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Opinion
What you need to know for 01/22/2017

Of taxes, tax rates and fees in Schenectady

Of taxes, tax rates and fees in Schenectady

Just to be clear on this, taxes and fees on the average single-family house in Schenectady will go u

Just to be clear on this, taxes and fees on the average single-family house in Schenectady will go up 4.6 percent under the budget proposed by Acting Mayor Gary McCarthy.

The advertised 1.89 percent increase is for taxes only, which is not the whole picture, since City Hall breaks out the cost of garbage collection, as well as water and sewer services, and charges for those things separately.

Property taxes, strictly speaking, will go up from $1,309 to $1,334 for the average house assessed at $100,000. The garbage fee will go from $165 to $189, the sewer fee will go from $307.21 to $330.13, and the water fee will go from $234.48 to $255.12, making for an increase in the total hit from $2,016 to $2,109, in round numbers.

County and school taxes are of course separate.

The magnitude of the hit varies from house to house. Property taxes are a percentage of assessed value, so the more valuable your house, the more you pay. But fees are flat for garbage collection — every single-family house pays the same, every two-family house pays double, and so on, while water and sewer fees depend on the number of water fixtures and the extent of a house’s frontage, not on the property’s assessed value. So you can’t say what the percentage increase and taxes and fees will be across the board. The 4.6 percent is only for a single-family house worth $100,000.

For a more valuable house the percentage will be smaller, the fees being more or less flat, and for a cheaper house, it will be greater, which is why such fees are often called regressive. They hit poorer people harder. A $189 garbage-collection fee is a bigger burden to a poor family than to a rich family.

One advantage of fees, McCarthy points out, is that unlike taxes they get collected from nonprofit organizations like churches and colleges as well as from homeowners and businesses.

There is no STAR exemption on them, so older people do not get a break, nor do veterans.

Roger Hull, running for mayor as the candidate of his own newly formed Alliance Party, and endorsed by the Republican Party, is vexed not only by what he regards as the deception of the advertised 1.89 percent tax increase but also by the city spending down its reserve funds in order to balance the budget, which it has been doing for some years now.

McCarthy proposes balancing the new $79.2 million budget by taking $4.8 million from reserves, after the city already took $6.1 million to balance this year’s budget and $7.3 million to balance last year’s.

It’s the last time such a thing will be possible, since by the end of next year the pot of unrestricted reserve money will be down to about $1 million, or practically nothing.

Hull, former president of Union College, says it’s necessary to look farther ahead. “What is the three- or four- or five-year budget?” he asks. “This city will have no money next year.”

McCarthy says the city does have other reserves, earmarked for specific purposes like buying new fire engines or removing large amounts of snow, and he says what’s happening now is that Schenectady is weaning itself, as he puts it, from its dependence on the sale of tax liens.

The city’s finance director, Izmat Alam, says the city will still have $8.4 million in reserve funds earmarked for specific purposes, in addition to the leftover $1 million. Still not much for budget purposes.

Among the problems the city must deal with is the rising cost of those cushy pensions that are the envy of private-sector drones like me. The city’s contribution to the pension fund for the coming year will be a fat $5.4 million, a 25 percent increase over this year’s $4.3 million.

And it must meet these various burdens while keeping an eye out for the new 2 percent tax cap, which is not exactly airtight but is still a consideration. (It’s not airtight because the Schenectady City Council, which is one-party Democratic to begin with, would simply need five votes out of seven rather than four out of seven to exceed the cap.)

Do not go thinking, however, that the ever-wily McCarthy saw to a tax increase of 1.89 percent so as to just barely slip in under the 2 percent cap. The cap applies to the total amount raised by property taxes, which is to say the tax levy, and Schenectady’s tax levy is going up a parsimonious 0.22 percent, so there’s room to spare in that department.

The 1.89 percent increase applies to the tax rate.

Why do you have to increase the rate 1.89 percent to in order to raise just 0.22 percent more money?

Because the total taxable value of property in the city is declining.

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