from the taxpayer viewpoint.  For more on school district versus taxpayer tax rates, see School Tax Rate Comparisons — Two Viewpoints.

Here are the aggregate tax rates for the 13 school districts in Dutchess County, which I compiled primarily from data in Dutchess County Real Property Tax Service Agency's 2011 Tax Rate Pamphlet.

The school districts' aggregate tax rates fall roughly into 4 groups:  low, medium, high, and almost-off-the-chart.  The low ranking districts include Millbrook — lowest of all in Dutchess County — Pine Plains, Webutuck, and Poughkeepsie.  The medium group include Wappingers, Rhinebeck, and Beacon.  The high group — the largest group — includes Dover, Red Hook, Hyde Park, Pawling, and Arlington.  Spackenkill comprises it's own almost-off-the-chart group.

How should these rankings be interpreted?

Probably narrowly.  It is fair to say that these rankings compare how steeply each school district taxes its tax base.  But aggregate tax rate is only one of a number of objective metrics for evaluating school district financial performance.  Although most school districts in Dutchess County get the bulk of their funding from the tax levy, the proportion of other funding varies considerably from one district to another.  A few districts — such as Poughkeepsie, in the low group — get less than a third of their funding from the tax levy.

Even if aggregate tax rate were a reliable measure of a school district's financial performance, does a low tax rate mean that the school district is short-changing its students and staff, or does it mean that the district is using its funds more efficiently than other districts?  Does a high tax rate mean the school is superior, or that it is more wasteful?  There's really no end to such imponderable questions.  Depending upon how one wants to look at it, there are many additional useful ways of measuring school district financial performance.  (Examples:  cost per student, market value per student, etc.)

BOCES Corrects Its Tax Rates

School officials and others who are familiar with the Dutchess County Board of Cooperative Educational Services (BOCES) publication Contract Analysis 2010-2011 may notice some discrepancies between that publication's table, True Value Tax Rates for 2010-11 on page 32 of the Financial section, and my ranking chart above.  The data should be the same, because both are measuring the same thing.  Although most of the data in the BOCES table agrees with mine to the penny, I found 4 school districts with substantial disagreement:  The BOCES table's tax rates for Beacon, Millbrook, Poughkeepsie, and Spackenkill are lower than mine by 5 percent or more in most cases.  After consulting with a senior BOCES official about these discrepancies, I'm happy to report that BOCES has accepted all my tax rates as correct, and has adjusted its records accordingly.  BOCES has earned my thanks for its gracious and prompt handling of my inquiries.

School Tax Rate Comparisons — Two Viewpoints

I'm beginning a series of posts on school district tax rates in Dutchess County.  School taxes are by far the largest single property tax for most taxpayers.  In fact, property owners often pay more in school taxes than in all other property taxes combined.  Another way of saying this is that the school tax rate is greater than the sum of all the other tax rates (town, county, fire, library, etc.) for a typical taxpayer. 

Comparison Requires True Value Tax Rates

In order to properly compare tax rates — any tax rates — the tax rates must be expressed in dollars per thousand dollars of market value, as I have explained countless times in this blog (for example, here, here, and here).  Tax rates expressed in terms of market value rather than assessed value are sometimes called true value tax rates.

True value tax rates are useful for comparing school tax rates with town, county, fire, and library tax rates, as above, and they are also useful for our main focus here, which is comparing various school tax rates with each other.  Comparison of school tax rates arises in a number of useful contexts, including comparisons among school districts, comparisons in the same district among years, and comparisons within the same district (or even different districts) among taxpayers.  We will investigate all of these contexts in this series of posts.

School District Viewpoint versus Taxpayer Viewpoint

It is important to understand that in Dutchess County, school tax rate comparisons should be conducted in two different ways, depending upon the purpose or viewpoint of the comparison.  These two viewpoints are the taxing authority viewpoint (in this case, the school district viewpoint) and the taxpayer viewpoint.  These seemingly similar viewpoints can be described by the following two sets of questions:

Q1 (School District Viewpoint):  How steeply does each school district tax its tax base?  Which school district in Dutchess County has the highest tax rate?  The lowest?  Where does your school district stand in the ratings?

Q2 (Taxpayer Viewpoint):  How steeply are property owners taxed by their school district?  Which property owners in Dutchess County pay school taxes at the highest rate?  The lowest?  Where does your property stand in the ratings?

If every school district taxed all their property owners at the same true value tax rate within the district, the above two sets of questions would have the same answers.  Unfortunately, this is not quite the case.  Of the 13 school districts in Dutchess County, 8 school districts tax all their property owners at the same true value tax rate within the district.  The remaining 5 school districts have a more complex taxing structure, taxing different property owners at different rates.  These different rates occur for two different reasons, homestead tax option and apportionment option.

School District	Tax Rate Structure
Dover Hyde Park Millbrook Pawling Pine Plains Red Hook Rhinebeck Webutuck	Single tax rate
Poughkeepsie Spackenkill	Homestead tax option
Arlington Beacon Wappingers	Homestead tax option Apportionment option

(I've chosen to ignore for the most part the small regions in Dutchess County lying in the out-of-county Carmel, Haldane, and Taconic Hills school districts.)

Homestead Tax Option

Under New York State Real Property Tax Law, school districts and certain other taxing authorities can opt to classify the taxable properties in their jurisdiction into two separate classes.  Properties in the homestead class (essentially homes) are taxed at a relatively low rate, while properties in the non-homestead class (essentially businesses and commercial properties) are taxed at a higher rate.  The Poughkeepsie, Spackenkill, Arlington, Beacon, and Wappingers school districts utilize the homestead tax option, as shown in the above table.  In these five school districts, a property's true value tax rate depends upon whether the property is classified as a homestead or a non-homestead property.

Apportionment Option

Nearly all school districts in Dutchess County comprise portions of more than one town.  (The only exceptions are Poughkeepsie and Spackenkill.)  The portion of a school district lying in a particular town is called a municipal segment.  Ordinarily, property taxing authorities in New York State are required to apportion their tax levy among municipal segments in such a way that all properties (or all properties of a given property class, if the homestead tax option is used) are taxed at the same true value tax rate.

However, for school districts, New York State Real Property Tax Law provides an optional exception to this common-sense rule.  The exception permits school districts to apportion their tax levy among their municipal segments based on a different criterion than uniform true value tax rates.  Essentially, the tax levy is apportioned based on total market value, rather than on total taxable market value.  Only the Arlington, Beacon, and Wappingers school districts utilize this special apportionment option, as shown in the above table.  The important point here is that in these three school districts, a property's true value tax rate depends not only upon the property's class (homestead or non-homestead), but also upon which town (municipal segment) the property lies in.

School District	Number of Towns
Arlington	9
Beacon	3
Wappingers	5

OK, enough about real property tax law.  Here's how the two sets of comparison questions can be answered using various kinds of tax rates:

Aggregate Tax Rate

I define the aggregate tax rate for a school district to be simply its total tax levy divided by its total taxable market value.  The aggregate tax rate is a true value tax rate which measures how steeply a school district taxes its tax base.  Thus, the aggregate tax rate is appropriate for comparing school districts with each other (Q1).  If a school district taxes all its taxpayers at the same true value tax rate, as do 8 of the school districts in Dutchess County, then the aggregate tax rate is this rate.  If a school district taxes different taxpayers at different true value tax rates (5 school districts with homestead and/or apportionment options), then the aggregate tax rate is the average of those rates, weighted by the proportion of taxable market value in each taxing class and/or municipal jurisdiction.

Homestead and Non-Homestead Tax Rates

For a school district using the homestead tax option, the homestead tax rate is simply the portion of its total tax levy assigned to the homestead class, divided by the total taxable market value of its homestead class.  Thus the homestead tax rate is a true value tax rate.  The non-homestead tax rate is defined similarly.  For property owners in the Poughkeepsie and Spackenkill school districts, these rates are appropriate for measuring the steepness of their taxes, and comparing them with those of property owners elsewhere (Q2).

Segment Tax Rates

In the Arlington, Beacon, and Wappingers school districts, a property's school tax rate depends not only upon the property's class (homestead or non-homestead), but also upon which town (municipal segment) the property lies in.  I define the homestead segment tax rate for homestead properties in a municipal segment to be the portion of the homestead tax levy apportioned to homesteads in the municipal segment, divided by the taxable market value of homesteads in that municipal segment.  Thus the segment tax rate is a true value tax rate.  Non-homestead segment tax rate is defined similarly.   For property owners in the Arlington, Beacon, and Wappingers school districts, the segment tax rates are appropriate for measuring the steepness of their taxes, and comparing them with those of property owners elsewhere (Q2).

For example, in the Arlington School District, the 2010 homestead tax rate in the Town of LaGrange is $18.92 per thousand dollars of market value, while that in the Town of Poughkeepsie is $18.61.  This means that a homestead property in the Town of LaGrange paid 1.7 percent more Arlington school tax in 2010 than a homestead property with the same taxable market value in the Town of Poughkeepsie.

Ranking the School District Tax Rates

In subsequent posts, I'll present the rankings of Dutchess County school district tax rates, from both the school district and the taxpayer viewpoints.