M.M. Tirion
The St. Lawrence County government website provides data on local property values and tax rates. Browsing through the numbers provided for the village of Potsdam, one notices that the total assessed value of all parcels in Potsdam is an impressive $670 million: Over half a billion dollars would be generated if every parcel in the village (nearly 1700) were sold at their current market values.
If the tax rate within the village was $10 per $1000 of property value, applied uniformly across all property classes, it would raise $6.7 million annually for the general fund or GF. This amount is in fact very close to the actual number of dollars required annually for the GF. However, only around $4 million typically derives from property taxes with most of the rest coming from sales tax revenue. Naively one might think, therefore, that a property tax rate of $6 per $1000 of assessed value would suffice to keep the general fund solvent. But in fact, the tax rate within the village is a bit over $18 per $1000. Why? Because properties owned by NYS and private non-profits are exempt from paying property taxes. The parcels within the village exempt from the property tax levy have a combined assessed value of $450 million. This leaves $670 million – $450 million or $220 million worth of property “free” to be taxed.
This peculiar situation, where less than one third of total property value within a municipality is taxable, not only strains the finances of non-exempt businesses and home owners, but has a second unfortunate consequence. Sales tax revenue is collected at the county level and distributed to local municipalities based on their total taxable assessed value (50%) as well as on their population (50%). Potsdam village’s share of the sales tax distribution is based not on its total assessed value of $670 million but on the taxable $220 million, reducing our sales tax revenues accordingly and further straining the finances of non-exempt businesses and home owners.
Residences, businesses and nonprofits co-exist . They work synergystically: Nonprofits attract workers and visitors, who in turn seek dining, housing, shopping and support services supplied by the business-commercial sector, who in turn rely on the local government to maintain and develop the requisite infrastructure. Optimally the three co-existing enterprises, non-profits, for-profits, and local government work together proactively to create a social-economic network both resilient and stable.
The village is currently in the exciting business of ascertaining how much money needs to be allocated to run services for another fiscal year, which runs from June 1 2023 through May 31 2024. Once a total is obtained, the tax rates and user fees need to be adjusted to cover expenses. Now is the time to get involved, asking questions about user fees and tax rates, before those values are locked in for another FY.
Local Government Matters 