With taxpayers in the Southampton Town part of the Riverhead School District facing a 22 percent tax rate increase for 2011 — after they endured a 60 percent increase over the past three years — state Assemblyman Fred Thiele (I-Sag Harbor) has proposed legislation to ease their pain.
While the Southampton portion of the district has seen the tax rate soar, the Riverhead Town portion of the district has had a rate rise of only 3 percent in the same three years.
The tax wallop and dissimilar rate on the Southampton side “points to the need for the 2 percent property tax cap proposed by Governor-Elect Cuomo,” Mr. Thiele said. “However, it also shows that new legal tools are required to protect taxpayers from manipulation of assessment data and equalization rates.”
Mr. Thiele has proposed requiring the state to establish a special tax equalization rate in the Riverhead School District that would apply to the entire district. Currently, each of the three towns in which the district is located — Brookhaven, Riverhead and Southampton — has its own equalization rate, so the school district has a different tax rate in each of those towns.
The equalization rate, which is assigned by the state, is used both to determine at what percentage of market value a town assesses property and to divvy up tax payments in districts like the Riverhead School District that stretch over more than one town. Southampton Town assesses property at 100 percent of market value, while Riverhead Town assesses at 15.98 percent, according to the state. Also, Southampton Town reassesses on a regular basis to reflect changing market conditions and Riverhead does not. As a result, the total assessed value of land in the Southampton Town part of the school district has sagged recently, which has driven up the tax rate there proportionately.
In the past three years, those disparities, and different equalization rates, have contributed to a big shift in the school tax burden to the Southampton portion of the school district, officials say.
A similar problem occurred in 2003 and 2004. The state legislature at the time approved a temporary special equalization rate for the Southampton portion of the Riverhead School District. From 2005 through 2008, the school tax on the Southampton side dropped by about 30 percent, thanks in part to payments from Southampton Town’s Community Preservation Fund (CPF) to make up for land taken off the tax roles. A state audit later found that the town paid more in CPF funds to the Riverhead School District than it should have under CPF regulations.
Unlike the 2003 legislation, Mr. Thiele’s current proposal would be permanent and would cover the entire district, including parts in Riverhead and Brookhaven towns. He said it would not necessarily create one tax rate for the entire district, but it would eliminate the big tax shifts and fluctuations the district has seen.
Mr. Thiele’s bill also would allow both taxpayers and local officials to challenge the special equalization rate for their properties or jurisdictions if they felt it had been unfair to them.
“Under current law, for example, only Riverhead Town could challenge the equalization rate for Riverhead Town, even though in the apportionment of school taxes, taxpayers in Southampton or Brookhaven could be adversely affected by the Riverhead Town rate,” Mr. Thiele said. “The new legislation would set a special equalization rate just for the Riverhead School District and permit taxpayers in Southampton or the town supervisor to challenge that equalization rate if they determine that it is wrong and they have been aggrieved by it.”
The part of the law allowing residents to challenge equalization rates would apply statewide, Mr. Thiele said.
Flanders resident Therese McGuiness said she believed the real problem with school taxes is unequal treatment.
The Riverhead School District in Southampton Town pays a tax rate of $12.35 per $1,000 of assessed value, which is the second highest rate in the town, after the Eastport-South Manor School District. Meanwhile, wealthier districts pay much lower rates, she said. Bridgehampton’s rate is $1.41, while Sagaponack’s is $0.39 per $1,000.
The average parcel in the Riverhead School District in Southampton Town is assessed at $205,611; the average parcel in Sagaponack is assessed at $4.4 million, and the average parcel in Bridgehampton is assessed $2.16 million, according to town records.