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Understanding equalization rates

Taxes can be a confusing jumble of numbers, but add in a different equalization rate for each municipality and then things can get complicated.

According to the New York State Office of Tax and Finance, equalization rates are the state’s measure of a municipality’s level of assessment. This is the ratio of total assessed value to the municipality’s total market value. The municipality determines the AV and the MV is estimated by the state.

Equalization rates are only used for taxes that include several municipalities, like school districts.

In order for a school district to fairly distribute its property tax levy, the levy needs to be divided in proportion to the total market value of each municipal segment. This allows for an equitable distribution of taxes based upon the market value of each municipality.

It is important to note that equalization rates other than 100 percent do not indicate the degree of uniformity among assessments within a municipality. So, an equalization rate of 50 percent does not mean that all properties are assessed at half the market value, some would be above and some below, 50 percent is an average of all properties in the municipality.

“At 100 percent, assessments are clear to everyone and it is more equitable. When a town is not at 100 percent, it is more likely that they are not keeping up with values. People are under the misimpression that all values rise and fall equally. This is not true for different kinds of neighborhoods; it could be lakefront, a cow farm, or a grape farm or new development. The value for each of these kinds of neighborhoods moves independently,” Jim Caflisch, director of the office of real property tax services for Chautauqua County, explained.

According to Caflisch, there are benefits to maintaining a 100 percent equalization rate.

“If an equalization rate is less than 100 percent, taxes may not be distributed fairly unless the level of assessment is kept at the same level equally, it doesn’t have to all be at 100 percent, but it is more likely that assessments will fall behind,” he explained.

Caflisch said in addition to eliminating inequity, an equalization rate of 100 percent can prevent confusion come tax time.

“When equalization rates are at 100 percent, it is less confusing for residents because when they get their tax bill, they are not seeing two different numbers for the assessment and the valuation. At 100 percent, these numbers are the same. It is less confusing when they see one number,” he said.

Equalization rates are done either by towns or cities, not villages. Of the 29 towns and two cities in Chautauqua County, 18 of those municipalities have a 2013 equalization rate of 100 percent.

These municipalities include the city of Jamestown and the towns of Busti, Carroll, Charlotte, Chautauqua, Cherry Creek, Clymer, Ellery, Ellicott, Ellington, French Creek, Gerry, Mina, North Harmony, Poland, Ripley, Sherman and Stockton. The towns of Hanover, Harmony and Kiantone have equalization rates of 98 percent.

All 21 of these municipalities have done a reassessment done in the past three years.

Municipalities with lower equalization rates for 2013 include the city of Dunkirk at 82 percent, Westfield at 80 percent, the town of Dunkirk at 73.5 percent, Sheridan at 70 percent, Villenova at 65 percent, Arkwright at 55 percent, Portland at 54 percent, and Pomfret at 20.21 percent.

Most of these municipalities had reassessments done last in the ’90s, with the exception of Westfield in 2003 and Pomfret prior to 1974, according the County Real Property Tax Department.

In Cattaraugus County, Leon is at 100 percent, Dayton is at 79 percent, Persia is at 78 percent and Perrysburg is 67.16 percent. In Erie County, North Collins and Evans are at 100 percent equalization rate, Brant is at 98 percent and Collins is at 62 percent.

Caflisch said the decision to do a reassessment rests with the municipality but a major barrier is the cost. According to Caflisch, each property assessment costs between $35 to $40 and the state will only reimburse $5 per property assessed and $2 in the years following to maintain the 100 percent equalization rate.

Pomfret Supervisor Donald Steger said the cost is what has held the town of Pomfret from doing a townwide reassessment for nearly 40 years.

“I can’t justify expending the taxpayer’s money on this. It is an expense you cannot recoup. I just can’t see where it is cost effective,” he said in a phone interview.

He said when he looked into the matter about 6 years ago the cost was estimated over $600,000 to reassess the town’s 6,000 parcels. Using Caflisch’s cost estimate for reassessments, the cost today would be around $240,000 with state refunding around $30,000.

“The way I understand market values is overtime one-third of properties go up, one-third go down and one-third stay the same. Going by that only one-third of residents would benefit from a reassessment, for the other two-thirds it is just an expense,” Steger added.

Steger said the equalization rate is discussed almost annually by the town board, has been brought up by residents and the board has heard from real property tax departments about the benefits of a townwide reassessment.

“This has been an annual discussion for the 15 years I have been on the board. We have had people come in and pitch it but I can’t see where it will make a difference in the long run,” he said.

Steger said although he knows there are benefits of having an equalization rate of 100 percent, it is not worth the cost of the reassessment.

“There are benefits if you eliminate the cost but I can’t see how we would finance it,” he said, adding some towns in downstate New York have single digit equalization rates. “My biggest argument against a reassessment is the cost.”

According to the state Office of Tax and Finance website, there are several town’s downstate with equalization rates below 10 percent. Suffolk County on Long Island has several equalization rates below 1 percent and also some above 100 percent, meaning that assessments are higher than market value.

For more information on equalization rates go to www.tax.ny.gov.