Property tax collection agreement with county represents opportunity for city
What’s good for the goose is not always as good for the gander, even though good intentions are clear.
That’s the best way to describe the recent property tax collection deal struck between the county and city of Schenectady. The argument as to whether or not it should be the responsibility of the city to make good on uncollected county property taxes has been carrying on for the past several years and it always seems to come up around budget time, which only adds to the contentiousness of the issue.
A majority of city officials have felt that it is inequitable for the city to have to incur the cost of paying the county up front, instead of paying when it actually collects property taxes. While it is the city’s responsibility to collect property taxes on behalf of the county, in all likelihood, if a taxpayer isn’t paying their city taxes, they’re probably not paying their county taxes either. That’s a double whammy for the city.
So in all fairness, the county should incur the financial burden of uncollected property taxes; and on Dec. 17 both municipalities came to an out-of-court agreement that decided just that.
The deal stipulates that the city will make good on all unpaid county property taxes for fiscal year 2012 and 2013. This specifically includes a favorable payment plan for paying the 2013 taxes in full. In turn, the city will pay the county only what it receives from its tax base for fiscal year 2014 and beyond. This is great news for the city, as it finally puts an end to the ongoing dispute that has included everything from public bickering, to threats, to lawsuits. Yet, I cannot confidently proclaim the same for taxpayers.
Make no mistake about it: The agreement that was reached is an example of legislative competence between different levels of government, which is something of a rarity nowadays. And at a cursory glance, taxpayers seem to benefit from the deal. After all, with the city soon off the hook for paying the county in full, one could make the argument that city taxpayers will see some relief come budget time.
Conversely, one could also make the argument that future uncollected county property taxes beyond 2014 could result in higher county tax rates for residents of all municipalities.
For example, the city still owes the county $653,000 in uncollected taxes for fiscal year 2012 and even more for 2013. The county, like any tax-levying municipality, depends on tax revenue to pay for its expenses. Is it such a coincidence, then, that county property taxes have gone up over the past couple of years? And what’s to stop the rate from continuing to rise, especially since the city will no longer have to pay the county in full?
This is by no means an argument that the city should continue to pay the county in full, but county taxes collected from city residents make up the majority of the property tax revenue received. This is because the city has the largest tax base in the county.
When the deal between the county and city was made, I think both parties involved failed to realize, or ignored the fact, that it would affect everyone, not just them.
It’s almost as if county officials gave one back to the city after they were able to lock it into a sales tax revenue agreement last year, with the help of the City Council of course, that many believe will financially hurt the city in the long run.
And that’s not all. The latest agreement has done nothing to resolve one of the biggest problems with property taxes — delinquent taxpayers. What the county and city should have also agreed on was how to better handle delinquent taxpayers and improve collection measures. The county opted to keep the city as the sole tax collector in the agreement, but that doesn’t mean sharing ideas and methods to help improve tax collection rates is something that should have been overlooked. In fact, it should be greatly encouraged.
It is my hope that this deal is one of many to come, because on top of a shrinking tax base, which lowers the value of properties, the city continues to suffer from an annual rise in delinquent taxpayers. This has a compounding effect on not only the county, but other local governments and municipalities.
Furthermore, there is little doubt the city would be in dire financial straits if the lawsuit the county filed against it earlier this year had been brought to court and decided in favor of the county. The city could have very well been forced to pay the county in full for fiscal year 2012, 2013, 2014 and beyond.
The agreement represents an opportunity for the city, which means Mayor Gary McCarthy and the City Council cannot sit idle and relish this small victory. They must double-down on their tax collection efforts, continue to sell foreclosed homes and make even more attempts to revitalize residential neighborhoods. It is absolutely imperative that these actions be taken.
The city received some financial relief with the property tax collection agreement. Now it should be the taxpayer’s turn.
Robert Caracciolo lives in Schenectady and is a regular contributor to the Sunday Opinion section.