Why your Erie County tax bill is higher than you expected
When Edward G. Schneider III received his county property tax bill last month, he didn’t even look.
“I get sick to my stomach,” the Evans resident said.
No one likes paying taxes. But when Erie County’s elected officials touted a 2018 budget that reduced the county tax rate for the fourth year in a row, it was only a matter of time before the angry phone calls from confused taxpayers started coming.
Their question: Why are county tax bills arriving in the mail more costly than a year ago?
The answer’s a bit complicated. But it comes down to this: Property values across Erie County are rising. And the county is collecting $15 million more in property taxes this year.
The result: A majority of Erie County homeowners are seeing higher tax rates and paying more taxes.
“Just because the rate went down doesn’t mean they’re spending less,” said Schneider, a former local taxpayer group member who is among the few who understand – and hate – the complicated formula used to calculate property taxes.
Even county legislators find themselves in a pickle when they attempt to explain county tax bills to their constituents. At last week’s Finance and Management Committee meeting, legislators spent more than 20 minutes with Joseph Maciejewski, director of real property tax services, trying to unravel and explain the strange disconnect.
“They’re opening up their tax bills and they’re confused,” said Barbara Miller-Williams, D-Buffalo, chairwoman of the Finance and Management Committee. “They’re hearing one message, that taxes are stable, taxes are going down, but when they open their bills, they see something different.”
In Buffalo, for instance, the county tax bill climbed by more than 10 percent.
Legislators asked Maciejewski to put together an explainer sheet, or even redesign the tax bill, to make it more clear how property taxes are calculated. But why wait for that?
Getting the basics
First, let’s look at some key numbers. This year, the county will collect $15 million more in property taxes than it did last year. That’s an increase of 5.35 percent, the highest percentage increase in at least a decade. That means people are chipping in more money into that county pot.
How much the county collects in taxes overall is called the “tax levy.” The tax levy is a much better indicator of whether you’ll pay more or less in taxes than the “tax rate.”
A property “tax rate” only reflects the dollar amount in taxes charged for every $1,000 of a property’s assessed value.
When the county executive and legislators talk about a budget that slightly lowered the county tax rate, they refer to the “full value tax rate,” which is $4.94, down 1 cent from last year. The full value tax rate is the rate the county would charge property owners, assuming all homes are assessed at what they are really worth.
But few properties have assessments that match their true market values.
Story continues after tax rate chart:
Many local governments do not reassess their residents’ properties on a regular basis because it’s costly, time consuming and often politically unpopular. In most communities, homes are worth more, and sell for more, than what they are assessed at by their city or town.
The state compensates for the gap between a property’s assessed value and its estimated true value by employing an “equalization rate.” The City of Buffalo has not reassessed its properties in many years. But during those years, city property values overall have gone up, as evidenced by higher home sales prices.
In 2016, Buffalo’s equalization rate was 81 – meaning that based on marketplace data, the state believed the city’s property assessments were at 81 percent of the properties’ actual values.
For 2017, the state dropped the city’s equalization rate to 72. That rate change led to a tax rate hike for all Buffalo homeowners. The city is in the midst of a reassessment process now. Once that is complete, tax rates for city residents will likely fall.
But that doesn’t mean that city property owners will necessarily see a smaller tax bill.
How tax rates mislead
Whenever a community conducts a reassessment of property values, tax rates fall, but many residents still pay the same amount, if not more, in property taxes.
Amherst residents, for instance, saw their county tax rate fall by 10 percent this year. That’s because Amherst properties were reassessed last year based on current market rates, and many residents saw the assessed value of their properties go up.
So the tax rate went down but many individual property assessments went up, leading to higher taxes.
Here’s why: If a property is assessed at $100,000, a $1 tax rate would translate into a $100 property tax bill. If that home is later reassessed to be worth $130,000, a city or town could lower the tax rate to 77 cents and still collect the same amount of money.
To complicate matters further, the county also tacks additional charges onto tax bills for certain community college fees and Erie County Board of Elections operations. This year, to remain under the state-imposed property tax cap, the county is absorbing $3.6 million in community college-related taxes it could have charged to cities and towns next year.
County leaders note that county property taxes remain low, overall, compared with city, town and school tax bills. County Executive Mark C. Poloncarz also regularly points out that new construction is also responsible for bringing in additional property tax revenue.
But that doesn’t make any of this easier to understand.
Chairman Peter Savage, D-Buffalo, one of several legislators who has fielded multiple questions about this year’s tax bill, said, “We need to do a better job of communicating this.”