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Montgomery County 2020 budget shifts tax burden to Amsterdam and Florida

Montgomery County 2020 budget shifts tax burden to Amsterdam and Florida

Falling equalization rates lead to higher taxation for some municipalities
Montgomery County 2020 budget shifts tax burden to Amsterdam and Florida
County Executive Matt Ossenfort delivers the 2019 Montgomery County State of the County Address at The Sentinel of Amsterdam.
Photographer: Erica Miller / Gazette Photographer

Property owners in the city of Amsterdam and the towns of Canajoharie, Florida, Glen, Mohawk and St. Johnsville could shoulder the entire 4.9 percent county property tax increase County Executive Matt Ossenfort proposes in his 2020 spending plan of $119.1 million.

While Ossenfort’s budget proposal would raise the county’s property taxes levied against the city and the county’s 10 towns, to $30.6 million, up $1.45 million from $29.2 million for 2019, tax rates in seven of those 11 municipalities will collectively decrease by $1.61 million.

County Treasurer Shawn Bowerman said that changes to the equalization rates for the municipalities in Montgomery County, which are maintained by local assessors, have caused the county’s tax burden to be shifted, with the city of Amsterdam and the towns of Canajoharie, Florida, Glen, Mohawk and St. Johnsville paying for all of the proposed tax increase plus an additional $161,499 stripped off the other towns’ county tax liability.

“The county has nothing to do with those equalization rates. I know it’s not popular to say it, but this wouldn’t be happening if we had countywide assessing,” Bowerman said.

Bowerman said the county’s tax levy is apportioned to municipalities based on the total full value of property in each municipality, as determined by the state when the New York State Office of Real Property sets equalization rates. Equalization rates are meant to measure and equalize the gap between how much a piece of property is assessed for and how much its actually worth for tax purposes. Equalization rates are determined by comparing the assessed value of land and the actual sale price of real estate within a municipality.

When a municipality’s equalization rates fall, both its portion of the county tax burden and its tax rate almost always go up.

While the town of Florida is the only municipality in which property owners will collectively pay more in county taxes, $3.68 million, up $725,259 from 2019, they will pay at a lower tax rate per thousand dollars of assessed value, $12.02, down 1.34 percent. Florida’s unique situation is caused by $60 million being added to both the state-set full value of its property, $306.41 million, and its total taxable assessed value, which is also $306.41 million, because the town has a 100 percent equalization rate.

Ossenfort said the swing in Florida is due to the end of a Payment in Lieu of Taxes agreement for the Target Distribution Center. He said that while Target had been paying approximately $788,000 through the PILOT agreement to Montgomery County, its property will now be taxed at full value. He said Montgomery County was given a “growth factor” exemption as part of New York State’s complex property tax cap formula as a result of the loss of the Target PILOT payment from county revenues.

“Usually you will see property tax caps of about 2 percent, but this year Montgomery County’s tax cap is 5.29 percent. Now my budget comes in at about 4.97 percent [levy increase], which is about 0.3 percent under the cap, which is about $95,000 under the cap,” he said. “Next year, if we’re to be Nostradamus so to speak about next year, we’re predicting a very low tax cap, so we’re really trying to be mindful about this year.”

In the city of Amsterdam, the tax increase situation is almost the opposite to that in the town of Florida. New York state has estimated Amsterdam’s full property value to have jumped $51.32 million from $447.23 million to $498.55 million. However, because the city does not have a 100 percent equalization rate, the total city assessed value actually dropped year-over-year by $3.08 million, from $335.42 million in 2019 to $332.38 million for 2020.

Mayor Michael Villa said the city is essentially being punished for positive economic development.

“It’s like everything we do, it’s like two steps forward and five steps backward in terms of we don’t get a break,” Villa said.

The gap between the sale price of land and its assessed value has dropped the city’s equalization rate from 75 percent in 2019 to 66.67 for 2020. The county tax levy for city property owners would collectively increase $534,533, to $5.99 million under the proposed budget.

“If every municipality was at 100 percent equalization rate then everyone would see the same 4.9 percent tax levy increase, but because they’re not, it shifts,” Bowerman said.

Bowerman said its difficult to tease out who is hurt when a municipality’s equalization rate drops. He said some property owners are likely being overtaxed, while others are being undertaxed.

Under the proposed budget plan the city’s tax rate would increase 8.7 percent to $18.12 per thousand dollars of assessed value, up from $16.66 for 2019.

The tax increase for the other municipalities in Ossenfort’s budget plays out like this: u Property owners in the town of Canajoharie will pay $2.38 million in county taxes, up $104,648, and receive a 5.08 percent rate increase, $12.81 dollars per thousand dollars of assessed value, up from $12.19 in 2019. The town’s equalization rate has dropped from 100 percent in 2019 to 93.87 percent. u In the town of Glen the collective county property tax burden would increase $65,506 to $1.91 million, the county tax rate per thousand dollars of assessed value would increase to $21.10 from $20.49 in 2019, a rate hike of 2.96 percent. Glen’s equalization rate has fallen to 57 percent, down from 59.5 percent in 2019. u In the town of Mohawk the county tax levy will increase by $137,287, to $2.71 million, and the county tax rate would go up by 5.33 percent, from $12.41 per thousand dollars of assessed value to $13.07. Mohawk’s equalization rate has fallen from 98.24 percent in 2019 to 92 percent for 2020. u The town of St. Johnsville’s county tax levy is set to increase by $13,651 to $1.17 million, and the county tax rate would increase 1.72 percent from $36.96 per thousand dollars to $37.60. St. Johnsville’s equalization rate has fallen from 33 percent in 2019 to 32 percent in 2020.

If the budget is approved the five municipalities where the county tax levy portion is set to increase would go from paying 55.67 percent of Montgomery County’s tax levy to paying 58.29 percent for 2020.

Properties in these towns would collectively pay less in county tax levy and receive a county tax rate cut: the town of Amsterdam, $84,687 levy cut, 1.92 percent tax rate cut; Charleston, $12,135 levy cut, 1.34 percent tax rate cut; Minden, $22,081 levy cut, 1.38 percent tax rate cut; Palatine, $30,726 levy cut, 1.35 tax rate cut, and Root, $11,872 levy cut and 1.34 percent rate cut.

While spending for Montgomery County’s budget is projected to increase by $2.6 million compared to 2019, much of the increase is offset by additional state revenues and a $1.7 million projected increase to the county’s anticipated sales tax revenues, bringing the sales tax projection to $30.5 million.

Ossenfort said one positive development for the city of Amsterdam is that it will see an increase in its share of the county’s sales tax revenue if the 2020 sales tax revenues prove accurate.

Ossenfort said he has budgeted $2.9 million in spending from the county’s approximately $5 million in fund balance, its reserve of unspent tax revenues. He said his budgeted fund balance spending is down $800,000 from 2019.

“We’re trying to get our budget back in balance. We’re about to close out our books from last year, and if you look at what we appropriated in fund balance — we budgeted $3.8 million but only used about $900,000 — which shows our budget is coming back into balance, but we’ve still got a ways to go. So, that becomes the debate now in the legislature, are they going to look at lowering the tax rate by lowering the use of fund balance? That’s really where the discussion is right now,” Ossenfort said.

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