By GAR Special Counsel/Partner F. Cindy Baire
For many towns across New York State, property owners recently received their school tax bills. If your school taxes increased – remember that decision was made by your local school board not your assessor. For communities that haven’t performed a reassessment and are subject to the equalization process, as the equalization rate drops, the tax rate increases, along with any increase in school budgets.
If your assessment hasn’t changed, and the equalization rate has decreased, indicating the full market value estimate on your tax bill suggests your property value has increased.
Tax rates are determined by dividing total taxable assessed value of a municipality into the budget or levy. For example, if the current budget is $2 million and the total taxable assessed value is $1 billion, the tax rate would be $2 per $1,000 of assessed value.
If the property assessment is $300,000, that amount divided by $1,000 equals $0.03, therefore the taxes would be $300 dollars times $2, totaling $600 in taxes owed. If the town is assessed at a 50% equalization rate, the full value estimate of the property is $600,000.
If in the following year the equalization rate falls to 45%, the total taxable assessed value now is $900,000 dividing into a $2 million budget would now give you a tax rate of $2.22 per 1,000.
The properties assessed at $300,000, will pay now pay $666. If the equalization rate is now at 45%, the full value of this property will be $666,000.
Conversely, if the town assesses at 100%, the tax rate drops. So, if there’s a $2 million budget levy and a $2 billion total taxable assessed value, the rate per 1,000 is now $1. Therefore, a property assessed at full value of $600,000 would pay $600 in taxes.
I address these types of concerns from property owners and encourage them to support a townwide reassessment, so the tax rate calculations are less likely to see impactful changes. Also, I encourage property owners to monitor school budget /levy changes carefully. If the budget/levy increases, and there is no townwide reassessment, the tax rate will increase.
I also respond to property owners that if your municipality has not conducted a reassessment in years, have your taxes increased? In most cases, the response is yes.
So, while your first instinct might be to think it is your property assessment driving up your taxes, which may have not actually changed, the equalization rate and the budget/levy are changing. That really drives the tax rate. The assessment is merely the vehicle to collect the taxes.
Your assessor is not responsible for setting budgets/levies or determining the equalization rate. Equalization rates are set by New York State.
If you think the full value estimate indicated on your tax bill is not accurate, there is a process to challenge that full value estimate. Most assessors offer an informal review process whereby property owners can submit a request for a review of their assessment. All municipalities offer a Formal Grievance Day typically in May each year. For more information on these processes, check with your local assessment office.
