Tax Levy...
Tax Levy...
Open Ended To Say The Least.
As many of you who read this substack have come to rely on our reporting of the town board meetings in full video— it will be a disappointing revelation that no video will exist for tonight’s meeting. This week our member who provides the videographer service was unwell and didn’t feel up to the task. So, we will foil the meeting’s audio recording from the town of Windham. These files will be posted to the substack as soon as those files are available for us to do so. We apologize to any member of the community that relies on these videos of the meetings to stay informed of the Town Board’s operations.
A short synopsis of this meeting is that cozy town of Windham has run amok of the 2.0% increase that is prescribed by the NYS Comptroller’s office for growth in the levy. And yes, prescribing a 2.0% percent cap across the board is a bit of a problematic stance in the sense it might not address every communities needs for cashflows—but, it is designed to keep communities from running amok in times of fiscal plenty when interest rates are low and the appeal of floating bonds by local municipalities often seems too irresistible to many communities that wish to take on long-term obligations for projects with few long-term benefits. By forcing the towns to go before their citizens to ask for these increases in tax levies periodically the Comptroller’s office has put the People back into the process of budget making. By being asked to become part of the decision making process through a public hearing. Unfortunately, tonight was not an example of that glorious process.
Last night the audience was treated to various half-truths about the Levy Process, including the statement that we needed to adopt this open ended Levy Process before any budget conversations could be discussed. While it is true a budget mustn’t be adopted before the Levy resolution—- the idea that dire consequences would befall our dear town if this local levy weren’t passed with sufficient time isn’t exactly so. That’s three Pinocchio’s for Mr. Hoyt and the Town Board members—
The preceding paragraph makes it very clear that the community could hold the tax levy hearing after the tentative budget hearing —after which, a special meeting of the board to adopt the Local Law to increase the Levy Limit could commence with a greater understanding by the public. A concept that transparent is radical and would be most unusual in Windham. In fact it, would be downright shocking. We understand it might take a moment for that shock to be absorbed. Furthermore, even if the Secretary of State rejected the Law it wouldn’t be a dire situation since there is provision in the state law to secure these funds in a special account until the Secretary of State accepts a corrected version of the local law presented to them by any town in this process. Supposed disaster averted.
Because the Town Board has no intention of releasing the Tentative Budget early enough for the public to be given a chance to truly scrutinize it— the community has no way of asking intelligent questions about the proposed budget and the reasons why a tax levy must occur. Last night’s meeting consisted of meaningless questions, vague answers and the usual rubber stamping procedure. The opportunity to clarify and enlighten elucidate our fiscal priorities. was lost Instead we were left pondering what exactly is in store for the Town of Windham.
There was some mention of the Equalization Rate in passing by our Town Board. The equalization rate is a method of equalizing the property taxes value in our state since no uniform amount is prescribed by law. Meaning that if you live in Jewett your property might be taxed at 30% of the market value. In contrast a home owner in Windham might have a 61% taxation rate of market value. It is calculated like so "Equalization Rate =. Total Assessed Value / Total Market Value”. An Equalization rate than less than 100 means the town is assessing homes at below their market value. A rate greater than 100 means assessed value is greater than market value. While a rate equal to 100 means the market value and the assessed value are equal. This might seem like useless math, but it in fact has a some very important outcomes for your tax dollars when it comes to shared resources.
This image from a Publication of the NYS Comptroller “Understanding the Equalization Rate: A guide for property owners" is outlining the importance of the Equalization Rate in the apportionment of Tax dollars between towns regarding shared assets like our humble School District Windham Ashland Jewett— perhaps, you’ve wondered why one town seems to pay more than other for this shared resource? Here is why the equalization rates.
We will use the example above to illustrate this point. In this example two towns exist A and B. Town A has a market value of $30 million. Town B has a market value of $20 million. Therefore the combined school district AB is the market value of Town A plus that of Town B’s ( $30 million + $20 million = $50 million). To find the correct apportionment of this model we then do the following simple math divide total market value of each town by the total market value of the School District AB. This will look like the following: Town A “ $30 Million / $50 million = .6 [60%]” , Town B “$20 Million / $50 Million = . 4 [40%]” . Now all we need to know is the total tax levy for the School District to solve the apportionment. In this example we will use $1 million as shown in the graph above. That will leave 60% of $1 million is $600,000 for Town A and 40% of the same levy for Town B is $400,000.
Now, here is where the Assessed rated becomes important, To calculate that you use the Assessed Value [AV] of each Town in the above graph. We see that equalization rate for Town A is 1/3 of $30 million = $10 million. Town B’s equalization is 1/2 of $20 Million which gives us $10 million too. So then divide the $600,000 by the $10 million which equals $.6. Now multiply by 1000 ( so you can adjust per $1000 as customary). This give us the assessment which is $60 per $1000 AV for Town A and $40 per $1000AV for Town B.
In this example the value of the municipalities’ total market values in relationship to each other in this tax jurisdiction model is the key to apportionment. So, if Town A’s value rises by 10% over a given period but Town B raises by 30% during the same period Town B will now be paying the larger portion of the Tax Levy while Town A’s will decline. The same is true for Home Owners in a single jurisdiction like a Town— if Home Owner A’s house increases by 10% in market value but across town Home Owner B’s market value increases by 40% then Owner B will see an increase taxes while A’s decline.
We hope this will allow our readers to be better prepared for the next phase in this budget process.
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