Tax formula ruffles feathers
The city of Kingston is trying to decide the proper ratio between taxes paid by business and taxes paid by residents.
A decision is expected next month whether to repeal the so-called homestead exemption and reconfigure the city”™s tax collection to require more from residents and less from business. The plan is favored by the mayor but regarded skeptically by the Common Council, which has put off a decision until after tax grievances are heard May 27.
“Its not a plan of mine to shift the tax burden from business to resident, my plan is to make tax collection fair and equitable, no matter what it takes,” said Mayor James Sottile of Kinston. “There is a gross inequity,” he said, between what is paid by commercial property owners and taxes paid by residents in the city.
Specifically, Sottile said, residential properties, those on the homestead side of the system, comprise 70 percent of the city’s assessed value, while the remaining 30 percent is commercial property, or “non-homestead.” But business properties have been picking up 51 percent of the tax burden, while residential property owners have been covering 49 percent of the total.
Sottile has said the ratio will change under the recently completed revaluation. Under the new formula, he said, residential property owners will carry 62 percent of the burden while businesses will shoulder 38 percent. But while that means a 25.5 percent decrease in the commercial tax levy, it also means a 26.5 percent increase in the residential tax levy and such homestead property owners are the majority of voters.
Sottile has said his plan is a fairer distribution of the tax burden, but Kingston”™s nine-member Common Council, which must approve the change, is divided. Majority Leader Bill Reynolds has expressed agreement that businesses should pay less and homeowners more, but has not said what that ratio should be. Two other city alderman support the mayor”™s plan, but other council members are noncommittal or oppose the change.
At least one Realtor supports the change envisioned by the mayor. Karen Vetere, of Vetere Real Estate, who has been vocal on the issue, says that businesses in Kingston are suffering from high tax rates within the city, compared to the neighboring town of Ulster, which is the de facto commercial center for Ulster County as a whole. “Just drive around Kingston and see how many businesses are closed,” she said. “They are moving to Ulster.”
The city of Poughkeepsie also has a homestead law, passed in 2006 just prior to a revaluation, to prevent the revaluation from dramatically increasing the property tax rate paid by homeowners in light of their new assessments. Poughkeepsie has a roughly similar divide with 65 percent of property considered residential and 35 percent as commercial property.
Under the homestead law, the property tax for residents could not rise by more than five percent from the previous year, even when revaluation is figured in.
And according to the city”™s finance department, under 2007 figures, residents paid the same ratio in taxes, being assessed some 65 percent of the tax burden, while businesses paid roughly 35 percent.
Poughkeepise Mayor John C. Tkazyik was noncommittal regarding the commercial versus residential debate. “You can”™t say it”™s on one or the other,” he said. “Everyone wants tax relief. Businesses are being hit, homeowners are being hit, we”™ve got to get a handle on taxes.”
In Kingston, Sottile said that the numbers are clear: “I would hope they would make the decision based on the financial future of our city and not on politics. This is one of those times the city council has to make a tough decision.”