Property Taxes, Mill Rates, and (re-)Evaluations: A quick primer

There is an interesting article on the WTNH website today about how many communities are now battling rising property taxes.

However, me thinks that their facts are a bit wrong.

The articles states:

Many towns and cities are in the midst of revaluation and in some cases property taxes could be doubled.

and then quotes (perhaps mis-quotes?) Economist Ron Van Winkle as saying:

"It's going to occur in almost every town in the state of Connecticut, re-evaluation. The good news is your house is worth a lot more today than it was five years. Bad news is your taxes are going to go up substantially because of that,"

This is a common mis-conception. Revaluation itself doesn't raise taxes. The value of your home as a percentage of the town's total tax basis is used to determine your share of taxes. Basically, your taxes are determined by the budget, and how much "of the town" you own.

Your taxes equal the percentage of the town that you own, times the budget. So, for a simple example, if your property is appraised at $10, and the total taxable property in town is appraised at $1000, and the budget is $300, you would own 10/1000 (which is 1%) of the town, and your taxes would be $10/$1000 x $300 = $3.

The property tax mill rate SHOULD be set as dividing the budget by the total taxable property of the town. So, in the above example, the mill rate would be $300/$1000 = 0.30

If the town is revaluated, and your property is worth $20, and the total taxable property is worth $2000, you still own the same percentage of the town (20/2000 = 1%). If the budget is the same, the mill rate would be $300/$2000 = 0.15. So, while your property value doubled, the mill rate was halved, and you still would owe the same amount of taxes!!!

Now, there are a couple of reasons that the taxes in West Haven went up, and didn't go up the same amount for all people in West Haven.

1. It was decided that all property values in West Haven did not increase at the same rate. It was decided to raise the property values of the West Shore owners (and particularly those who live nearest Long Island Sound) dramatically (220-260% !), while those who lived inland nearer Orange and New Haven went up dramatically less (some as low as 80%). This dramatically changed the tax burden for West Shore owners, quite a few of whom are retirees!
   
   
2. The Budget increased dramatically, with the majority of the increase being used to pay off debt, while chopping services, such as the West Haven Ecomonic Development Corp., the education budget, the police budget, etc.
   

There are friends of mine on the West Shore who work hard (including working a full time job and operating a full time business). Their taxes have increased over $6000 to $14,000.

I know of SEVERAL people who live in long-time family homes -- homes that they grew up in many years ago, and now have themselves retired in. They are trying to decide what they will have to do... and several believe that if the tax situation doesn't abate that they will have to move...

So, the West Shore Taxpayers tried to appeal the the home revaluations for the West Shore, siting that the tax burden that was falling on their shoulders was overwhelming. The West Haven Taxpayers Initiative is trying for a change to the budget, to have a more reasonable mill rate.

I agree with both.

While I do understand that property values may have increased somewhat faster on the West Shore side of town, real estate agents that I had spoken to last year before the revaluation actually said that there was not enough affordable houses for sale... that there were more buyers than sellers.

I also don't think that we have to pay off all debt in one fell swoop. Some speculation has been around that perhaps Mayor Picard is trying to raise the taxes dramatically this year, so that he can cut them next year, and look like a hero... I hope that isn't true.