WPCNR MR. & MRS. & MS. WHITE PLAINS VOICE. May 17, 2006: Don Hughes recently wrote an commentary on city tax rates and started a dialogue on the subject with the Mayor's Office. He expands as follows:
John,
I recently submitted a piece responding to the city´s claim to have the lowest tax rate of any city in the state. Using data published by the NYCOM, (New York Conference of Mayors), we saw that White Plains had the 5th highest property tax rate in the state. However, there is another measure - the `full valuation´ tax rate which is obtained by multiplying the tax rate by the equalization rate.
By this measure White Plains has the second lowest full valuation tax rate. There is some validity in using this number since the purpose of the equalization rate is to allow the statewide comparison of property values. However, neither number is very useful.
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Let´s try an example: assume two similar homes purchased at the same time in two different cities. Further assume that these two cities had equivalent assessment rolls, tax, and equalization rates. Then assume that after two years everything has stayed the same except that property values in city2 have doubled.
All very unlikely, but this is make believe. At this point the tax rate for the two cities are the same,
while, although both cities are providing equivalent services for equivalent costs, the full valuation tax rate for city2 is 50% of city1.
Remember how the tax rate is figured: you take the budgeted amount and divide it by the total assessed valuation (OR the full value assessed valuation).
City2 is being given credit for the run up in property values. While reasonable at some level, in order for a resident to realize this windfall he as to sell his property and move out of the city. It
is also likely that the costs for goods and services in city2 have also increased over those in city1.
Now let´s assume that city2 does a citywide reassessment. At this point in order to raise the same money, city2 will cut its tax rate in half (the budgeted amount is the same, but on paper the assessables have doubled). Now city1´s tax rate and full valuation tax rates will both be double that of city2.
While this is an extreme example, the point is that either measure comes with so many conditions, footnotes, and asterisks as to be not very meaningful.
White Plains is one of the few municipalities in New York that have not done a reevaluation in recent memory, and thus our tax rate will appear higher when compared with other cites. On the other hand, the increase in property values has lowered our full valuation tax rate in relation to other cites; a statistic which may be hard for long-term residents to appreciate when the out-
of-pocket dollar amount is going up faster than inflation.
That was why it was suggested that cities look at per capita expenditures, where White Plains ranked number one in the state.
But that measure also comes with caveats - for example, it does not consider the ability
to pay (what the full valuation measure was trying to capture). Another measure periodically suggested is to compare taxes not to $1,000 of property value but to $1,000 of income.
Comptroller Alan Hevesi recently released a report - `Property Taxes in New York State´ -
which did such an analysis (The report is available on www.WhitePlainsOnLine.com). According to this report Westchester´s property taxes per $1,000 of personal income average of about $56.36 which is inline with the state median of $53.
Unfortunately after several weeks of effort, I found that neither the state nor federal
governments breakout income information on a city level, and I could not easily extended the study. However, the IRS does provide summary information by ZIP code, and using this data plus information from the Post Office relating ZIP codes to cities, I calculated the tax rate per $1,000 of personal income for the 61 cities in New York State (Note: ZIP code and city boundaries do not
necessarily align, and that most of the data is two years old).
Using these numbers White Plains has the 2nd highest tax rate, the 2nd lowest full valuation tax
rate, the 4th highest per capita expense rate, and the new number: the 14th lowest property taxes per $1,000 of average income (your mileage will vary).
So what is the bottom line? Same as before, depending on what you measure, the numbers can be either good or bad, but there IS always room to do better; and we need to look beyond our borders for ideas on how to contain our budget. Oh, and always question the assumptions behind any statistic.
Don Hughes
