Potsdam per capita property tax

This work compares the village-levied property taxes in the Village of Potsdam to other villages around the State (1)(refers to notes at bottom).

To provide a rational basis for comparison, the property tax levy per resident is calculated.  Because there are many small villages in the state and few of these provide police services--which are a big expense--only villages with a population greater than 4000 were included in the study. (2)  Data for property tax levy and census population count was obtained from the NYS Office of the Comptroller, for the year 2008 (3).

The detailed results should be examined for interesting comparisons to particular villages. A summary is reproduced below.

Median = $462

Average = $599

Examples:

Potsdam		Per resident
Basis	Population	property tax	Rank*
Full time residents only	4851	$543	50/127
Census count	9425	$279	100/127
FT residents + all students	12228	$215	111/127

*Rank is from highest taxes to lowest taxes, so a lower rank is better.

The comparison of per capita property tax burden depends, of course, on the population basis.  In the results for Potsdam I have looked at the data using three bases, all taken from my population analysis given earlier on the benchmark page.  Each basis gives some insight into our property tax picture.

Discussion

The magnitudes are interesting (4).  First, it appears it is typical for a village to spend about $500/resident out of property tax revenues. This spending goes to provide general government services such as street maintenance, fire and police protection, parks and recreation, street lighting, planning and development, and code enforcement (5).  Second, there is quite a large range in per capita spending.  It is likely that much of this difference is due to the menu of services provided; for example, not all villages have police, some have paid fire while others do not, etc.

The ranking is also interesting.   The comparison shows one of the distinguishing characteristics--some would say problems--of Potsdam.  When the basis is only full time residents our property tax rank is quite high (up with some of the Westchester County villages).  Yet when the basis is all of the population (i.e., full time residents plus students) we compare quite favorably to other villages.

This is a fundamental dilemma in Potsdam: a few pay for the many. Most students do not pay property taxes, and neither do their schools.  The property tax burden falls primarily on full time residents.  Yet the student population consumes services this revenue buys. 

The data illustrates this.  If you are a full time resident of Potsdam mostly likely you or your family is a property tax payer (6), and the village is a relatively expensive village to live in (rank 50/127).  However, if we look at the per capita spending for all residents, Potsdam appears to be a relatively inexpensively run village (rank 111/127).

Since the per capita spending--based on providing services to all residents of the the village--is already quite low, the data suggests it will be difficult to reduce property taxes without major service cuts.  Rather, it suggests that per capita tax reduction is more likely to be accomplished by increasing our basis.  This can be done by increasing the full time population living in the village or increasing the "student" contribution to the tax paying base (7).  In addition, we can try to reduce the size of the numerator by finding other sources of revenue to partially replace property taxes.

There are some bright spots in the data.  It shows that Potsdam is not the most expensive village to live in, even in the North Country.  It shows that Potsdam is delivering a large menu of services, to all its residents, for a relatively modest property tax cost/resident compared to other villages.  On a census population basis, Potsdam and Canton villages have similar expenditures. And, by looking at the chart of cost vs. rank, it shows that Potsdam is on the flatter part of the curve and has avoiding moving left to a model of local government where costs quickly accelerate.

Notes

(1) This study does not include property taxes levied by the county, school, or library.

(2) Even some of these villages do not have police departments, but the 4000 number was chosen because of my population analysis that showed Potsdam has a full-time resident population of about 4851.

(3) http://www.osc.state.ny.us/localgov/datanstat/findata/index_choice.htm, level 1 data for villages, 2008.

(4)  The question should be raised, what does per capita property tax measure? The per capita rate depends on an amalgam of services offered, efficiency of delivery, and population density. Property taxes are the primary revenue source for villages.  As such, the per capita rate reflects to a resident the administrative cost of having a village to live in, at least with respect to the general government services provided.  Of course it is true that properties are taxed and the burden of payment falls on property owners, not all residents.  However, the amount of revenue that must be generated is driven by the need to provide services to all residents. So while not all residents pay property taxes, they all consume property taxes. There are problems with this measure.  Most notably, some services are tied closely to population, such as public safety, but others, such as road maintenance and street lighting, are not. Another difficulty is that different villages have somewhat different service mixes, so the measure does not compare costs for exactly the same basket of services. Nonetheless, I think the case can be made that the per capita property tax rate is a useful measure of what it costs to provide a village for its residents.

(5) Property tax spending does not include water or sewer service, which by law require separate billing.

(6) Indirectly if you are a renter, but paying nonetheless.

(7) How might we accomplish this? Some possibilities: build more housing in the village, improve village housing, encourage more students to live off campus, annex additional property/people into the village, have a village student fee, encourage employer-assisted village housing, promote economic development, make the village a more attractive place to live.  Other?  Suggestions welcome.