continued “This came out of the blue at us and causes a pretty dramatic shift in dollars,” Bates explained.
According to the State Office of Real Property Tax Services, equalization seeks to measure the relationship of locally assessed values to an ever-changing real estate market. At its simplest, an equalization rate is the state’s measure of a municipality’s level of assessment. This is the ratio of total assessed value to the municipality’s total market value.
An equalization rate of 100 means that the municipality is assessing property at 100 percent of market value; an equalization rate of greater than 100 means that the total assessed value for the municipality is greater than its total market value.
The Real Property Tax Law requires that annual state equalization rates be established for each county, city, town and village. Equalization rates are calculated each year to reflect that year’s assessment roll and current market values for each assessing unit.
In order for a school district to fairly distribute its property tax levy (the total amount of school taxes to be collected), the levy needs to be divided in proportion to the total market value of each municipal segment. This is intended to allow for an equitable distribution of taxes based upon the market value of each municipality or segment.
The district had projected Spafford to have an equalization rate of 100 percent. At 109 percent, a large portion of the tax levy that was expected to be paid by Spafford now shifts to Skaneateles and the other towns in the district. As a result, Spafford will have a reduction in its tax rate.
Only 14 towns in the entire state were equalized at more than 100 percent, Bates said.
The news came unexpectedly to the district because Bates only received all the final equalization numbers for its towns from the state last Tuesday, Aug. 16, which was when Bates was able to spreadsheet all the numbers and assess the impact.