ITHACA – In an earlier article, we took a look at the county’s perspective on the City of Ithaca’s high property tax rate. In this piece, we’ll examine some of the factors specific to the city itself.
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The previous article noted that Tompkins County has the second highest average property tax burden in Upstate New York at $3,918 a year. County Administrator Joe Mareane said that the average tax bill from the county came out to around $1,100, which leaves a pretty big gap.
“I really don’t think it’s with the county. You’d have to look at the city and the school district,” Mareane said.
It’s also important to note the impact of property values on taxes. As this chart from the county assessor’s office shows, a higher tax rate doesn’t always mean a higher average tax burden.
Quoting the assessor’s office page: “The lowest tax rate combination was the Town of Lansing in the Ithaca City School District (28.26 percent) however this yielded the second highest overall tax bill ($9,960). The highest tax rate combination was the Village of Groton and Groton School district (40.90 percent) however this was only the 15th highest overall tax bill ($3,950).”
A Voice report from 2014 seems to bear out Mareane’s assessment. In 2014, the average homeowner in Ithaca paid $2,482 in city property taxes per year. Add that to the $1,100 average from the county and we get a lot closer to the $3,918 figure (with school taxes likely making up the rest).
As one might expect, there’s a strong correlation between average property value in a municipality and its actual tax burden. With that in mind, let’s talk about the specific issues that are keeping taxes higher in Ithaca:
What makes Ithaca’s property taxes so high?
Ithaca City Controller Steve Thayer offered a few explanations:
1 – Cornell’s tax exemption: Cornell, which is of course a substantial piece of property, is tax exempt.
“We’re very high, we’re generally in the top five cities in the state for tax exempt properties,” Thayer explained. “What that means is that the other payers of taxes have to pick up the burden. For 2016, we’re at about 60 percent tax exempt, which is very high, and that means the other 40 percent have to pick up that burden.”
There are other tax exempt properties in the city, but Cornell makes up roughly 85-90 percent of the tax exempt property in the city, according to Thayer.
“We’re very happy Cornell is located here. They bring a lot to the community, but they also put a lot of stress on the infrastructure on services,” said Thayer.
County Administrator Joe Mareane also told us that between Cornell, Ithaca College and other tax exempt properties in the county, about 40 percent of county property is nontaxable, which may also be pushing up taxes county-wide.
2 – Development: With all of the new development going on in Ithaca, new infrastructure must be created. With that, property taxes can go up when properties are reassessed.
Another layer of this is that Tompkins County does full assessments every year, compared to some areas which perform them every two or three years. With the constant influx of new development and housing demand, this can lead to property values — and thus property taxes — going up even if the tax rate doesn’t.
3 – Lack of state funding: The state provides a certain amount of funding to the city, but Thayer says the amount has remained flat for a number of years. Currently, the city receives $2.6 million annually.
“We’ve been trying to get that calculation changed,” Thayer said. “If you factor that with inflation, we should be getting more like $4.9 million. That would make a big impact for us, we could lower taxes, we could do a lot.”
Thayer also mentioned the issue of state mandates that Mareane brought up. “The state’s patting themselves on the back, but a lot of that is because they’re pushing it down to the local level. Then we have to absorb it and the taxpayers get mad at us, when they should be looking at the state level,” he said.
4 – Cost of labor: Another factor, Thayer said, is the cost of labor for the city. New York State has a variety of mandates for what the city must provide in terms of a pension and generous health benefits for its workers, which adds to the taxpayer burden.
Additionally, the city is mandated to pay prevailing wages to its public works employees, and due to the increased construction demand in recent years, that burden has also increased.
On a similar note, Thayer cited the cost of uniformed services – that is, police and firefighters. Simply put, the training and upkeep costs for those services are expensive. Furthermore, New York State law provides for binding arbitration in labor negotiations with uniform services. This means that uniform workers have an easy way to leverage better pay or benefits.
5 – Higher cost for youth services: Thayer said the city spends about $6.9 million per year on youth services, because such services are a very high priority for the city.
“I don’t think if you looked across the state you’d see other cities spending that much on youth services, but it’s really important to us,” he said.
6 – Debt load: Tying back into the development factor, Thayer noted that the city has taken on a substantial amount of debt in its pursuit of improving infrastructure. Thus, some amount of tax revenue has to be put toward paying down that debt.
In future parts of this series, we’ll look into the school district’s role in Ithaca’s property taxes, and possibly examine the tax exempt status of Cornell that seems to be putting such a heavy strain on the city.
(Photo courtesy Ithaca Builds)
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