Taxes

2010-11 Budget Meeting Four, Tuesday March 2, 2010

The most significant change discussed was in a dental/vision insurance expense. Initially thought to require a $600K increase to the budget, it transformed into a $549K cut. Most other items concerned changes which the BOE did not seem well equipped to evaluate in terms of their impact on education achievement. One Board member characterized what the BOE has been doing as "micro-managing the budget."

The utility tax was mentioned. The current budget does not include utility tax revenue (but if you reside within the Newburgh School District you are paying a utility tax to the School District right now, whether you know it or not). Click through for voluminous meeting notes.

Future meeetings are scheduled for March 11, 18, and 25 at 5pm.

Backfill: September 29 Newburgh Board of Education Meeting

State Senator Larkin, and several other visitors were at this meeting. A brief on the district financial audit and a presentation on tax issues were given. Two public comments raised issues at Temple Hill.

See details in the long version.

For additional details, please see, the official minutes of the September 29, 2009 meeting from the Newburgh School District Clerk. The minutes are very good.

Follow Up on Tax Rates

The recent Times Herald-Record article about school taxes implied a dramatic increase in tax for the City of Newburgh. However, that is not really what taxpayers are likely to experience. At the September 29 Newburgh Board of Education meeting there was a presentation by John Wolham of the New York State Office of Real Property. He explained how the tax rates are computed for different municipalities based on assessed values and an equalization rate.

His presentation included numbers showing the actual amount of the Newburgh School District tax levy assigned to different towns.

Town 2008-2009 tax levy amt 2009-2010 tax levy amt % Change
Cornwall 18,033 18,468 2.40%
City Newburgh 24,356,567 22,971,740 -5.7%
Town Newburgh 43,055,802 42,406,197 -1.5%
Town New Windsor 27,236,155 29,330,213 7.7%

So what threw the Record's computations so far off?

The City of Newburgh went through a property reassessment last year and the total "Taxable assessed value" of property subject to school tax dropped significantly, from $1.58 billion to $1.32 billion. So a property valued at $200k last year was most likely to have been assessed at a lower value this year. At the Newburgh Board of Ed meeting, Steve Reulke, the assessor for the City of Newburgh, commented that the average decline was around 17%.

Taxes Ouch

Today the Times Herald-Record has an article with data about the actual changes in tax rates. For the full article, please see Homeowners face mixed bag in school Taxes by Paul Brooks and Meghan E. Murphy.

The printed article does not include the rates from all four of the municipalities which pay Newburgh School District Taxes. In an Excel spreadsheet available from the THR site there is more complete data.

The THRecord explains their data this way: "The numbers in the accompanying chart are for a $200,000 property after applying property assessments and district tax rates for the respective town and district. Tax bills for other assessments will vary, and other factors such as exemptions are excluded."

Here is a summary of the Newburgh School District data:

Town 2008-2009 tax 2009-2010 tax % Change
Cornwall 3,195.49 3,272.16 2.40%
City of Newburgh 3,195.52 3,608.94 12.94%
Newburgh 3,517.03 3,441.60 -2.14%
New Windsor 3,195.50 3,439.31 7.63%

If you find this interesting, you should review this letter from the NECSD Assistant Superintendent of Finance, which was posted to the Newburgh School District web site earlier this month. Key points:

The change in your taxes is a result of either a change in your property's assessed value, a change in the New York State Office of Real Property Services (NYSORPS) equalization rate or, a reduction in your STAR exemption amount. None of these factors are controlled by the School District.

[...]

There will be a public presentation by NYSORPS at the regularly scheduled Board of Education meeting on Tuesday, September 29, 2009 at 7:00 PM to explain the taxation process.

If you have questions regarding your assessed values, please contact your local Assessor's office. For questions regarding the equalization rates, please contact NYORPS. For questions regarding your STAR exemption, please contact your local legislator.

THR on Newburgh School District Utility Tax

The Times-Herald Record covers the the new utility tax in this article today: New utility tax will help fund Newurgh schools.

The article covers the usual bases. There is this piece of new information:

The state has already warned the district that school aid will remain flat for the next three years. Ever-increasing expenses mean finding new revenue or cutting expenses, and they've already slashed expenses, Saturnelli said.

If state aid is expected to remain flat for three years that is quite a looming crisis. State aid covers approximately half of the Newburgh School District's approximately $240m budget. Take a look at what the district spends the most on. Three out of the top four items (teacher salaries) are contractually required to increase by around %4 each year. The fourth item is Medical Insurance--it will probably go up 10% each year.

Intrepid Citizen Polls Voters

Here's an interesting letter from the Mid Hudson Times, Wednesday, June 3, 2009, page 9. I give Mr. Weiss a lot of credit for making the effort to find out about public opinions and for encouraging greater public involvement with the Newburgh School District. Thank you Mr. Weiss.

Letters: Polling Survey

On School Board election day, my son Ian and I briefly interviewed 102 voters as they exited four polling places located in the towns of Newburgh and New Windsor and the City of Newburgh. Although it would be ludicrous to claim scientific accuracy, I do believe the results of our polling are meaningful. There was a surprisingly high level of participation in the survey with only 15 voters declining to answer our questions. The vast majority seemed genuinely grateful for the opportunity to share their thoughts, many offering opinions and providing details about their voting experience that extended far beyond the narrow scope of the survey.

...

Do read the full letter at this link.

Mid Hudson Times on our new utility tax

I don't think the impact of the utility tax on businesses is well understood.
From the June 3, 2009 Mid Hudson Times...

More school taxes
Newburgh school district approves utility tax

By JESSICA McALEESE

Newburgh Enlarged City School District officials may have managed to keep next year's budget increase relatively low, but come Sept. 1 they will turn to a new source for generating revenue for the district.

Last week, the Board of Education authorized the establishment of a utility tax as permitted by New York State Tax Law 1212. According to the law, small city school districts may impose a utility tax of up to 3 percent on certain services such as gas, electricity and telephone.

Newburgh Assistant Superintendent for Finance Michael Pacella explained that the district decided to administer the 3 percent tax with help from the New York State Department of Taxation and Finance as a way to offset the anticipated zero percent state aid increase next year.

"We're trying to plan ahead for next year," he said. "We're not anticipating enough revenue for the district."

According to Pacella, the tax will also help relieve some of the burden on homeowners who are paying property taxes by broadening the source revenue. And while some may not agree, he said that establishing a "use tax" (payment is based on how much of a service is used) is something that the district is more than entitled to do.

"There are lots of school districts throughout the state who are doing this," Pacella said. "The Middletown School District has imposed a utility tax since the 1960s. The City of Newburgh instituted one in 1988. It's no different for us."

But for Newburgh residents like Bill and Sandra Wiseman, the difference is huge.

"As a business owner, that tax is going to be passed along to the consumer," said Bill, addressing the school board before the decision had been made. "It's a tough burden to bear."

Sandra spoke next, urging school officials and members of the board to think hard before imposing yet another tax on local residents.

"We are struggling to pay our taxes as it is," she said. "Tell us how we're supposed to do this. It's unfair."

"Nobody likes taxes," Pacella said in response. "But my job is to look for ways to fund the education system in the best way possible. If the state's not going to give us money we have to get it someplace else; we either have to cut expenses or collect money from the taxpayers."

The district has already completed the first option, Pacella said. Now it's time to turn to the second.

Utility Tax Passes

At the May 28 Newburgh Schools Board of Ed Meeting the Utility Tax proposition was passed by the Board of Education. Two board members voted no: I believe that the No votes were Resch and Woodhull.

This means there will be a 3% tax on utilities for residents of the Newburgh School district. This is likely to show up on utility bills in October or so. Noone seems really certain how this will look on bills, or precisely which companies will be collecting the taxes.

For other items at the meeting see May 28 meeting notes.

Come Learn About the New Tax

This evening, Thursday May 28, there will be a "Public Hearing on Utility Tax - 7:15 p.m.". That's just before the regularly scheduled Newburgh School District Board of Ed meeting at 7:30 p.m. I guess they're not expecting many questions.

Here's some background information.

Utility Tax An Option For Newburgh Schools?

The New York State DOE publishes a very nice primer on State Aid to schools.

The 2008 State Aid to Schools Primer says at page 14:

Small city school districts may also impose a utility tax, not to exceed 3 percent.

The Newburgh Enlarged City School District is a "small city school district" and does not yet impose a utility tax.

What does a utility tax look like? It looks something like this.

New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau

ODERICK G. W. CHU, COMMISSIONER GABRIEL B. DiCERBO, DEPUTY COMMISSIONER FRANK J. PUCCIA, DIRECTOR

TP-8 (3/83) CITY OF NEWBURGH IMPOSES A 3% SALES AND USE TAX ON UTILITIES AND UTILITY SERVICES

Effective June 1, 1988, a 3% sales and use tax is imposed by the City of Newburgh on sales of consumer utilities and utility services. For these purposes, the terms "consumer utilities" and "utility services" mean:

- gas, electricity, refrigeration and steam;

- telephony and telegraphy (except interstate and international telephony and telegraphy);

- gas, electric, refrigeration and steam service; and

- telephone and telegraph service (except interstate and international telephone and telegraph service).

Beginning June 1, 1988, all consumer utilities and utility services sold within the City of Newburgh, unless sold for resale, are subject to the tax imposed by the city except as provided in the transitional provisions discussed later.

The above is an excerpt from the announcement when the City of Newburgh imposed a utility tax on City residents. Several New York State school districts impose the same kind of tax. The New Rochelle School District for instance, books about $3.8 million in revenue through a utility tax (see the Revenue chart on page 5).

Does instituting a utility tax require voter approval?

Here's an opinion which says no.

Property Tax Report Card Data

Here is proposed budget and tax data for the Newburgh School District, excerpted from 2008 Property Tax Report Card Data (Part I - Budget, Levy and Enrollment):

District Name 2007-2008 Budgeted Spending 2008-2009 Budgeted Spending Percent Change 2007-2008 School Tax Levy 2008-2009 School Tax Levy Percent Change 2007-2008 School Enrollment 2008-2009 School Enrollment Percent Change
NEWBURGH 203,711,965 227,777,046 11.81 91,562,209 96,067,729 4.92 12,163 12,230 0.55

There are lots of caveats regarding this data. It is self-reported and neither audited nor verified. For full info see the disclaimer at the NYSED site.

Public Participation in Budget Planning

On May 20 New York State Schools hold budget votes and elections for open Board of Education positions.

Unlike the Newburgh Enlarged Central School District several nearby districts have involved the public in budget planning and have presented information to the public well in advance of submitting a budget to be voted upon.

The Cornwall Central School District established a School Budget Advsory Committee "to solicit community feedback regarding the budget process". They have held public meetings with well detailed minutes.

The Enlarged City School District of Middletown has put the slides from three budget presentations from February and March online.

The Washingtonville Central School District has their proposed 2008-09 budget online in both summary and line item formats as well as two budget presentations from February and one from March.

This may be a tough year to get voter approval of budgets. Getting the public involved, allowing and answering questions, and providing information freely probably improve the likelihood of approval.

Star Tax Refund Amounts

The New York State Department of Tax and Finance has information about the 2007 Middle Class STAR Rebate Program.

Here are the expected rebate amounts for Newburgh School District taxpayers as reported by that site:

2005 Combined Incomes for all Resident Property Owners and their Spouses
  Up to $120k $120+ to $175k $175+ to $250k Enhanced
City of Newburgh refund amt $573.55 $430.16 $286.78 $452.40
Town of Cornwall refund amt $450.32 $337.74 $225.16 $354.93
Town of New Windsor refund amt $499.54 $374.65 $249.77 $393.54
Town of Newburgh refund amt $542.31 $406.73 $271.16 $427.85

Property tax payers in the Newburgh School Distrct should have already received mail from the NYS Department of Taxation and Finance with a form explaining how to receive the rebate.

Hat tip to The Hall Monitor blog.

Taxpayers Suffer from Lack of Interest

If you pay your Newburgh Enlarged City School District taxes via a mortgage escrow account you may be surprised at the amount of the payment to be made for taxes due October 5.

Because the School Board voted to impose a one dollar fee to pay in three installments, many financing companies will no longer allow you the option of paying by installments. Instead, you may be charged the entire year's taxes as a lump sum.

If you get billed and pay your taxes directly, you should have the option to pay in three installments. Your bank may allow you to change from an escrow based school tax payment to direct payments. You will need to keep track of billing and payment yourself, but you will be able to earn interest on your money for several months instead of giving that privilege to the district.