What is an equalization rate and what does it mean to me as a property owner?

New York State Real Property Tax Law Section 305 states that all properties are to be assessed uniformly.  New York does not mandate full value assessments.  Therefore, in order to attempt to fairly spread tax levies/budgets  in communities that do not assess at full market value, an equalization rate must be established annually.

An equalization rate is the state’s measure of a municipality’s level of assessment (LOA). This is the ratio of total assessed value (AV) to the municipality’s total market value (MV). The municipality determines the AV; the MV is estimated by the state. The equalization rate formula is:

Equalization rates do not indicate the degree of uniformity among assessments within a municipality.

This rate applies to all parcels in a municipality, vacant land, residential type properties, commercial type properties, and utility type properties.  Typically, since most municipalities have the majority of the parcels in the residential category, that rate carries the most weight in the calculation.  Therefore, if residential properties show a greater appreciation or deprecation, that factor is weighted more heavily in calculating the total overall rate.

The challenge for assessors comes when the equalization rate is more  reflective of the measurement of residential properties, but the commercial properties might not be as reflective of the total equalization rate.  Since the rates are blended based on weighted averages, one rate applies to all properties.  The further away from the 100% level the more difficult it is to rely on the fact it applies to all property types.

What does your equalization rate mean?

• An equalization rate of 100 means that the municipality is assessing property at 100 percent of market value.

• An equalization rate of less than 100 means that the municipality’s total market value is greater than its assessed value.
  
• An equalization rate of greater than 100 means that the total assessed value for the municipality is greater than its total market value. 

There would be no need for equalization if all municipalities assessed all property at 100 percent of market value every year.