The taxable value of property in the Town of Tonawanda took a $19.4 million dip this year, forcing an immediate increase in school taxes for local businesses, and raising questions for the upcoming town budget.
The drop in assessed value is the largest in recent memory for the town, where the assessment rolls had been relatively stable in recent years, officials said.
With residential assessments townwide dropping by $6.9 million -- or .6 percent -- and business assessments dropping by $12.5 million -- or 1.7 percent, town assessor David Unmack attributed much of the decline to two factors:
Senior citizens exemptions increasing sharply, partly because the town upped the income limit, making more people eligible, but also because hundreds of senior citizens applying for the state's school tax reduction program, known as STAR, also signed up for other tax exemptions to which they were entitled.
"That was almost all senior exemptions," Unmack said.
Senior exemptions increased by $10.4 million. The loss was offset somewhat by increases in other residential assessments, the assessor said.
Businesses successfully challenging their tax assessments, including National Fuel, whose assessment dropped by $3 million, and New York Telephone, whose assessment dropped $1.2 million. "Taxes are such a big expense to companies, and businesses, they pay a lot closer attention," Unmack said. "If they think there is a chance, they pursue it. Years ago, it wasn't that common."
The initial effect of the new assessments was seen Wednesday, when the Kenmore-Town of Tonawanda School District set its tax rate to help finance its $95.6 million budget for the upcoming school year.
The school district's tax base is slightly different from the town's because of differing boundaries. In fact, the assessed value for homes in the school district increased slightly -- by $500,000. The assessed value for businesses, however, dropped by $12.4 million.
The new homestead rate is $22.99 per $1,000 assessed value, according to Schools Superintendent David A. Paciencia. The rate is down slightly from the $23.01 per $1,000 estimated rate the district announced in May, prior to the final assessment figures being released this week.
The new rate is down $1.10 -- or 4.6 percent -- from the 1997-98 rate of $24.09 per $1000.
The new non-homestead rate is $39.67 per $1,000 assessed valuation, said. That figure is up slightly from the $38.95 per $1,000 assessed valuation the district estimated previously.
The non-homestead rate is up $2.53 -- or 6.8 percent -- from the 1997-98 rate of $37.14 per $1,000.
Still unclear is how the new assessments will affect the town budget next year.
Unmack and Town Supervisor Carl Calabrese said it is too early to tell, but both agreed that another factor will be recent changes in the state equalization rate, which determines what percentage of taxes are borne by businesses and homeowners.
The new formula shifts a larger proportion to business, and away from homeowners. It is intended to reflect changing market values.
The shift is expected to offset some of the loss in residential assessment, but add to the burden on the business community.
In the current town budget, 51.9 percent of the tax levy is borne by residents, and 48.1 by businesses. In the upcoming budget, the percentage will shift to 49.3 percent by residents and 50.7 percent by businesses.
"It's a significant shift," Unmack said. "
Calabrese said he didn't want to speculate on how the combination of new assessments and shifting equalization rate will affect the new budget, but said the town's challenge "will be to look at the shift, and mitigate it as much as possible."
The revised equalization rate was already calculated in the estimated tax rates the Ken-Ton school district released in May, Unmack said.
For the school district, 51 percent of the tax burden falls on residential property owners while 49 percent falls on business.
That's a shift from last school year, when 53.4 percent was borne by residential, and 46.6 percent by business.