Potsdam councilor talks assessments, tax rates
Monday, June 3, 2013 - 3:40 pm

To the Editor:

I would like to try to explain the relationship between budgets, tax rates, and assessed values. Ms. Haggett-Sloan sent a letter to NCTW.

I think she is referring to comments I made at the last Town Board Meeting when I stated that increased assessments do not necessarily mean increased taxes.

Let me explain again….maybe some different words can convey the idea more clearly.

Towns, villages, schools, and counties all raise revenue through taxes on property. First budgets are drawn up by each of these entities.

Whatever is not funded from other sources (grants, federal programs, state aid, etc.) is the tax levy. This money is raised from tax on property.

The tax rate, which is given as a rate per thousand, is determined by dividing the tax levy, or the money needed for the budget, into the taxable base (all the assessed properties that are not tax-exempt).

So….if the current tax rate for one of the entities mentioned above is $10 per thousand and I own a property assessed at $100,000, then I would pay $1,000 in taxes. If my assessment doubles, and everyone else’s doubles as well, then the tax rate would be $5 per thousand and I would still pay $1,000 on my now $200,000 property. If assessments are cut in half, and everyone else’s is also cut in half, then the rate would be $20 per thousand and I would still pay $1,000 on my $50,000 property. The rate depends on how much money needs to be raised to cover the tax levy portion of a budget.

The reason some people will pay more after a revaluation is because someone else is paying less. One property is valued more than someone else’s….values are redistributed.

One way for everyone to pay less tax is to reduce the tax levy part of budgets. The Town of Potsdam has worked diligently in the past few years to prevent the tax levy from going up. A second way to reduce taxes for everyone is to add new taxable properties to the tax base.

I am giving an honest answer, as requested by Ms. Haggett-Sloan, to the best of my understanding of all this. I have talked to several superintendents of schools to make sure I understand this correctly. I have asked town and village officials as well. I have read other people’s explanations to try to find the easiest way to explain the relationship of tax levies, tax rates, and assessed values of property.

Rose Rivezzi, Potsdam