Assessment Increases and the Amount You Pay in Property Taxes

Reassessments are again underway after being put on hold due to the pandemic and homeowners are concerned that their property taxes could also go up. But that’s not necessarily the case.  

Why are property tax assessments going up?

You might call it a "perfect storm." And a matter of supply and demand.  

  • When Covid-19 spread across America and shut down many activities, people stayed at home and many worked from home.
  • Money not being spent on travel, leisure, and work expenses such as gas and clothing was saved and often spent on home improvements. 
  • Mortgage interest rates for 30-year mortgages fell to an all-time low of 2.65% in 2021, making it more affordable to buy. 
  • When Covid-19 became more manageable and communities began to re-open, an influx of new homebuyers and renters were unable to purchase or rent a new home due to low inventory or high prices. 
  • The New York State Association of REALTORS® (NYSAR) reported on April 20, 2022, that, “Inventory of homes for sale across New York State fell 22.6 percent from 39,707 homes available in March 2021 to just 30,724 units last month.” 
  • As inventory dropped, prices increased. Increased demand for the limited supply of homes drove up prices as sellers entertained multiple offers. 
  • New home building couldn’t make up for the increased demand as it was slowed by supply chain issues. 

In its 2021 Annual Report on the New York State Market, the New York State Association of Realtors reported: “The overall median sales price increased 19.4 percent to $370,000 for the year. There was also a 26.8% drop in homes for sale priced $100,000 and below… so housing affordability will remain an important factor to watch.”

Source: the New York State Association of Realtors 2021 Annual Report on the New York State Market

In those towns where assessments have resumed, assessments are up because housing prices are up.  

Will real estate prices fall? That is yet to be determined. Inflation, which is at a 40-year high according to a federal report,  is already impacting mortgage interest rates, which are rising. 

Source: NY Times

In a recent story in the Democrat and Chronicle in Rochester, NY, the Town of Irondequoit said it is holding off on a revaluation of property assessments for another year.  Property values may drop from current highs and the town does not want to assess at an improper or quickly changing property value.  Town Assessor, Amy Jorstad said, “We just want to provide additional information, so that people don’t believe that because they see a large increase in their assessed values that translates directly into a tax increase of the same percentage. That’s what we’re worried about.” 

As New York state explains, “Municipal-wide reassessments (which review the market value of all the properties in the community) are the best way to ensure that assessments are fair and accurate…. If the increase in your assessment is less than the average increase, your taxes will actually decrease.” When all properties are not reassessed, some become over-assessed, and some are under-assessed. 

Most people accept the fact that we must pay sales tax on almost everything we buy. But for the most part, those rates rarely change, which may be why we pay little attention. However, with property taxes, we take notice when the new school, town, and county tax bills are received because they change every year and almost always go up. 

If your tax bill increases, it is not because your assessment went up. 

  • Assessments are based on the current market value of your property. The taxes may not go up because of a higher assessment.
  • The amount you pay in property taxes is based on the tax rates needed for the local school, town, and county to achieve their current budgets.  
  • So, for example, if a school used say 10 percent of reserve money for the current budget (out of the revenues raised locally), it would then lower the amount needed by taxpayers, thus lowering the tax rate per one thousand dollar of assessment. The same could be said with the local towns and  counties.
  • School budgets are based on several things. 
  • In New York State, estimated 2001-02 public education funding comes from three sources: approximately 5% from federal sources, 49% from State formula aids and grants, and 46% from revenues raised locally
  • Local property taxes constitute close to 90% percent of local revenues.
  • Town revenue sources include local sales tax, transfers from the federal and state governments, other taxes, miscellaneous charges, and individual income taxes. The balance is raised from property taxes. 

As the net worth of a village, town or county goes up with higher assessments, the rate charged by the school, village, town, or county should go down if local municipalities do not go on spending sprees and take unfair advantage of the additional revenues.  

Public Education Spending in New York

New York is home to the largest K-12 public school system in the nation, with 2.70 million students enrolled in the New York City system. The state receives 10.1% of all educational funding for U.S. public primary schools. New York schools rank 1st in spending and 1st in funding.

  • New York K-12 schools spend $25,520 per pupil for a total of $78.21 billion annually.
  • Expenditures are equivalent to 1.3% of taxpayer income.
  • New York K-12 schools receive $3.32 billion, or $1,083 per pupil from the federal government.
  • State funding totals $30.92 billion or $10,089 per pupil.
  • Local funding totals $43.51 billion or $14,197 per pupil.
  • State and local funding is equivalent to 1.2% of New York’s taxpayer income.
  • Federal education funding is equivalent to .05% of taxpayer income.
  • Funding for K-12 education in New York totals $77.75 billion or $25,369 per pupil.
  • New York spends $460 million or $151 per pupil over its funding budget.
  • At the postsecondary level, colleges and universities spend $15,414 per pupil, 34.30% of which goes toward instruction.
  • Federal funding for postsecondary education averages $634 per student.
  • State funding, local, and private funding average $1,174 per student.
  • Tuition accounts for 15.09% of all funding.
  • 3.90% of all postsecondary funding comes from sales and services of auxiliary enterprises.
  • New York’s 2-year community colleges spend 21.97% of what its 4-year public colleges spend in a year.

Source: Hanson, Melanie. “U.S. Public Education Spending Statistics” EducationData.org, March 15, 2022, https://educationdata.org/public-education-spending-statistics

References

How property taxes are calculated

U.S. Public Education Spending Statistics

What you can do

1)    It is very important for property owners to attend their local school board, town or village, and the county meetings when the new budgets are being prepared. Let your voice be heard in the process. This is the time to complain or understand the process better, not when you receive your property tax bill.

2)    If you disagree with the amount of your property tax assessment and feel it does not reflect a fair market value you should first discuss the assessment with the local assessor. Some are still scheduling informal meetings prior to Grievance Day. If you are still unhappy with the decision, you should continue to grieve the property assessment through the property tax grieving process. Help with the grieving process can be found here on our website.

Challenging Your Assessment: What You Can Do if You Feel Your Assessment is Incorrect

5 Ways to Grieve Your Assessment

The Fears of Grieving Your Property Tax Assessment

Grieving by Excessive Assessment & 2 Case Studies


Updated April 27, 2022