Garden City Budget News By Roy S. Ryniker and Bob Sundius





The Board of Trustees recently approved a Village budget for 2009-2010 that included a 5.9% increase in taxes, with a total tax levy of $44.3 million.

Substantially all of the discussion surrounding this year’s budget process concerned the propriety of individual operating and capital expenditure appropriations.

There is a parallel issue that residents should understand – They actually shoulder the largest share of the Village tax burden. And, there has been a systemic shift over the last ten years which has increased the tax burden on residential property owners.

Distribution of the tax burden for the fiscal years ended May 31, 1999 and 2009 (taxes are based on the assessments as of January 1st of the prior year which are shown below) –

1999 2009 Incr(Decr) 2010 Incr(Decr)

Single Family

Residences $ 20.8 $ 32.7 57.7 %

Condominiums

& Apartments 1.5 1.9 22.8 % NOT

All Commercial

& Other 9.6 7.9 -17.3 % AVAILABLE

Total Tax Levy 31.9 42.6 33.4 % $ 44.3 4.1 %

Non Tax Revenues 3.4 9.1 167.3 % 7.0

Anticipated Use

of Surplus 2.8 3.6 27.7 % 1.5

Approved Operating &

Capital Appropriations $ 38.1 $ 55.3 44.9 % $ 52.7 -4.6 %

Since 1999, the single family residence property owners’ taxes have increased 57.7% while the commercial sectors’ taxes have actually declined 17.3%%. In the current ’09 fiscal year homeowners are bearing 59% of the cost to operate Village government, up 4.5% from fiscal year ’99 despite a tremendous increase in non tax revenues.

Significant is the shift in the components of the real property tax base. Because of declines in the assessed values of non-residential properties, residential properties now represent 81.3% of the total tax base, up from 71.5% only 10 years prior.

Assessments as of January 1st for 1998 and 2008 –

1998 2008 Change in Share

Single Family Residences 66.8 % 76.9 % 10.1 %

Condominiums 2.2 % 2.6 % 0.4 %

Apartments 2.5 % 1.9 % -0.6 %

Sub-total Residential 71.5 % 81.3 % 9.8 %

Golf Courses 1.0 % 0.9 % -0.2 %

Hotel 2.1 % 1.3 % -0.8 %

Utilities 2.4 % 1.2 % -1.2 %

Special Franchise 2.3 % 1.0 % -1.3 %

Commercial 20.7 % 14.3 % -6.4 %

Sub-total

Non Residential 28.5 % 18.7 % -9.8 %

100.0 % 100.0 %

Total Assessed Value $ 123,531,823 $ 111,278,399

This dramatic shift in the tax base is due to various factors including different valuation methodologies used in determining assessed values for residential compared with commercial properties and the success commercial property owners have had litigating their property assessments. (Note the housing market is not the primary explanation. The assessed value of single family homes increase at a rate of only 0.4% per year over this ten year period.)

Thus, because of a continually shrinking tax base over the last ten years single family homes have become an even greater component of the tax base. Shouldering nominally 10% more of the tax burden, while all other property classes (except condo owners) have realized reductions in their share of the tax burden.

We understand the Village has determined the Total Assessed Value as of January 1, 2009 is $109,330,000; this likely reflects the further success of legal challenges to the assessed value of commercial and other non residential property owners.

It is this decrease in the total assessed value that adds 1.8% to the increase in the effective tax rate. That is, the effective blended tax increase of 5.9% for the coming fiscal year is comprised of a 4.1% increase in the tax levy and 1.8% increase because of the eroding commercial tax base.

The tenuous Village position with respect to assessments of non residential property owners leads the Village Trustees to budget millions of dollars in tax refunds annually. Tax Certioraris claims budgeted over the last two years and for next year total more than $8.5 million.

Residents must ask themselves – Over the last ten years have Village services increased commensurate with the increased tax burden the Trustees have put on their shoulders?

The four Property Owners Associations have authorized the Garden City Citizens Budget Review Committee (CBRC). Roy S. Ryniker is President of the Reorganization Alternatives Group, Ltd. and the CBRC Chairman (Roy.Ryniker@ReAltGroup.com). Bob Sundius is a corporate executive and financial advisor for middle market companies (rwsundius@interim-exec-mgmt.com).




Leave a Reply