Joel Miller Just Can't Get Fairview Facts Straight

“Everyone is entitled to his own opinion, but not his own facts.” Daniel Patrick Moynihan

Try as he might, New York State Assemblyman Joel Miller just can't get his facts right regarding the Fairview Fire District. On his first try, in a Poughkeepsie Journal Valley Views article on April 22, 2012, he wrote

Fairview alone had fire district tax rates nearly 10 times higher than 27 other towns in Dutchess County in 2010.

I pointed out in Joel Miller's Flawed Legislation for Fire District Budget Empowerment that there are only 20 towns in Dutchess County, and that even if he meant “fire districts” instead of “towns” (which would have made more sense), his statement is still not even close to correct.

Flawed Staff Work

In preparation for that blog post, I spoke with the staffer for Miller who had generated this misstatement. This staffer had already reviewed some of my own reports, including The Big Three Fire Districts of Dutchess County. It became clear to me that this staffer was not well prepared to interpret quantitative information, and the staffer readily conceded as much. My instinct was that if Miller were to release a corrected statement, it might also be wrong. Because I genuinely wanted facts to be correctly stated, I suggested a corrected statement, and I offered to preview any proposed new statement about Fairview. I never heard from Miller or any of his staffers about this matter.

My instinct turned out to be correct. On April 26, Miller sent a press release to each Fairview Fire Commissioner. This press release was essentially a rewording of his Valley Views article, except that the incorrect statement about Fairview was replaced by a new incorrect statement about Fairview:

Fairview alone had fire district tax rates nearly eight times higher than 30 other fire districts in Dutchess County in 2010.

The irony is that the above statement appears to be a mis-quote of a statement in my own report, which reads

Fairview’s tax rate is nearly eight times the average of the non-big-three districts.

Apparently the staffer thought the word “average” in my statement didn't really mean anything important, and could just be omitted! But as most European high school students know, an average of a bunch of numbers must be smaller than some of the numbers being averaged. In fact, for ordinary data like tax rates, roughly half the numbers can be expected to be greater than the average. Maybe even much greater.

And so it is in this case. Half the non-big-three fire districts had tax rates greater than the average of the non-big-three, and half had tax rates less than the average. So Fairview's tax rate was eight times higher than only 14 other fire districts — not 30 other fire districts.

Incidentally, “30 other fire districts” in Miller's statement is wrong too. There were only 30 fire districts in the whole analysis, and the big three fire districts were excluded from this average, so there could only be 27 non-big-three districts. The (weighted) average of these 27 was greater than 14 of these districts, and smaller than 13 of these districts, as one would expect. For five of these districts, Fairview was only about four times higher — not 8 times higher as Miller claimed.

Miller Has Been Ambivalent About Accuracy

This post isn't about flawed staff work. The principal is responsible for the work of his staff. If Miller had any doubt whether his staff could handle the fire tax rate issue, the doubt was resolved the first time the mistake was made. At that point, Miller knew — or should have known — that his staff didn't know what they were doing on this issue, and so were unlikely to make a proper correction on their own. Miller could have arranged for an independent review of his proposed “correction” before it was released. (I would have been glad to accommodate.)

But this post isn't just about fire taxes either. Joel Miller represents 6 of Dutchess County's 20 towns in the New York State Assembly. Yet he allowed himself to write “27 other towns in Dutchess County,” a gaffe that he or any member of his staff could easily have corrected without knowing anything about fire tax rates.

Taken together, these mistakes show Miller to have been ambivalent about the accuracy of his factual statements. Such lapses affect his credibility.

Joel Miller Combats Incestuously Elected Fire Commissioners

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

I heartily support Miller's initiative.

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

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

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

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

How low is voter turnout in fire district elections?

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

Abolish taxation with slanted representation

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

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

Joel Miller's Flawed Legislation for Fire District Budget Empowerment

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

Popular Vote on Budget Is Inconsistent With Other Local Governments

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

Direct Democracy Is Seldom Used But Often Problematic

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

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

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

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

Incorrect and Misleading Statements in Valley View Article

Miller's Valley View article contains misleading statements, and at least one statement that is just plain wrong. In the context of the Fairview Fire District's high fire tax rate, Miller writes:

Fairview alone had fire district tax rates nearly 10 times higher than 27 other towns in Dutchess County in 2010.

This statement is absurd, since there are only 20 towns in Dutchess County. Well, perhaps Miller meant “fire districts” instead of “towns”, since there are about 31 fire districts in Dutchess County. I checked with Miller's office, and was assured that yes, that's what he meant. Well, wrong again! My tax rate analysis from 2009 shows (page 14) that Fairview's tax rate was 10 times higher than 13 other fire districts — not 27 other fire districts. Miller's research staffer has conceded that the Valley Views statement — even after changing “towns” to fire districts” — is incorrect.

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

This Is My Opinion

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

Fairview Fire District's Exempt Percent Is Misstated — Again

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

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

History of Exempt Percent Misstatement

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

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

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

Busting the Urban Legend

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

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

Busting the Corrected Exempt Percent

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

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

Pace Study Misstatement

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

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

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

Fairview's Exempt Percent Has Substantially Increased

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

Is a Committee of Two Subject to the NYS Open Meetings Law?

I've recently become interested in New York State's powerful open government laws, which provide the public with comprehensive rights of access to government records — the Freedom of Information Law (FOIL) — as well as rights of attendance at government meetings — the Open Meetings Law. The nuances of these laws are often unclear to both the public and public officials. For this reason, the NYS Committee on Open Government has published thousands of “advisory opinions” on its website. Even with all this attention to open government laws, I have found that the law is still sometimes ambiguous, and that public officials are not always aware of their responsibilities under these laws. The following post is my first venture into the world of open government. This post happens to come during Sunshine Week, which the Poughkeepsie Journal acknowledged yesterday in an unsigned editorial.

Local government “public bodies” such as boards of fire commissioners, town councils, village boards, school boards, city councils, etc. are subject to New York State's open meetings law. This means that these bodies must allow the public to attend their meetings, and must provide various accommodations to make public attendance practical and meaningful. (For example, advance notice of meeting, advance copies of records to be discussed, recording of meeting by public, accessibility by disabled persons, and timely availability of minutes of meeting.)

What is less well known is that, as a general rule, committees of public bodies are also public bodies, and are therefore subject to all the requirements of the open meetings law. What I mean by “as a general rule” is that a committee comprising three or more members of a public body is a public body, and is therefore subject to the open meetings law. But what about a committee of just two members of a public body? This case is ambiguous at best. Most likely, a committee of two members of a public body is not a public body, and therefore is not subject to the open meetings law. But this conclusion is not dead certain.

Why does it matter?

It is common for local government public bodies to form various committees for various purposes. For example, the Board of Fairview Fire Commissioners has separate committees for budget, personnel, apparatus, check audit, computer, safety, policy, record retention, and others. These committees typically comprise two commissioners, or two commissioners and the fire chief. In practice, these committees have met in private — not in public. Do these meetings violate the Open Meetings Law?

What does the law say?

Section 102.2 of the Open Meetings Law defines a public body as:

... any entity, for which a quorum is required in order to conduct public business and which consists of two or more members, performing a governmental function ... for a public corporation as defined in section sixty-six of the general construction law, ... or committee ... of such public body. [Elided phrases believed irrelevant to this discussion.]

The term “public corporation” in this context simply means a municipality such as a fire district. A committee comprising two fire commissioners certainly is an entity of two or more members performing a governmental function for a fire district. So it would appear that such a committee is a public body, and therefore subject to the open meetings law. At least, this was my understanding of a phone conversation with Committee on Open Government Executive Director Robert Freeman on February 16. So case closed, right?

Not so fast

Wait a minute. What about the “quorum” part? The above definition says that a public body is an entity for which a quorum is required. Does a committee of two commissioners even have a quorum? Freeman assured me that it does, and he cited Section 41 of the General Construction Law to prove it. After my conversation with Freeman, I found Section 41 to say the following:

Whenever three or more public officers are given any power or authority, or three or more persons are charged with any public duty to be performed or exercised by them jointly ..., a majority of the whole number of such persons or officers ..., shall constitute a quorum .... [Elided phrases believed irrelevant to this discussion.]

The crucial part of Section 41 is that the law does not define a quorum for two persons, only for three or more. But a public body is an entity for which a quorum is required. Therefore, two persons cannot be a public body. And only public bodies are subject to the open meetings law. Conclusion: A committee of two is not subject to the open meetings law. My understanding of a subsequent conversation with Freeman on March 13 is that he agreed with this new conclusion.

What if this conclusion is wrong?

The fact that the definition of public body mentions two or more rather than three or more adds a certain degree of ambiguity — or some might say contradiction — in the law. Thus there is still a little bit of doubt as to whether a committee of two is subject to the open meetings law. In my view, it would be unduly burdensome for a committee of two to be subject to the open meetings law. For example, the Fairview board of five fire commissioners has about a dozen committees. If each committee comprised two commissioners, then it's quite likely that every commissioner is paired with every other commissioner on some committee. So no commissioner could speak in private with any other commissioner, unless they were careful to avoid talking about the business of the particular committee(s) they comprise. As a practical matter, two commissioners could very easily slip into violating the open meetings law if they spoke with each other at all. If no commissioner can talk in private with any other commissioner, the work of government would be greatly impeded.

Protecting a committee from the open meetings law

I am a strong supporter of open government, and I would normally look askance at any attempts to circumvent its intent. On the other hand, it would frustrate the workings of government if the open meetings law applied to a committee of two. It turns out that a board of fire commissioners can “protect” itself from any possible applicability of the open meetings law to committees of two by the simple device of adding another official such as the fire chief or District Treasurer to each committee. That's because advisory opinions and legal decisions have held that the definition of a committee as a public body requires every member of the committee to be a member of the public body. Since the fire chief and treasurer cannot be commissioners, their membership on a committee automatically insulates a committee from the open meetings law. It turns out that in Fairview, many committees already include the fire chief or treasurer. My understanding of my conversation with Freeman on March 13 is that this way of circumventing the open meetings law for a committee of two is safe and effective, and does not significantly violate the spirit of the open meetings law.

You Can Now Subscribe to this Blog by Email

Would you like to know when I post a new item to this blog? You can now subscribe to this blog by email. Simply enter your email address in the field at the upper right of the main blog page (under my photo), select the Submit button, and follow the directions from there. From then on, you'll receive a copy of any new posts to this blog within 24 hours after their posting.

There was a time in the past when some readers received automatic email notification of new posts to this blog. However, this older scheme seems to be permanently broken, for reasons I frankly don't understand. My apologies to readers who've lost automatic email notification. Newsreader subscriptions to this blog (Atom, etc.) continue to be available from the bottom of the blog's main page.

Which Fire District Has the Highest Tax Rate in New York State?

It's been nearly three years since my first post to this blog, and a good time to update information in some of my initial posts. Originally named Fire Tax in Dutchess County, my blog expanded from “Fire” to “Property” after I began exploring wider issues.

True Value Tax Rates

A consistent theme of this blog is that true value tax rates, that is, tax rates expressed in dollars per thousand dollars of market value (not assessed value), are the appropriate way to compare the steepness of property taxes across different jurisdictions, as well as within the same jurisdiction across different years. The idea of taxes as a percent of home value is essentially the same idea. My second post to this blog explained true value tax rates (without using that handy name) in terms of fire taxes. Since then, I've explored variations on this theme many times, such as here, here, and here.

Which fire district in New York State has the highest fire taxes?

This question can be answered in principle by comparing the true value fire tax rates of every fire district in the state. Unfortunately, I don't have access to this information, so I can't really answer this question. However, there are a few contenders for highest fire taxes that I'll discuss here.

Regular readers of this blog know that the Fairview Fire District has the highest fire tax rate in Dutchess County, with a tax rate exceeding $5.00 per thousand dollars of market value for every year of this millennium. When I started this blog three years ago, no other fire district in Dutchess County came anywhere near to Fairview's $5.00 mark. None even reached $4.00. This has changed. The Arlington Fire District — one of the big three fire districts of Dutchess County — has dramatically increased its tax rate since I began this blog:

Arlington's tax rate has exceeded $4.00 in each of the last three years. For 2012, Arlington's rate of $4.89 is just 11 cents below the magic $5.00 mark.

Gordon Heights Fire District

But a stronger contender lives outside Dutchess County. The Gordon Heights Fire District in Suffolk County — the subject of my third post to this blog — has had a true value tax rate in the $4.00 and $5.00 range every year since at least 2004. The following chart comparing Fairview with Gordon Heights updates my chart of three years ago:

Gordon Heights beat out Fairview between 2004 and 2007, but Fairview has triumphed over Gordon Heights almost every year since then, with Gordon Heights just edging out Fairview last year. This year, Fairview is significantly “ahead”. In fact, Fairview's 2012 tax rate of $5.72 is higher than that of either district for any year since 2005. So, for now, Fairview is the prime contender for “highest fire tax rate in New York State”. If there's another fire district with higher tax rate, I'd like to know about it.

Differences between Fairview and Gordon Heights

Although Fairview and Gordon Heights have comparable tax rates, the two districts differ in a number of important ways. As I noted in my post three years ago, Fairview is staffed predominantly by career firefighters; Gordon Heights is a volunteer district for firefighting, although it has full-time paid staff for responding to medical emergencies. Paid staff accounts for most of the budget in both districts. I also noted that Gordon Heights has been cited for mismanagement of taxpayer dollars over a period of years.

A third difference between Fairview and Gordon Heights is that nearly half of Fairview's real property is tax exempt. To my knowledge, no significant part of Gordon Heights is exempt. This factor alone accounts for a substantial portion of Fairview's high tax rate.

Will Gordon Heights Drop Off the Radar?

The Gordon Heights Fire District may soon drop off the radar of high fire taxes. In the last three years, Gordon Heights has seen strong grass-roots political activity to dissolve the district, or otherwise bring an end to what advocates call the “killer fire taxes”. Two fire commissioners supporting this goal have been elected, and a third one was narrowly defeated two months ago. The Town of Brookhaven, which contains Gordon Heights, is conducting a feasibility study to determine how to remedy the Gordon Heights tax situation. In the future, it is possible that Gordon Heights Fire District will be “off the charts” in the sense that it will either no longer exist, or that it will have a more manageable fire tax rate.

Taxpayer Viewpoint

All tax rates in this post (and in most posts on my blog) are from the taxpayer's viewpoint. In other words, these tax rates derive from data used by the government offices which prepare tax bills, so they correspond to the taxes actually paid by taxpayers. Municipalities such as boards of fire commissioners generally find it more convenient to look at tax rates from the budget viewpoint instead of a taxpayer viewpoint. The two viewpoints usually give pretty much the same tax rates, but generally not exactly the same. For the technical differences, see my recent post Tax Rate Viewpoints — Taxpayer Versus Budget.

Town of Pleasant Valley Publishes Incorrect Tax Rate Change — Again

For the third year in a row, the Town of Pleasant Valley has calculated its tax rate change incorrectly. The Town's 2012 budget makes the absurd claim that the 2012 tax rate is 42.3 percent lower than the 2011 tax rate. If only it were so, I'm sure many taxpayers would be very happy! But of course this figure is not remotely correct.  Pleasant Valley's 2012 tax rate is just 2.2 percent lower than its 2011 tax rate, not 42.3 percent lower.

The mistake was made by Pleasant Valley Town Supervisor John McNair — who was also the Town Budget Officer for the 2012 budget. McNair's mistake was to compare tax rates based on assessed value, rather than first converting these rates to true value tax rates before comparing. McNair's method is like saying a car slowed from 100 kilometers per hour to 60 miles per hour, so the speed decrease is 40 percent. No, 100 kilometers per hour is “really” 62 miles per hour, so the speed decrease is only 3.2 percent.

McNair failed to take into account the equalization rate changes that have occurred every year since 2010 in Pleasant Valley. He should have divided each tax rate in the budget by the corresponding equalization rate to obtain the true value tax rates before comparing. McNair has been making this same mistake for at least the last three years, with the following results:

Pleasant Valley Tax Rate Increase

Year of Tax Bill	Budget Entry (incorrect)	Correct Value
2010	8.3%	17.3%
2011	9.2%	23.9%
2012	-42.3%	-2.2%

Note that the Pleasant Valley budget grossly understates the tax rate increase every year.

What were town officials thinking?

Too bad McNair wasn't aware of my analysis, right? Just kidding! Not only has McNair been aware of my analysis for almost two years, but at least three other town officials have been long aware of this issue. Upon my polite and constructive inquiries with all these officials, two of them not only rejected my analysis, but also responded with open hostility. I thought maybe I'd accidentally contacted the Town of Unpleasant Valley. The third official understood my analysis right away and agreed completely with it. This third person is no longer a town official.

What can we expect in the future?

The two hostile people remain as town officials today, but McNair has been replaced as Town Supervisor and budget officer by Carl Tomik. Hopefully, Tomik will encourage his colleagues to represent the town in a more professional manner. Regarding the publication of incorrect tax rate changes, I can confidently predict that this will not happen in future years. Not because town officials have seen the light, but because the revaluation that occurred in 2011 means that Pleasant Valley's equalization rate will stay constant at 100 percent in future years. Therefore, even calculating future tax rate changes the way McNair did will give the right answer in future years.

My predictions have come true

The main new information here is that despite my many attempts to engage McNair and other Pleasant Valley officials in reasoned dialog, McNair still continued to employ his flawed methodology for one last year, resulting in the ridiculous claim that the tax rate fell 42.3 percent in 2012. I'd predicted this outcome last March in Town of Pleasant Valley Revaluation Will Challenge Supervisor's Miscalculation, long before the 2012 budget or even the Town's assessed valuation was precisely known. My post predicted that McNair's flawed methodology would result in a claimed tax rate decrease of 44.3 percent, pretty close to McNair's 42.3 percent. My post predicted a correct tax rate decrease of 5.6 percent, reasonably close to the actual 2.2 percent, considering the unknowns at that time.

Detailed Report on Pleasant Valley's Tax History

My post last March included a link to my report on Pleasant Valley's tax rate history for the last 12 years, including projected 2012 data. I've now updated this report to include the final 2012 data. You can find my updated report at Town of Pleasant Valley Property Tax Rate History.

The current post contains data from a budget viewpoint, since that would be the viewpoint of Pleasant Valley's budget officer. However, my full report contains data from a taxpayer viewpoint, because that data represents what taxpayers have actually paid (or will pay next month). The two sets of numbers are slightly different from each other, as explained in my post Tax Rate Viewpoints — Taxpayer Versus Budget. Either set of numbers can be considered valid, depending upon your point of view.

Dutchess County 2012 Tax Rate Is Highest In Decade

Just over a year ago, I posted Dutchess County 2011 Tax Rate Is Highest In Decade. For 2012, the property tax rate for Dutchess County government has increased an additional 6.2 percent, making it once again the highest tax rate in the last ten years. The rising tax rate means that property taxpayers are paying a larger and larger proportion of their wealth — measured by the market value of their property — in taxes. As I've written many times in this blog, the tax rate is the most meaningful way to compare taxes between different years, and between different jurisdictions.

Since the economic meltdown began in 2008, public officials, particularly County Executive William Steinhaus, have focused on the tax levy and changes in the tax levy, while downplaying the tax rate. That's because they know that in a declining real estate market, changes in the tax levy don't sound as bad as changes in the tax rate. But in my view, it's really the tax rate that describes how burdensome your taxes are — not the tax levy.

Let's look at the data:

Alert readers will notice very small differences between the above table and that in last year's post. That's because the above table comprises data from the taxpayer's viewpoint, while that in last year's post comprises data from  the budget viewpoint. The differences between these viewpoints are explained in Tax Rate Viewpoints — Taxpayer Versus Budget. All the data in the above table was derived from the tax rate pamphlets published by the Dutchess County Real Property Tax Service Agency. This data matches that on property tax bills.

We can look at this data more easily in graphical form. Dutchess County's taxable market value has continued to drop for the fourth straight year, since the meltdown began:

The above chart shows that Dutchess County's real estate market has been getting worse for each of the last four years. However, a three-year trend of ever-faster declines has reversed itself in 2012, as we can see clearly in the chart of changes in the market value:

This chart shows that Dutchess County's market value isn't falling as fast as it has been:  The 2012 decline is smaller than in any of the three previous years. If this new trend continues, 2013 may not be worse than 2012. In the years since the meltdown began, this is what passes for good news.

As real estate values decline, government officials focus on the tax levy, rather than on the tax rate. That way, the news won't sound as bad as it really is. Steinhaus has been a master at this.

Changes in the tax levy are more clearly seen below:

This year is the first for which New York State's famous two percent tax cap kicks in. This law has been widely touted as helping to reign in escalating property taxes. The law limits local government tax levy increases to 2 percent, with some exceptions. So naturally, Dutchess County's 2012 tax levy increase is only ... um ... 3.2 percent. Surprised? Well, I guess you didn't read the fine print — the part of the law about “some exceptions”. It turns out, according to Steinhaus' 2012 budget message, that the state's property tax cap formula includes exceptions which allow Dutchess County's tax levy to increase up to 3.3 percent. If you think the tax cap law is ineffectual, note that even at 3.2 percent, Dutchess County's 2012 tax levy increase is smaller than in all but three of the last 11 years.

The fact that Dutchess County's tax base has decreased, but its tax levy has not, means that Dutchess County's tax rate is bound to increase. Here it is:

For 2012, Dutchess County's tax rate is $3.25 per thousand dollars of market value, a 6.2 percent increase over last year's $3.06. This tax rate information is useful to property owners who want to understand how high their property taxes are compared with their personal wealth, as measured by the market value of their home. That’s exactly what this true value tax rate measures.

For what it's worth, Dutchess County's 2012 tax rate is not yet at an all-time high. In 2001, the first year for which coherent data is available, the County's tax rate was $3.36.

Changes in the tax rate again show increases every year since the 2008 meltdown:

As we begin 2012, we can compare our situation today with that in 2008, when the economic meltdown hit. Property values in Dutchess County (as measured by taxable market value) have now dropped 17.0 percent since 2008, despite any new construction. At the same time that property owners' wealth has been decreasing, Dutchess County government is billing 17.8 percent more dollars in tax levy than in 2008. These two detrimental effects combine to yield a whopping 42.0 percent increase in the true value tax rate since 2008. So 42 percent more of taxpayers' current wealth goes to Dutchess County than in 2008.

This Bad News is by no means unique to Dutchess County government. On the contrary, the story is qualitatively similar for all property taxes in Dutchess County — for towns, cities, villages, school districts, fire districts, etc.

Buechele and Calamari Elected Fairview Fire Commissioners

Long-time Fairview advocate Virginia “Ginny” Buechele was elected Fairview Fire Commissioner last evening, as was Dutchess County 9-1-1 Emergency Communications Center shift supervisor Andrew Calamari. Buechele will serve for one year, completing the term of Jack Burghardt, who resigned as commissioner this year. Calamari will serve for five years.

One-Year Commissioner Slot

Out of 130 votes cast for the one-year slot, Buechele, leader of the Fairness for Fairview advocacy organization, received 77 votes.  Her opponent, John Anspach, Fairview's Board Chairperson until 2009, received 50 votes. Three additional votes went to write-ins. As in the 2008 and 2009 elections, this contest was a choice between a newcomer aligned with taxpayer advocacy and a veteran aligned with the fire station. Just as in those previous years, voter turnout was substantial, and just as in those previous years, the newcomer won.

Five-Year Commissioner Slot

Calamari's election was officially uncontested.  However, just as in 2009's election, which was also officially uncontested, there appeared to be an organized write-in effort — or perhaps more than one.  Of the 108 votes for the “uncontested” five-year slot, Calamari received only 70 votes.  Former Fairview Fire Commissioner Clinton Kershaw received a respectable 23 write-in votes — more than the total number of votes cast in the truly uncontested 2007 election.  It is embarrassing to report that your devoted blogger received 11 write-in votes, putting me in third place.  The remaining 4 write-in votes were all for single-vote names.  In summary, 35 percent of the votes for this “uncontested” position went to someone other than the winner.  I'm not sure what's going on here.  Calamari only moved into Fairview this year. Kershaw, though he was a commissioner in the past, has not been active here in recent years. Neither man is well known to many people who have been involved in fire district issues in recent years.

Fairview's Board of Fire Commissioners Has Been Completely Transformed

In the spring of 2008, when I first became involved in Fairview Fire District issues, the Board comprised five veterans, all closely associated with the fire station. Since then, newcomers have gradually replaced veterans on the Board.  With the resignation of veteran Jack Burghardt earlier this year, and the defeat of John Anspach in yesterday's election, the transformation of the board from all veterans to all newcomers is complete.

Yet Another Board Change Is Expected

On November 8, Commissioner Joe Petito won election as Hyde Park Town Councilman. This means that he is expected to resign as Commissioner by January, leaving an empty slot on the Board.  The four remaining commissioners will then have the opportunity to nominate a replacement until the next election in December, 2012.

Fairview Fire District Proposed 2012 Budget May Deepen Financial Crisis

The Fairview Fire District Long Range Planning Committee announced at a public workshop meeting on May 26, 2011, that recent budgets have not contributed enough money to the apparatus and equipment reserve fund.  The money that should have been set aside was used instead to decrease the fire tax levy.  If Fairview continues this strategy, it will be out of money when future obligations come due.  Fairview's proposed 2012 budget continues this strategy, therefore threatening to deepen Fairview's long term financial crisis. 

How much should be contributed to reserve fund?

Fairview Fire Commissioner Bob Gephard is justifiably proud of the fact that he initiated the first long range planning study of the District in quite some time.  One result of this work is the Long Range Committee Capital Equipment and Building Plan posted on the District’s website, which shows specific apparatus and equipment expenditures going out 15 years to 2026.  This document shows that if nothing is ever contributed to the apparatus and equipment reserve fund, the District will be in the hole about $4.1 million by 2026.  However, the current fund balance is actually about $335,000 more than that document assumed, so the District only needs to come up with $3.8 million.  On the other hand, it needs to come up with it by 2025, not 2026, because 2025 is when the last significant expenditure occurs.  Dividing the $3.8 million by 14 years gives about $270,000 per year that the District must contribute to the apparatus and equipment reserve fund in order to meet anticipated expenses.

The following chart shows how this would play out on a year-by-year basis.

The red bars show the amount projected to be spent each year, according to the Long Range Committee Capital Equipment and Building Plan.  The blue bars show the amount available in the Fund at the beginning of each year.  The green bars show the amount contributed to the Fund each year – in this case $270,000.  Note that in 2026, the blue bar is zero, indicating that the yearly contribution of $270,000 is just enough to carry the district into 2026, paying for everything with no money left over.

What if less than $270,000 is contributed to the reserve fund?

If only $153,000 is contributed to the apparatus and equipment reserve fund every year beginning in 2012, there will be just enough money to carry the district into 2020.  Unfortunately, the District's ladder truck, which will then be 18 years old, is scheduled for replacement that year, and the reserve fund will be nearly $1 million short of the projected $1,716,160 replacement cost.  Oops!

How much does proposed 2012 budget contribute to the reserve fund?

Fairview's 2010 budget contributed only about $143,000 to the apparatus and equipment reserve fund, and Fairview's 2011 budget contributed nothing to the reserve fund.  Fire Commissioner Bob Gephard stated at the May 26 meeting that he regretted supporting the move to not contribute to the reserve funds, seeing that neglect of the reserve funds is at the heart of Fairview's long term financial crisis.

So on September 26, 2011, after careful consideration, the Fairview Fire Commissioners passed a proposed 2012 budget that contributes nothing to the apparatus and equipment reserve fund.  Zero!  Zilch!  Zip!  Scratch!  Null!  Nix!  Nada!  Even Fairview's Treasurer, James Passikoff, during his presentation of the proposed budget, noted that adding nothing to the reserve funds, “ ... is probably not a good move.”  Under the circumstances, this strikes me as a bit of an understatement.  In my view, the failure of the proposed 2012 budget to contribute $270,000 to the apparatus and equipment reserve fund is the single most inexplicable decision.  It appears that the Board has learned nothing from the May 26 meeting which described the long-term financial crisis.

Proposed 2012 budget makes high-risk assumptions

Unfortunately, the proposed 2012 budget makes a series of high-risk assumptions on smaller items.  Consider the following quotes from Passikoff's budget presentation on September 26 (emphasis added):

• “We've got a potential to get another $45,000 from Dutchess Community College when the dorms open next September.”
• “We also have a chance of getting a SAEFER grant of $75,000.”
• Fairview currently has four firefighters eligible to retire.  An early draft 2012 budget contained $100,000 needed for a “buyout” in case one of them retired.  Passikoff said, “We ended up taking that out.  We're gambling that nobody's going to [retire].”

So let's see:  “We've got a potential ... We have a chance ... We're gambling ...”  Not my words — Passikoff's.  These gambles add up to $220,000 that hopefully will fall in favor of the District.  But what's the chance that all of the above optimistic assumptions will hold?  As far as I can tell, there isn't any “fat” in other parts of the proposed 2012 budget.  So if any assumption fails, the District may need to borrow money at taxpayer expense to make up the difference, essentially costing taxpayers more money in the long run.

Proposed 2012 tax levy is low-ball

The proposed 2012 tax levy continues Fairview's strategy, begun in 2009, of starving the District of resources, as I explained in Big Three Fire Districts Use Divergent Tax Strategies.  It's true that the proposed 2012 tax levy is 9.3 percent higher than 2011's (or 10.7 percent higher, if you take the budget viewpoint).  The problem is that Fairview's 2011 tax levy is artificially low in part because it contributed nothing to the reserve funds.  If the 2011 budget had contributed a nominal $250,000 to reserve funds (lower than the $270,000 that's now needed), then the proposed 2012 tax levy would actually be slightly lower than 2011's.  A similar analysis shows that if the 2010 budget had fully contributed to reserve funds, the proposed 2012 tax levy would be lower than 2010's.  In other words, it's only because recent budgets have neglected the reserve funds that the 2012 tax levy seems large.

In my view, it is more relevant to note that the proposed 2012 tax levy is 5 percent lower than Fairview's pre-meltdown 2008 tax levy.  In other words, one could add $150,000 to Fairview's proposed 2012 tax levy and still not exceed Fairview's 2008 tax levy.  From the perspective of 2008, Fairview's proposed 2012 tax levy is low indeed. 

Fairview's Financial Crisis May Deepen

Given the difficult times we've lived in since the economic meltdown of 2008, it is understandable that Fairview's 2012 budget cannot in any way reverse or compensate for the mistakes of the past.  But one can reasonably expect a budget that does not make Fairview's dire financial situation worse.  Fairview's proposed 2012 budget, by underfunding the apparatus and equipment reserve by $270,000, and by making $220,000 of other high-risk assumptions, threatens to do just that.

Big Three Fire Districts Use Divergent Tax Strategies

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

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

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

Strategies of the Big Three — Tax Levy Viewpoint

The LaGrange Fire District has taken the moderate strategy of maintaining its tax levy relatively close to its 2008 level.  Thus, its bars are barely visible until 2012.  The amount of additional tax money LaGrange will have collected through 2012 is just 2.5 percent of LaGrange's 2008 tax levy, or $120,000.  That's the meaning of LaGrange's 2012 bar of 2.5 percent.

The Arlington Fire District has taken the strategy of significantly increasing the tax levy almost every year, so that the cumulative increase in Arlington's fire tax levy from 2008 until 2012 (proposed budget) is nearly 60 percent.  Thus, the amount of additional tax money Arlington will have collected through 2012 is 60 percent of Arlington's 2008 tax levy, or about $7.8 million.

Now we come to poor Fairview.  And I mean poor.  The Fairview Fire District has taken the opposite strategy from Arlington by decreasing its tax levy almost every year.  The cumulative decrease in Fairview's fire tax levy from 2008 until 2012 (proposed budget) is 26.5 percent.  This means that the amount of tax money Fairview has failed to collect through 2012 is 26.5 percent of Fairview's 2008 tax levy, or about $800,000.

Strategies of the Big Three — Tax Rate Viewpoint

Taxable market values in the big three fire districts have fallen every year since 2008.  For the period 2008 to 2012, they will have fallen a total of about 22 percent in LaGrange and Arlington, but only 15 percent in Fairview.  Fairview's shallower decline means that Fairview's tax rate has taken less of a hit than LaGrange and Arlington have incurred.  Nevertheless, the differing strategies of the Big Three are starkly evident in this chart of cumulative tax rate increase since 2008:

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

The true value tax rate is a good measure of how steeply taxpayers' wealth — measured by the market value of their properties — is taxed.  Therefore, the above chart shows, for each fire district, how much more steeply taxpayers are being taxed compared with the meltdown year of 2008.  Looking at the proposed 2012 budgets, Arlington will tax 52 percent more steeply; LaGrange will tax 31 percent more steeply; poor Fairview will only tax 11.5 percent more steeply.

The Proposed 2012 Budgets Continue These Divergent Strategies

The proposed 2012 budgets for all three fire districts are not isolated decisions, but are continuations of strategies that have been followed by each district since the economic meltdown of 2008.  I plan to say more about Fairview's proposed 2012 budget in a subsequent post.

Fairview Fire District Commissioners Approve Flawed Budget Document

I considered an alternate title for this post: “Fairview Fire District Treasurer Presents Flawed Budget Document”  Both titles are accurate.  But the commissioners actions indicate they wish to take some of the blame for embarrassing the Fairview Fire District.

On September 26, 2011, Fairview Fire District Treasurer James Passikoff presented a proposed budget document to the board of fire commissioners at a budget workshop meeting, and it was approved unanimously by the commissioners with little comment.  This budget document contains so many flaws, it's hard to know where to start.  If this is sounding like yet another rant against Passikoff, well, that's really only half true.  When it comes to the fiscal aspects of the Fairview Fire District, when it comes to following Fairview's budgetary money, when it comes to understanding the financial facts of Fairview, my view is that Passikoff is the smartest guy in the room.  To some extent, that's as it should be.  The problem is that the standard for smartness that is acceptable to Fairview's board of fire commissioners is so low that Passikoff can present just about anything, it seems, and the board will uncritically accept it. 

Officials Don't Understand Fairview Fire Tax Issues

As I see it, Passikoff has a great depth of knowledge concerning many fire district fiscal issues.  Unfortunately, when it comes to property tax issues, Passikoff has repeatedly demonstrated that he does not grasp some essential facts about assessed value and equalization rate.  See here.  More unfortunately, he has not shown an interest in correcting this weakness.  Even more unfortunately, Fairview's board has shown itself indifferent to whether the budget numbers presented to the public — or to themselves — make any sense.

Garbage in Budget Document

To find flaws, one need look no further than the first line of numbers on the first page of the proposed budget document.  This line, purporting to show a change in Fairview's “assessed property valuation” is all meaningless garbage.  Similar garbage is shown on the “Total Assessed Valuation” line on the next to last page.  This garbage is an exact repeat from the budget projections spreadsheet presented at the May 26 public workshop meeting. The reason this is garbage is explained in detail here.  I sent essentially the same explanation to Passikoff, Commissioner Bob Gephard, and Commissioner Joe Petito on May 24.  I received no effective response from any of them, despite months of making myself annoying.  Apparently they are all indifferent at best about understanding, correcting, or even repeating this blunder.

Contradictions in Budget Document

The last two pages of the budget document contain data about 2012 assessed value and 2012 proposed tax rate.  Each page contains numbers for both assessed value and tax rate, but the numbers do not agree with each other.  So which is right?  I wrote here that the first set is right.  Silly me!  It turns out that both sets are wrong!  (For details, see my 9/29/2011 comment appended to that blog post.)  It's not just a couple of misprints.  All the numbers derived from the wrong numbers are wrong too.  That's right, the Treasurer presented, and the commissioners passed, a budget with two contradictory tax rates — and both are wrong.

The treasurer didn't look at this beforehand?  None of the commissioners looked at this beforehand?  Or is it that the tax rate — the rate at which property owners' wealth is taxed — doesn't really matter?  One thing is obvious:  The commissioners had no idea what the proposed 2012 tax rate really was when they approved the budget.  This is more than a little disturbing.  It shows a board that has no hand on the wheel.  The board doesn't even know there is a wheel.

Fairview Fire District Proposes 13.2 Percent Tax Rate Increase

The Fairview Fire District's proposed 2012 budget approved by Fairview's fire commissioners last evening calls for a true value tax rate of $5.79 per thousand dollars of market value, the highest in a decade.  Under this budget, property taxpayers will pay Fairview a greater portion of their wealth — as measured by the market value of their property — than at any time since 2001, when the tax rate was $6.07. 

Tax Rate Increase

Fairview's proposed tax rate increase is 13.2 percent, the highest tax rate increase in a decade, according to my analysis of the budget document from a taxpayer viewpoint.  The tax rate increase from a budget viewpoint is 14.6 percent.  The taxpayer viewpoint represents taxpayer experience, while the budget viewpoint represents the fire district government's experience.  For more details, see Tax Rate Viewpoints — Taxpayer Versus Budget.

It is a little-known fact that Fairview's true value tax rate has decreased for most years of this decade, as shown in the following chart:

Next year will be only the third year this decade that Fairview's tax rate has increased.

In my view, charts like the one above tell a much richer story about what has happened and what is happening with Fairview's taxes than I can tell in words.  If you agree, I strongly encourage you to view all six charts in my report Fairview Fire District Property Tax Data.  Detailed numerical data is also included.

Tax Levy

The proposed 2012 tax levy of about $2.9 million is the third highest in Fairview's history, exceeded only by the tax levies in 2008 and 2009.  The proposed tax levy increase is 9.3 percent, according to my analysis of the budget document from a taxpayer viewpoint.  The tax levy increase from a budget viewpoint is 10.7 percent. 

Market Value

Fairview's taxable market value for 2012 taxes has fallen for the forth straight year, reflecting the continuing real estate meltdown.  Fairview's taxable market value is now just under a half billion dollars, for the first time since 2006.  Fairview's taxable market value has dropped 15.3 percent since its high of $586 million in 2008, including 3.5 percent since last year.  The market value decreases in recent years have been a major factor in increasing Fairview's true value tax rates over what they would otherwise have been. 

Why did I write this post?

Why did I write this post describing Fairview's proposed tax rate increase and trends from previous years?  After all, anyone can just look at the proposed 2012 budget document itself and get the same information, right? ...  Right?

If you've tried this at home — or even at yesterday's budget workshop where the document was presented — you know the answer:  No, you can't.

Well, you can get a few of the numbers:  Fairview's proposed tax levy, and even the tax levy increase percent.  But the tax rate increase percent?  The document does contain a number for this, but the number is incorrect.  What about the tax rate itself?  And what about the market value of Fairview?  The document contains both correct numbers and incorrect numbers for each of these key parameters!  Can you tell which is which?  I couldn't, without out of band information.

So now you know why I wrote this post.  I'll have more to say about Fairview's proposed 2012 budget document in a subsequent post.

Tax Rate Viewpoints — Taxpayer Versus Budget

This post explains why  tax rates on property tax bills can be somewhat higher than tax rates in municipal budgets.  This topic is a little more geeky than my usual post.

Around this time of year, local government officials in taxing municipalities (towns, villages, cities, fire districts, other special districts, and, yes, even Dutchess County government) prepare budgets for the next year.  (School districts do the same thing in the spring.)  As part of the budget preparation process, they set the tax levy — the amount of money the municipality decides to collect from property taxes in the next year.  The tax levy divided by the municipality's taxable market value — which is set on the previous July 1 by the town assessor — is the true value tax rate.  The true value tax rate expresses how steeply property owners' wealth — as measured by the market value of their properties — will be taxed by the municipality.  As such, it is a key parameter for municipal governments, taxpayers, and all other stakeholders.

When tax bills are sent out in January (or in September for school taxes), it is exactly this tax rate which appears on tax bills, and is used to calculate the amount of taxes for the municipality ... in an ideal world.  But we don't live in an ideal world, do we?

The Tax Situation in the Real World

In the real world, its not quite that simple.  In the real world, property owners sometimes don't pay their taxes.  And then they go bankrupt or disappear, and the money is never collected.  In the real world, taxable property can be sold at any time to a tax exempt organization, taking it off the tax rolls.  In the real world, property owners sometimes take legal action to reduce their taxable assessed value — sometimes even retroactively.  All these situations mean that the municipality doesn't collect as much tax in February as it planned for in the budget process the previous fall.  Not only that, but sometimes court decisions require that property tax that had been collected from a property owner in previous years “in error” must be given back.

All these real world situations pose a dilemma for the municipality.  There is the prospect that the municipality will not receive the full tax levy in its budget, or that it will need to refund money it hasn't budgeted for.  So when there's a shortfall of any of these kinds, who do you think is left in the lurch?  Who do you think loses out?  Who do you think gets left holding the bag?

If you guessed “the municipality”, you've just became the laughing stock of the party.  If you're a taxable property owner in the municipality, the correct answer is, ”You!”

How Taxpayers Get To Pay For Budget Shortfalls

Here's how this works in Dutchess County:  In February when property taxes are collected, if a municipality has a shortfall, the government of Dutchess County fronts the money to the municipality to make it whole.  That way, municipalities don't need to go through any painful re-budgeting process in the middle of the year just because some taxpayer went bankrupt, or some court ordered a refund.

But Dutchess County government doesn't eat these extra costs.  After all, it doesn't have any extra money to throw around either.  Instead, it remembers its generosity to the municipality, and demands full payback the next year.  Payback does not occur through the municipality's budget process.  Instead, the town which collects the municipality's tax adds an increment to the municipality's tax rate of just the right size to pay back Dutchess County.  By the way, Dutchess County, in its beneficence, declines to charge interest on the money it fronts.  It just eats those costs, which are small potatoes.  Well, I guess you get to pay even the interest, through county taxes.  See?  There's no escaping death and ...

This Is a Reasonable System

One advantage of this system is that the municipality is insulated from all these real world situations.  It can do its budgeting just once a year, rather than being whipped around by every court decision or bankrupt taxpayer.  But it means that taxpayers pay each year for all the extra costs incurred the previous year.  In other words, taxpayers pay at a slightly higher tax rate than what the municipality's budget says it's charging them.  This is why there's a taxpayer viewpoint and a budget viewpoint for tax rates. 

This Blog Focuses on Taxpayer Viewpoint

In my property tax investigations, I prefer the taxpayer viewpoint, because the taxpayer rates are the rates at which taxpayers actually pay taxes.  The taxpayer rates are readily available in tax rate pamphlets published each year by the Dutchess County Real Property Tax Service Agency.  But the thing is, the taxpayer rates for 2012 aren't available until, well, January 2012.   In the fall of 2011, the only 2012 tax rates available are those in municipal budgets.  I take these budget tax rates as the best available estimates of the (yet unknown) 2012 taxpayer tax rates.  Such tax rates will tend to underestimate the tax rates on tax bills, but generally not by much.

Tax Rate Increases

When the latest tax rate is only a budget tax rate, and not a taxpayer tax rate, the tax rate increase compared with the previous year will be reasonably close to the (yet unknown) taxpayer-view tax rate increase, but will tend to underestimate it.  Budget documents, if they show tax rate increases at all, will ordinarily use only budget tax rates, in keeping with the municipality's viewpoint.  The result is that these budget tax rate increases will tend to not reflect taxpayer experience as well as my approach.  The budget tax rate increases reflect municipality experience. 

Example — Arlington Fire District

An example of what I'm talking about can be seen in the Arlington Fire District's proposed 2012 budget.  I state here that this budget proposes a 10.1 percent tax rate increase over 2011.  The 10.1 percent is figured by comparing Arlington's proposed budget 2012 tax rate of $4.87 with the 2011 taxpayer-view tax rate of $4.43.  (Calculations carried to many significant figures, of course.)  On the other hand, if the tax rate increase percent is calculated using only budget tax rates, the budget tax rate increase would be 10.4 percent, as I describe here.  Both the 10.1 and the 10.4 figures are reasonable, depending on one's point of view.  From the taxpayer's viewpoint, the 10.1 figure is the more appropriate.

School Tax Rate Comparisons — Two Viewpoints

Long-time readers of this blog may wonder how the two tax rate viewpoints discussed above relate to the two tax rate viewpoints discussed in School Tax Rate Comparisons — Two Viewpoints.  The short answer is that they're unrelated.  The viewpoints in that previous post apply only to school districts, not to other municipalities.  Both kinds of tax rates discussed in that previous post are taxpayer viewpoint tax rates in the sense of this post.  On the other hand, the taxpayer and budget viewpoints of this post can certainly be applied to school districts, further complicating what starts out as a very simple idea.

Arlington Fire District Treasurer Misleads About Tax Rate Increases

I recently reported that the Arlington Fire District's 2012 proposed budget calls for a 10.1 percent tax rate increase, and that this fact is not mentioned anywhere in the proposed budget.  The tax rate expresses how steeply property owners' wealth — as measured by the market value of their properties — is taxed.  The tax rate increase expresses how much steeper the taxation is becoming.  The omission of the tax rate increase from Arlington's proposed budget makes it difficult for all stakeholders — taxpayers, residents, and even the fire commissioners themselves — to understand how the tax rate is changing.

It's bad enough that the proposed budget document does not contain any tax rate increases, but this document does something worse:  It contains percent increase numbers that many people would assume are tax rate increases, but that are not.  Stakeholders reviewing this document will therefore be misled, thinking they know what Arlington's tax rate increases are, when they really don't.  In my view, thinking you know — but being wrong — is worse than not knowing at all.

Examining Arlington's 2012 Proposed Budget Document

The last three rows on the last page of Arlington's 2012 proposed budget document are labeled as follows:

1. Rate per Thousand of Assessed valuation for Tax Bills going out Jan 1 (sic)
2. Increase Per Thousand Over last year (sic)
3. Percentage increase of Tax Bills going out Jan 1 (sic)

The first of these rows contains the tax rates for each year from 2008 to 2012 (proposed), as one would expect.  The second of these rows contains the amount of tax rate increase over the previous year, as one would expect.  So far, so good.

The third row is the point of issue.  Since the second row is the amount of tax rate increase, the third row should be the percent of tax rate increase.  It is not.  To calculate the percent of tax rate increase, one would divide the amount of tax rate increase by the tax rate of the previous year.  Instead, the numbers in the third row are the amount of tax rate increase divided by the tax rate of the current year.  The numbers in the last row represent nothing of much interest, and they certainly don't represent tax rate increases.  When tax rates are rising, as they have been for Arlington in recent years, these numbers understate the actual tax rate increases.

Numbers Deliberately Differ From Tax Rate Increases

The percentage increase numbers in the last row of the proposed budget are not a mistake.  They were calculated that way on purpose.  I don't know what that purpose is, since these numbers have no use that I know of.  But the effect, in my view, is that many stakeholders reading the budget document will be misled.

The author of the budget document is James F. Passikoff, Treasurer of the Arlington Fire District.  As a certified public accountant, Passikoff knows the formula for percent increase that we all learned in eighth grade (or maybe fifth grade these days).  Passikoff confirmed to me that his percentage increase numbers were calculated by dividing by the tax rate of the current year, not the previous year, and he agreed that these numbers do not represent the tax rate increase percent.  I expressed concern that many readers would be misled into thinking that these numbers represent the tax rate increase percent.  Passikoff responded that nobody understands these numbers anyway.

I have to admit, based on my three years of property tax investigations in Dutchess County, that I have considerable sympathy with Passikoff's skeptical view of his readers.  On the other hand, stakeholders can hardly expect to understand tax matters when they are given numbers which look, feel, and smell like tax rate increase percentages — but aren't.  Seemingly unconcerned with this outcome, Passikoff told me he is satisfied with what he did, and does not consider these calculations a mistake.  I have no reason to think that Passikoff is intentionally trying to mislead stakeholders.  On the other hand, his responses seemed to show an indifference to whether stakeholders might be misled.

Correcting the Record

Using the values for tax levy and assessed value in Arlington's 2012 proposed budget, the 2012 proposed tax rate increase is 10.4 percent — not the 9.4 percent number calculated by Passikoff.  Alert readers will notice that the 10.4 percent increase is different from the 10.1 percent increase I claimed in my last blog post.  The difference is because the 10.1 percent increase is from the taxpayer's view — my preferred viewpoint — but the 10.4 percent increase is from the municipality's view, an appropriate view for a budget document.  Each viewpoint is suitable to its own domain.  For more detail on this point, see my forthcoming post Tax Rate Viewpoints — Taxpayer Versus Budget.

Recommendation

I recommend that the Arlington Fire District's 2012 budget document be revised prior to the October 18, 2011, public hearing, to include tax rate increase percentages in place of the misleading numbers in “Percentage increase of Tax Bills going out Jan 1”.  That way, stakeholders will not be needlessly misled about Arlington's tax rate increases.

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.