Preliminary estimates from the state Office of Real Property Services estimate that the equalization rate for the town of Spafford will likely increase six or seven percentage points this year, which could result in higher school tax rates for the other towns in the Skaneateles school district.
“This same problem we dealt with last year is out there again,” Dale Bates, Skaneateles assistant superintendent for budget and finance, told the school board at its March 6 meeting during his presentation on the status of the district’s 2012-13 budget.
The current budget based on estimated revenues for the 2012-13 year is $29.2 million, which is an allowable budget increase of nearly $200,000, Bates said.
However, the loss of county, state and federal money to the district makes the numbers more like a $608,000 projected budget increase, which means the district would need to trim $414,781 from the budget, Bates said.
In explaining the new Property Tax Cap imposed by the state, Bates told the board the maximum allowable levy under the new regulations that could be sent to voters and approved by a simple majority vote was $21, 893,510 or a 3.43 percent increase.
This would be 1.43 percent or about $1.2 million above the 2 percent mandated by the state.
“This is a little better than we anticipated earlier, but the board will need to decide if they will use the maximum allowable tax levy of 3.43% or a smaller number,” Bates said.
Bates also told the school board that “real preliminary” numbers from the state’s Office of Real Property Services suggests that the equalization rate for the Town of Spafford could increase to 115 percent this year. Since the other town in the Skaneateles district — Skaneateles, Marcellus, Sennett, Niles and Owasco — are projected to stay at or below 100 percent equalization, Spafford’s increase would mean the other towns will have a higher school tax rate in order to recompense for Spafford’s lowered tax rate.
According to the State Office of Real Property Tax Services, equalization seeks to measure the relationship of locally assessed values to an ever-changing real estate market. At its simplest, an equalization rate is the state’s measure of a municipality’s level of assessment. This is the ratio of total assessed value to the municipality’s total market value.
An equalization rate of 100 means that the municipality is assessing property at 100 percent of market value; an equalization rate of greater than 100 means that the total assessed value for the municipality is greater than its total market value.
The Real Property Tax Law requires that annual state equalization rates be established for each county, city, town and village. Equalization rates are calculated each year to reflect that year’s assessment roll and current market values for each assessing unit.
In order for a school district to fairly distribute its property tax levy (the total amount of school taxes to be collected), the levy needs to be divided in proportion to the total market value of each municipal segment. This is intended to allow for an equitable distribution of taxes based upon the market value of each municipality or segment.
If Spafford’s equalization rate were to be at 100 percent, then the tax levy would fall equally between all the towns within the school district. At 115 percent, a portion of the tax levy that was expected to be paid by Spafford shifts to Skaneateles and the other towns in the district.
The impact of Spafford having a 115 percent equalization rate would mean that the Skaneateles tax rate would increase by 3.74 percent, Spafford’s would decrease by .68 percent, and the other towns in the school district would see increased rates of about 5.8 percent, Bates said.
“This certainly hurts us, and is pushing the tax burden unfairly to other towns,” said district Superintendent Phil D’Angelo.
Last year, Spafford’s equalization rate increased to 109 percent, which would have caused a 5.49 percent tax rate increase for Skaneateles and other towns in the district, while creating a 3.5 percent tax rate decrease for Spafford.
To avoid these numbers, the school board voted to shift $325,000 from the district’s reserve fund to the revenue fund and accepting a “compromise” tax rate increase of 3.9 percent.
School board member Michael Card, who took issue with the tax increase last year, also took issue with the numbers at the March 6 meeting.
“3.43 percent is too high,” Card said. “The target should be zero.”
Bates responded that 0 percent increase would mean a $1.2 million cut in the budget.
“Two weeks from tonight I can give you a full budget run, with the anticipated reductions necessary for the different levels of tax rates,” Bates said.
To view the district’s 2012-13 budget information currently posted online, go to skanschools.org/Budget.
Jason Emerson is editor of the Skaneateles Press. He can be reached at [email protected].
