Complexities Of School Tax

Co-Authored by Bill Zopf, Board President & Dr. Jean Parr, Superintendent

(Beacon) - Quality of education, student safely, property taxes, home values, educated work force. What do these topics have in common? Either directly or indirectly the Board of Education of your local school district makes decisions affecting these and other aspects of community life.

To help people better understand the policies and operations of a school district, a new column about the Beacon City School District (BCSD) is being introduced.

Demystifying the Complexities of School Tax Estimates

By the time you read this column, school tax bills will have been mailed. Property taxes are a mixed blessing. No one wants to pay them but they help fund public education, an essential part of our society.

School taxes are estimated as part of the budget process. First the district decides how much money it will need in order to achieve its goals and objectives for the coming school year. It then estimates how much money it will receive in aid from the state and federal governments and from other non-property tax sources. The difference between these two figures becomes the amount to be collected in property tax: the tax levy.

In years when the state budget isn't approved on time, the actual amount of state aid won't be known until after the school budget has been put before district voters. When this happens (and it happens much too often), the district must estimate the aid it expects to receive based on preliminary information. This is very difficult to do. Even in years when the state budget has been approved on time, the district's estimate may be accurate but may ultimately be wrong because the state aid is not yet finalized.

Everyone wants to know how much they will pay in taxes if the budget passes. The school district determines the tax rate by dividing the tax levy among the three taxing municipalities in the school district (City of Beacon, Town of Wappinger, and Town of Fishkill) based on assessed and market values of the properties in each municipality. Each municipality assesses differently, so properties in different municipalities with the same market value may have different assessed values and are therefore taxed differently. To correct this, the state calculates an equalization rate for each taxing municipality and the school district uses this rate to determine the municipalities' market values. This presents some problems. At the time of the budget vote, the assessment of each taxing municipality hasn't been finalized and the state equalization rates are also preliminary. This means the school district is making an educated guess about the tax rate prior to the budget vote and determining the actual tax rate after the budget vote. This is unfortunate, but it is how the various school district, state and local municipal deadlines are configured.

When the Beacon school board presented the budget to the public, it estimated the district-wide tax levy would increase 4.14% over the current year tax levy. It also estimated-based on experience in recent years-that total district assessments would increase, meaning the tax rate increase as a district average could be 1 to 2 percentage points less than the tax levy.

The actual district-wide tax levy increase is 4.14%, as shown on the tax bills. The actual district wide tax rate increase is 2.92%. Both of these figures match the estimates given in June. However, the state determined that the difference between the market value and the assessed value of property for Beacon increased more than for Fishkill and Wappinger, thus decreasing Beacon's equalization rate by a larger percentage. Beacon's equalization rate changed from 33.39 to 28, a 19.25% decrease, Fishkill's went from 49 to 44.5, an 11.22% change and Wappinger's changed from 39.5 to 35, an 11.39% change. Beacon's equalization rate decrease coupled with Fishkill's total assessed value increase caused a larger portion of the total tax levy to be assigned to Beacon. This increased the tax rate in Beacon by 5.88%, while Fishkill's tax rate decreased by 2.67% and Wappinger's tax rate decreased by 0.21%.

The school district business office did an accurate job of estimating our state aid revenue, the tax levy and the district-wide tax rate. The unpredictability of the final assessment figures and equalization rates makes it more difficult to estimate the tax rate by municipality. I hope this explanation gives everyone a better understanding of the complexities of predicting tax rates based on estimated figures.