VILLAGES GONE WILD

Rob Schapiro
numbatdog@aol.com

VILLAGES GONE WILD
It might amuse some of your readers who live in saner communities to hear the tax burden imposed on a property owner in Long Island, New York.
In addition to the federal and State taxes, the County imposes a general tax and outrageously high school taxes. The village then tacks on a village tax and you’re all set to enjoy your property. Provided, of course, you pay your mortgage and sky high utilities and sales tax on every purchase.
All through the property boom years, the various property taxes predictably cranked up in synch with the inflated values. One was grateful that the increase was generally capped at “only” 6% per year (this with no inflation to speak of) but when the property bubble burst something strange happened.
The home values plunged but the taxes kept going up.
Consider the following. The amount of property tax is not really determined by the property’s value. The various town and County financial budgets are divided by all the assessed values to find a tax rate that will  cover all their costs. So as the value of property drops, the taxing rate will need to go up to make up the shortfall.
This makes sense to the various authorities who have become used to increased income year after year and have lost the skill to balance or reduce their budgets. But look at it from the property owners point of view.
The value of one’s Long Island home is now roughly the same as it was 8 – 10 years ago. And still going down. But  property tax is up 30% from that time. And still going up.
The  tony North Shore village of Sands Point, rather than control its budget, put up its village tax an unbelievable 9% this year! This in the middle of the worst recession since the 1930’s.
So what is the result of this greed and inability to face fiscal reality?
Plunging property values and the highest number of properties in recent history on the market as fewer and fewer people are prepared or able to carry the tax burden. In the high value end of the market where property taxes can be $100,000 or more (yes, that’s per year!) homes are unsellable at almost any price.                         
 What seems to be overlooked by the village and County officials is their tax burden in these difficult times is a major cause of people needing to sell urgently and therefore a contributor to ever lower prices. Which will in turn require the remaining owners to pay an even higher rate.
The wild ride is over but someone forgot to tell New York.