Why Property Taxes Are All Over the Charts

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http://www.nytimes.com/packages/html/nyreg...APHIC/data.html

November 25, 2006

Why Property Taxes Are All Over the Charts

By FORD FESSENDEN

The New York Times

THE communities of Glen Ridge, Fairfield, Conn., and Great Neck and Pelham in New York have several things in common: first-rate public schools, stately homes on tree-lined streets and municipal amenities like well-groomed parks and fine libraries.

Yet in Fairfield, the owner of a house worth $580,250 — the median sales price in 2005 — paid $6,037 in property taxes, while the owner of a comparably priced home in Glen Ridge paid nearly twice that, an analysis of 2005 property tax and real estate records by The New York Times shows.

The wide variation in property tax bills in communities around the region illustrates how difficult it may be for elected officials, promising to address growing concern about the property tax burden, to come up with quick-fix solutions when there are so many factors driving tax rates up or down.

Take the property tax bills in these four communities, which offer similar advantages to their residents and public school students.

For the residents of Pelham, which includes Pelham Manor and Pelham Village, in Westchester County, the median property tax bill was $17,875 in 2005. The median sale price of a single-family home was $870,000.

In Great Neck, where the school district encompasses nine villages as well as a large unincorporated part of the Town of North Hempstead, the median property tax bill was $9,606. The median sale price of a single-family home sold in 2005 was about the same as Pelham’s: $890,000.

In Glen Ridge, an Essex County town known for its good schools and high taxes, the median property tax bill was $11,306. For single-family homes sold in 2005, the median sale price was $562,000.

Of course, there are obvious reasons property tax bills vary. Wide differences in taxable commercial property, teachers’ salaries and state aid, along with persistent segregation of wealth and poverty and varying concentrations of school-age children, all contribute to the inequities.

“There’s not one property tax problem, there are multiple property tax problems — and some people with no property tax problems,†said James W. Hughes, dean of Rutgers University’s Edward J. Bloustein School of Planning and Public Policy.

Based on 2005 census data, New Jersey has the highest median property tax bill in the country, followed by New Hampshire, Connecticut and New York.

But a look at the national rankings by county shows that Westchester tops the list, followed by Nassau on Long Island, and then Hunterdon, Bergen and Essex in New Jersey.

Gov. Jon S. Corzine and other state leaders are also pushing municipalities to consolidate services and change state education aid formulas, ideas that could scramble the lists of winners and losers. “That’s why property taxes have been Problem One for decades,†Dr. Hughes said. “There’s no painless, easy solution.â€

In New York, Governor-elect Eliot Spitzer said during his campaign that he favored expanding state property tax rebates, including an 80 percent jump for homeowners at or below the median income.

And in Connecticut, although Gov. M. Jodi Rell’s opponent in this fall’s election tried to make residential property taxes an issue, she is focused on another tax cut. Ms. Rell wants to eliminate the personal property tax on large ticket items, like autos.

Across the region, the median tax on a single-family home in 2005 was about 1.5 percent of the home’s market value, according to the analysis, which used data from all three states on real estate sales, along with tax rates, to yield a snapshot of taxes.

The Times analysis calculated the median property tax bills in municipalities in New Jersey and Connecticut and in school districts in New York. The calculations were based on the assessed value of thousands of single-family homes sold in 2005.

The median tax rate for the region was well above the national average, which is under 1 percent, according to census figures. For a home worth $500,000, the regional average is $7,500 and the national average is less than $5,000.

By that calculus, Pelham and Glen Ridge have high tax rates — more than 2 percent of a home’s value — while Fairfield and Great Neck have low tax rates — about 1 percent, the national average.

Homeowners in low-income municipalities and school districts regionwide are generally heavily taxed.

Although state education dollars are usually poured into these communities, the tax burden is crushing on homeowners in places like Trenton and Camden, N.J.; Waterbury, Conn.; and Hempstead and Central Islip, on Long Island. Homes in all of those communities have modest values. In Woodlynne, near Camden, where the median price for homes sold in 2005 was $79,000, the median tax bill was $2,440, a rate of 3 percent.

In Pelham, officials blamed their tax bills on their relative lack of commercial development. “Bronxville has a downtown, so does Larchmont,†said Lorri S. Gorman, the mayor of Pelham Manor, one of two villages that make up the town. “We have two strip malls with a computer shop, a hair salon, a Japanese restaurant and a CVS.â€

Many school districts and municipalities in the region share the problem. Statewide in New York, more than 40 percent of the tax base is commercial, but in the suburbs it is only about 25 percent on average, and it varies considerably, from a low of 6 percent to a high of 60 percent.

Even so, Pelham, which has a tax base that is 20 percent commercial property and a median property tax bill of $17,875, is better off than some other nearby communities. Scarsdale, where the median tax bill of $20,282 is the highest in the region, has a tax base that is just 6 percent commercial.

In Great Neck, where more than 40 percent of the property is commercial, the median property tax bill is $9,606. And White Plains, which has a large downtown shopping district in Westchester, and Carle Place, with acres of retail development north of the Roosevelt Field shopping mall on Long Island, have tax bases that are at least 60 percent commercial. Their median tax bills were $7,500 and $6,000, respectively.

“Some towns are winners because their geographic location gives them the lucrative ratables,†Dr. Hughes said, referring to taxable commercial properties. “But then other municipalities close by get the housing growth. It argues for some form of regionalization and tax sharing, but that’s impossible. The towns that don’t have ratables would improve their situation. But those that do have them would lose, and they will fight that to the death.â€

In Glen Ridge, residents insist their problem is something else entirely.

“Our problems lie with how the state funds education,†said Jackie Yustein, who has lived in Glen Ridge for 30 years but says she does not know how much longer she can remain.

“Our taxes are pushing $25,000,†said Ms. Yustein, the director of community health services for Essex County. “We love our home, we love our community. But we feel like we’re being pushed out.â€

Carl Bergmanson, the mayor, agreed: “Ratables wouldn’t help us that much, and they aren’t the reason our taxes are high. The reason is simple: 4 percent state aid.â€

Although it can be hard to pin down, the variation in taxes also has something to do with the willingness and ability of a community to tax itself, especially for its schools.

“More stock than ever is put in education, and on the perceived value of schools in justifying high home prices,†said Edmund J. McMahon, director of the Empire Center for New York State Policy, a conservative fiscal policy research group. “Without even being able to articulate it, suburban home buyers understand this is part of the price they are paying for a house — so, in a perverse way, high school taxes are linked to high home values.â€

In Pelham, taxpayers complain about the taxes, but they don’t do much about them: The last time voters defeated a school budget was in 1990.

“It’s important to us to keep a high level of educational commitment,†said John Brice, the board president in the Pelham Union Free School District. He said the district had kept costs down — per-pupil spending was 38th out of 40 districts in Westchester County in 2004.

But even at that rate, Pelham’s spending is high compared with the rest of the region, and that is another variable that drives widely divergent property taxes.

School spending per pupil varies from $8,000 to more than $25,000 in districts across the region. The national average was $8,600 per pupil in 2003, according to the most recent data available from the National Center for Education Statistics.

New York’s school spending tends to be higher than that in other states.

Pelham’s per-pupil school spending amounted to $14,203 in 2005, and in Great Neck it was $20,669, compared with $12,552 in Fairfield and $11,123 in Glen Ridge, according to the statistics center.

Part of the reason is that teachers cost a lot more in New York than they do in New Jersey and Connecticut.

School districts in New York must pay the cost of teacher pensions, a responsibility that grew substantially in the years after poor stock market returns in 2000 and 2001. In New Jersey and Connecticut, the state pays for teachers’ pensions.

Teachers also make substantially more money in New York suburbs than they do in New Jersey or Connecticut. In Fairfield, the average salary for a teacher was $64,760 in 2005; in Glen Ridge, it was $54,608. But on average, teachers made $70,993 in Pelham and $80,276 in Great Neck.

School expenses are not the only costs that vary, however. Balkanized government also helps explain higher tax bills in some places, with layers of expensive local government adding to the cost.

The tax rates for county and municipal government range from a few hundred to several thousand dollars per home.

New Jersey’s cities, with high infrastructure costs for streets and the police, tend to tax homeowners the most per dollar of home value, but many of the region’s small municipalities also have high costs. With towns, counties, villages and fire districts all levying separate taxes in some places, the numbers add up.

Fairfield’s municipal costs are low, less than one-half of 1 percent of home value. Officials there said part of the savings came from the abolition of county government in Connecticut.

“There’s virtually no remainder of county government, and so no cost,†said Paul H. Hiller, the chief financial officer for Fairfield. “There’s a lot of duplication in Westchester, with village and town and county layers, and you’ve built in some redundancy. If you did a management study for local government like they do in business school, you’d never split things up like this.â€

[tunaFish 0]

Granted the taxes are extremely high in most places. That's due to the school taxes more than anything else.

You have to look at owning a house as an investment and know that down the line you will profit from the sale of the house.

In Valhalla, my house has doubled in market value from when I bought it a few years back. Its better than paying a landlord and making him/her rich.

Consider the savings ( how small) on the STAR rebate and also a nice little deduction if you are a combat vet. It does add up.

So, its an option that we have. Its a dog eat dog world out there.

Edited November 26, 2006 by tunaFish