The Real ProblemsWith Reassessments - Part One
The growing outcry over rising property tax assessments now grabbing headlines in many Hudson Valley towns highlights the financial complexities and political controversies involved in achieving one of the most basic principles of municipal government: equitable taxation.
A recent spate of grassroots challenges– including a self-styled “tax revolt” protesting appraisal methods in the Dutchess town of North East and a slew of lawsuits by property owners in the Town of Canaan in Columbia County– are among many examples indicating that the current system for maintaining fair and updated tax rolls in New York towns is severely flawed.
In order to help understand the root of the problems, and identify possible solutions, our next few columns will try to clarify a few basic facts about assessment, examine alternative methods of revaluing property, and report on the main political obstructions to reforming current deficiencies.
A reassessment is not a tax increase. A common outrage heard from homeowners in the region is that recent reassessments have raised their taxes to a level where they can no longer afford to own their house. But raising the assessed value of a home does nothing to change the amount of taxes levied by local governments and school districts. Local government officials and school boards, not town assessors, are responsible for increasing property taxes, driven by the rising cost of providing key public services and by a growing population that demands more of those services.
What reassessments are meant to do is shift the tax burden to the owners of those properties that have gained relatively more market value than other parcels in the town, county or school district. Assessment professionals suggest that when a given town reassesses after 10 or 20 years– and if public spending budgets remain flat– only 20-25% of parcels will suffer a tax increase while the remaining property owners will see an actual decline in their tax payments or find no change at all.
In our region, it is usually large tracts of open land and expensive, recently improved houses that see the highest relative change in their assessed values and, therefore, take on more of the town’s overall tax burden.
Homeowners can expect to pay more taxes if their town reassesses and neighboring towns in the same school district or county do not.
Consider the case of North East, which, like most small towns in New York State straddles multiple school districts. When the town reassessed all its properties in 2003, taxes paid by North East residents located in the Pine Plains Central School District increased 62% on average in each of the next two years. Pine Plains CSD residents living in the adjacent Town of Pine Plains, which has not reassessed since 1987, saw their annual school taxes rise only 2%. The increase in the school district’s total tax levy increased 5% annually over the 2003 to 2005 period.
Another way of putting it: Pine Plains Town is about five times larger than the area of North East included in the Pine Plains CSD and has about 12 times as many housing units, according to data supplied by the school district; but property owners in Pine Plains Town collectively pay only 2.8 times as much school tax as their North East neighbors in the same district.
New York State lacks the authority to require consistent methods of assessment, monitor inequities or enforce corrective measures.
New York State encourages all towns to reassess regularly in order to achieve fairness among property owners, and the state does make indirect adjustments to a town’s outdated assessed property values to compensate for different reassessment schedules.
But as the Pine Plains example and many others indicate, towns may have a strong incentive to avoid regular reassessments, and the state has no power to compel them.
“We have no authority to enforce assessment administration,” noted Joseph Hesch, spokesman for the state’s Office of Real Property Services (ORPS).
In contrast, almost all other states requires town assessors to revalue all properties every few years using the same nationally accepted appraisal methods and standards. Many, like Massachusetts, have a state office with the power to audit local assessment rolls, challenge specific valuations and require acceptable revisions.
The Albany legislature in the mid-1990s did create a Temporary Commission on Real Property Tax, which proposed drastic reforms to bring New York more in line with other states and, in the process, save hundreds of millions of dollars in what it identified as redundant administrative costs. Among the commission’s key recommendations were uniform assessment standards, regular updating of tax rolls, closer alignment of town and school district boundaries, centralization of assessing units at the county level and authority for the state to review and correct inequitable valuations.
Why those recommendations were buried in Albany and what interest groups prefer to perpetuate the current fragmented, expensive and inequitable system will be the focus of next month’s column.
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Part of the problem with our assessment system is that it is susceptible to all kinds of political chicanery — from simple incompetence to overt inequity. Why can’t we have a system in which assessed value is pegged to a property’s sales price and some kind of economic indicator like inflation rate?