The troubles with reassessment
The Chautauqua County Chamber of Commerce has been at the forefront in calling for all layers of government – state, county, towns, villages and school districts – to reduce their costs through more sharing of services, mergers, internal cost reduction programs, elimination of “nice to have” services, etc. Progress has been slow at best. In general, “business as usual” continues at all levels which causes our property tax burden to be among the highest in the nation.
Business leaves or downsizes, new business stays away, our best and brightest people leave, personnel recruitment efforts are difficult, homeowners are forced to sell out, etc. Everyone from the governor on down acknowledges that upstate is in a downward spiral and is grasping for solutions.
The chamber has suggested that the schools be totally funded by the state through income and sales tax. The schools are creatures of the state and are managed to be in compliance with state mandates and regulations – there is very little local wiggle room. This could lead to a more productive use of physical resources and stronger programs in smaller districts. In the meantime, we must deal with our present way of funding schools.
Unfortunately, our elected officials have found a new way to dazzle us with their footwork – reassessment. At a County Legislature meeting about five years ago, a retiree declared that she has sold her property in Chautauqua Institution as her property taxes have increased from $4,000 in 1993 to $16,000 last year – she could not afford it any longer. The town of Chautauqua reassesses every year, but this gives the politicians more money to spend even if they hold the TAX RATE the same or lower it. Let us use the example of a town with a total assessed valuation of $100 million after applying the state equalization rate. They decide to reassess.
In general, history has shown that this will yield a new assessed valuation for that town of $120 million. Here is the windfall – if all three taxing entities (four if there is a village involved) keep the TAX RATE the same, each will collect 20 percent more revenue. If they keep the total TAX LEVY (the total taxes collected) the same, then the TAX RATE would be 83 percent of the former rate. Some people would pay a little more and others a little less, but the total taxes in dollars would be the same for the taxing entity.
Unfortunately, this is not the real world and why the retiree in Chautauqua is paying much more in real dollars. This is where the politicians thrive – convince the people that reassessment is the answer to the property owners perception that they are overassessed and their neighbor is underassessed. After reassessing, the politicians will cut the TAX RATE slightly, but collect a lot more in TAX LEVY to spend and then tell you what a wonderful job they are doing in cutting taxes.
A real world example of this has happened to me in Florida where my assessment has increased by 79 percent in the last five years and my taxes in dollars have gone up 59 percent. The TAX RATE has gone down slightly which the politicians have been using to tell us what a wonderful job they are doing. The bottom line is that I am paying 59 percent more in real dollars which is supporting a 59 percent more government spending if I am an average situation.
Reassessment is the pot of gold for all our elected officials!
The state has an equalization rate for every town or city that is calculated to reflect actual sales versus assessed valuation of that property in that town or city. There is no state mandate that a town or city must reassess if the equalization rate drops to a low number. In fact, there are towns in Long Island and in Central New York that have equalization rates as low as 5 percent (a property assessed at $5,000 has a full value of $100,000 – $5,000 divided by 0.05). These towns have figured out that if you appear to be poorer in property values, you get more state aid, which means lower property taxes.
Everyone should think long and hard before embracing the Trojan Horse of reassessment which looks attractive, but will certainly lead to higher property taxes. The law of unintended consequences!
Jim Mintun is a Chautauqua County land owner and Orchard Park resident.