Financials 12010 — Assessments & Valuation
I read this story City Continues to Weigh Financial Options and then tuned into the response in light of the story. I’ll just say that I’m totally lost — I can’t follow what’s real and what is subject to the usual distortion from misinformation, both deliberate and accidental. I’ll also say that the subject of finances lends itself to deliberate misinformation thanks to the politics involved. You need look no further than the recent global financial crisis to see how things get played based upon , let’s be kind, an absence of facts and understanding.
What piqued my interest here is that there was a mention of ‘bankruptcy’ for the city. At the same time, there does not seem to be an underlying rationale for such a statement other than concerns over the audit and apparently , an unclear picture of the city’s finances. Does uncertainty justify declaring bankruptcy as an option? I hardly think so.
I’m also biased just based upon my experience with local finances and budgets — the numbers and rationale usually do not exist to support a given policy or political platform. So when bankruptcy is brought forth with no financials to support it, I’m pretty skeptical. Still, in the spirit of getting to some clarify on the underlying financials, I started pulling together some data and rather than a monster post on financials that no one would read, I thought I’d pull together some numbers as I get a chance, for a number of shorter posts, that no one will read.
As context, all data is from the Office of the State Comptroller . I should also note that since I am using data and numbers, any observations based upon the data which challenge or reject conventional local wisdom merely demonstrate my liberal bias , not that the conventional local wisdom may be unfounded and untrue. That can never be the case.
Today, I was intrigued by the chart below which shows Full Value Assessments from Year 2000 through 2011 (2012 not available):
What is interesting is the upward trend (the red line), which is generally a good thing, as it shows higher market value and hence should translate to lower tax rates. At the same time, the graph also shows Real Property tax leveled by the city which does not show the same rise as assessments, also good news I think. What is not clear to me is why the acceleration in Full Market Value — perhaps an adjustment to how assessments were recalculated due to reassessments?
While the above are not directly related to the issue of bankruptcy, it’s important to keep a notion of Full Value Assessments in mind when discussing taxes, revenues, debts and policy as we proceed.
More charts tomorrow.
The definition from NYS OSC for Full Value is this:
Property taxes are levied using an annual assessment roll. An equalization rate is applied to this roll by the Office of Real Property Services (ORPS) to assure an equitable property tax allocation across municipalities. The resulting figure is the full valuation. A five-year average full valuation is used to calculate the Constitutional Tax Limit.