From time to time, I’m required to look up property valuations in New York State. Now, in most places in the US, the town (or township or other local authority) assesses each property and assigns it a valuation somewhat near the market value of the property. But New York State, and a few other localities, does it somewhat differently: its localities assess the market value of the property, then multiply it by a specific fraction called the “equalization rate”, and then that result becomes the assessed value of the property.
I could see that would make sense if the equalization rates were somewhat standard throughout New York State, or even if they were standard within each county. But they’re not in the slightest: Here’s the list of equalization rates for Nassau County in 2010, for example. As you can see, they’re all over the place (and, strangely, they’re called “State Equalization Rates” even though they differ from town to town and are likely set by the local authorities, not the state).
My question is: what is the point of the equalization rates at all? If it’s to determine property taxes, wouldn’t it be a whole lot simpler to figure out a tax rate per thousands of dollars of assessed property, rather than change the assessment rate of the property itself? And how come the equalization rate in one town might be several times the rate in an adjacent town? I can’t imagine the tax rate varies that widely from town to town within each county, IME of paying property taxes and dealing with school budgets here.
New York state equalization rates are in fact set by the state government, although they don’t affect the state budget because property taxes all go to the municipality.
There are several reasons why we have equalization rates:
Many school district cross municipal boundaries, but municipalities assess properties and collect property tax. The equalization rate is used to ensure that the school district gets the right amount of funding based on the proportion of people who live in each municipality of the same district. Similarly, one municipality may have pieces of multiple districts in it. Equalization rates are meant to sort this out.
Different municipalities assess properties with different standards, some deliberately under- or over-valuing properties as compared to the market value. Equalization rates are meant to ensure that one village can’t screw over its neighbor (which shares services) by deliberately under-assessing their property values.
Nothing about municipal government is simple in New York. We have more than 4000 villages, towns, cities and counties.