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Are city resident property taxes really lower now than 8 years ago?

I received an email sent to the various news outlets on Tuesday from Alderman Pat Russo, hours before the upcoming council meeting where crucial decisions on overriding the tax cap and official approval of changes to the mayor’s budget would be made. Attached was a chart that took an angle on the proposed tax and user fee increase that I had not heard anyone express so far.

You can view the chart here. Russo passed out copies to members of the public before the meeting, and spoke about it after the public hearing on the budget.

Basically, he shows that even with the proposed 8% increase in property taxes and 9.79% increase in user fees, which are the highest in at least ten years, total property taxes and fees for city residents, including county and school district taxes, would actually be lower than what residents were paying in 2011 through 2015.

But how can that be correct? To my recollection, county and city taxes have generally been increasing by small amounts each year. The school district has been up and down and sometimes flat.

I spot checked some of the values in the chart and found no errors, using information from the Greater Amsterdam School District and Montgomery County websites.

But looking at one specific case as an example – in Montgomery County’s 2019 budget, the tax levy increased by 1.98%. So how did the city’s tax rate decrease in the same year?

The answer lies in a concept called the equalization rate. Since both the school district and county encompass multiple municipalities, each one has it’s own equalization rate which is based on it’s most current assessed value. This equalization rate results in different county and school tax rates for the various municipalities.

You can check this link to see how the tax rates have changed for the municipalities in Montgomery County over the years.

According to Russo, the city has not had a complete re-assessment of city properties in twenty years. Michael Chiara, who attended the meeting and who was involved with the assessment process years ago, said it was done in 2014. Digging into that matter is a topic for another article, but suffice to say, the county tax rate for city residents has generally declined while other towns have gone mostly up. So that’s how it’s possible for our rate to go down during a year with a tax levy increase – because overall, the share that the other municipalities are paying is increasing.

At the meeting, Russo also went on the compare the cost of garbage removal, quoting a friend from a neighboring town who had to pay over $700 per year for one large trash container, compared to the city rate of $269 for single family home per year. He also compared to high cost of septic tank maintenance compared to the city’s rate of $303 per year for a single family home.

So is Russo correct? It looks like it. However, does it justify the tax and user fee increases?

For me the only justification for the tax increase is to reverse the trend of growing fund balance deficits. It is necessary to keep the city from running out of money while maintaining essential services. In my opinion, making cuts to the police or fire departments or closing down city parks would have a far greater negative impact on our quality of life than the modest tax increase that this budget creates.

The large increase in user fees is primarily due to extra contingency funds added to the sewer fund. Because of the city’s financial situation, borrowing in the coming year will be difficult and could incur higher interest rates. It was because of this that the council added extra funds for essential equipment repairs and replacement needed for the sewer system which were requested by City Engineer, so that the city can pay cash for these projects rather than borrow more money.

So while Russo’s analysis offers some comfort to worried tax payers, to me the increases are justified and essential for the survival of the city regardless of whether my other taxes go up or down.

For those in attendance who were audibly opposed to the tax increase, Russo’s analysis didn’t seem to change their mind and judging from the comments I heard, was generally regarded as a white-wash of the situation.

However, I think it’s worth pointing out that no one on either side of the issue is happy that taxes and fees are going up this much.

Summarizing the situation, Russo concluded, “Now that we know what our problems are in the city with our $8.34 million deficit within our budgets, we have to address that situation. I don’t really want to raise taxes, that’s the worst thing that I could possibly want to do because I’m a homeowner in the city too.”

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About Tim Becker

Tim Becker is the owner of AnthemWebsites.com LLC which publishes The Compass. He serves as both editor and a writer.

2 Responses to Are city resident property taxes really lower now than 8 years ago?

  1. Personally I’m not happy with how much the user fees are. I try to be a low waste person in general. I calculated that 43% of my city tax bill last year was for user fees. I’ve gone weeks without throwing out a garbage bag, have low water use fixtures, and repair leaks as soon as detected. All the user fees can be removed from our taxes. Water/sewer services should be billed per usage same as the gas/electric bill. You pay a minimum set fee to cover administrative overhead called a service fee. Then the rest of the bill is commensurate with usage. A water meter measures the usage and can be read remotely. Garbage can be regulated like other cities where you have to buy designated/marked trash bags. The cost of the service would be built into the price. Recycling is generally free. Either the service pays for itself in the value of the recycled materials or it is supplemented by the cost of the garbage bags.

    The latest Amsterdam water report indicated that the average usage per person is 296 gallons per day. The EPA website indicates that the average US household (2.5 persons) uses that much. We’re using 250% of the average US water usage. It’s really no surprise when there’s no incentive for conservation. We are paying for that water. It costs money to process and make safe drinking water. I see people watering lawns with what is drinking water. It’s wasteful but I only care because I’m paying for that extra 150% usage. I’d say waste all the water you want as long as your the one actually paying for it. I don’t know if this next idea would be feasible or not. Amsterdam already sells some of the water supply. Right now we sell about 130.2 Million or 174,000 units per year to the town of Amsterdam and Florida. That means we must be charging about $6.9 per unit to those municipalities. Well imagine how much more we could sell if city residents cut their usage down to the US average of 120 gallons per person per day. That be 3.27 Million gallons of water to resell per day or 4,376 units (100 cu-ft). The city commercial rate on that is $4.52 per unit so that puts the daily value of that water just shy of $20,000 per day for the city. We’re charging a rate about 50% higher to the municipalities. If we could resell that daily $20,000 worth of water for $30,000 that leaves $10,000/day in profit for the water department. That comes out to $3.65 million dollars per year. While this is hypothetical and ignoring any infrastructure costs of moving the water somewhere for resell…it does make you wonder what benefit the city and taxpayers could reap from that $3.65 million dollars per year of hypothetical profit. I’d love to see the thing (water) that brought Amsterdam into existence continue to help it thrive.

    • AvatarTim Becker says:

      I’d be with you on the water except that I don’t think that lack of capacity is holding us back right now. I might be wrong, but I’ve never heard it come up as an issue when officials have talked about extending water lines further than they are. In order to sell more, we have to have new customers – which I expect will happen in time if the Town of Florida and Town of Amsterdam continue to bring in new businesses as they have. The other issue is someone has to pay for the water lines to be extended, and that has been a point of contention in the past (it’s a moot point now, but the now-defunct Concordia project wanted the city to pay up front to build the water lines, then pay it back via an ad-velorum tax).

      So right now, unfortunately it doesn’t make sense to me to roll out water meters to the entire city. No doubt, people would use less, but without new customers ready to use the excess, revenue would drop and we’d just have to raise water rates and/or taxes to make up the loss in revenue.

      I think, however, any individual resident who wants to pay to install their own water and/or sewer meter should be able to do so and get billed on their actual use if they think it will pay off long-term. That way they will pay less and us families who use more will pay a little more for our flat rate, which is how it should be 🙂 Same with garbage – if individuals want to haul their own to the dump and pay the fee directly, they could cancel their city sanitation fee. This would be a way forward for individuals to lower their own fees.

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