Many Kingston residents and commercial property owners were surprised when they opened their school tax bills last month. As reported in the papers, the Kingston City School District’s $141 million, 2010-11 budget, which was passed by voters, called for a 4.1 percent tax levy increase. However, the increase in school taxes for city property owners was actually closer to 10 percent if the assessment on your home or commercial building remained the same, due to a significant increase in the tax rates.

“If people knew taxes were going to be up 10 percent, there’d be an uproar,” noted Gerald T. Soldner, the president of Kingston Uptown Residents’ Alliance, a community organization that has been lobbying for reduced taxes. “We are terribly over-assessed at the present time,” he said, noting that as a result, Kingston is paying more than its share of the school district bill. “The City of Kingston accounts for only half of the school district, yet we contribute more than any other town to support it. We pay more.”

The increase in the tax rate for homeowners was 9.77 percent — bringing it to $15.99 per $1,000 of assessed value, compared with $14.57 in 2009-10. To cite my own example, for a home with an unchanged assessment of $191,000 I paid an increase of $286, for a total of $2,431.60 — a 13 percent increase over the $2,145 I paid last year. Without my $624 STAR exemption (a decrease of a few dollars from the year before), I would be paying more than $3,000 in school taxes alone, an amount that would likely scare off any prospective house buyer, unless my home was sold for a pittance.

Non-homestead, or commercial, property owners, who pay a higher rate of taxation, are getting hit even harder. The commercial rate increased from $20.84 in 2009-10 to $22.77, a hike of 9.26 percent. That amounted to an increase of nearly $750 on the professional Uptown building owned by Dr. Gilberto Nunez, who runs his dentistry practice on the first floor and rents out two upstairs apartments. Nunez’s building was assessed at $390,000, unchanged from the year before, but his school taxes increased from $8,139 to $8,886. “It’s making it more and more difficult,” Nunez said. “I have to drain money from the business to try to sustain my building. The building is always in negative numbers, even with the rentals.”

City of Kingston taxpayers also are paying a greater share of the school district bill than the other nine towns in the district. Kingston School District Treasurer Gary Tomczyk Sr. noted that the city paid 37.4 percent of the total school district budget for 2010-11, an incremental increase over the 36.63 percent share it paid last year. The Town of Ulster, which paid 29.45 percent of the total share, also saw a small increase, up from 28.9 percent last year.

“The City of Kingston had more valuable real estate than the year before,” Tomczyk explained. Virtually no one in Kingston would agree, and Kingston assessor Mary Ann Bahruth has the numbers to show that the city’s property actually dropped in value —substantially. In 2010, residential property, which has a school taxable value of $1.2 billion, lost $41.8 million in value due to lowered assessments, tear-downs or properties being taken off the tax rolls — a drop of roughly 5 percent. Non-homestead or commercial property, which has a school-taxable value of $557 million, lost $16.1 million, a drop of approximately 3 percent. Altogether, city property lost $57.9 million in value in the past year.

As the real estate market sinks and assessments drop accordingly, “the rates will go up, if the budgets remain the same,” said Bahruth. “A lot of people came in saying, ‘My bill went up a lot more than I expected.’” Kingston seems caught in a nightmare scenario, in which a dwindling tax base pays an ever-higher share of a bill that just keeps rising.

Getting a clear picture of why tax rates rose more than twice of the percentage rate of the levy increase is not easy — the city is one of a total of 10 municipalities which make up the school district as a whole. The up-to-datedness of each town or city’s assessments plays a role, though a figure known as an equalization rate tries to put everybody on a level playing field. An analysis of the full value (assessed value divided by the equalization rate) shows that Kingston’s homestead value dropped 3.3 percent from July 1, 2009 to July 1, 2010, but other towns dropped further — the Town of Ulster fell 6.9 percent; Rosendale fell 10.2 percent; and the Town of Esopus fell 6.1 percent. So while the City of Kingston may have indeed lost value, other towns lost more value, which would tend to force the city’s tax rate higher. Then there is the fact that the City of Kingston is committed to keeping its equalization rates at 100, or full value. While that policy is good when the market is going up, as it keeps better pace with rising values, when the market is down, the lag between assessments and the market makes for properties being valued at more than their owners could ever expect to get for them.

Assessments out of whack

Kingston realtor Jonathan Hoyt has developed a cottage industry in representing home owners fighting their assessments. This year, he represented clients challenging their assessments in small claims court, and in virtually every case the reviews were successful. (Clients first grieve their assessment with the city’s Board of Assessors; if they are unsuccessful, then the next step is to take the city to court.) All of the cases were high-end, and Hoyt said the drops were significant — from $504,000 to $390,000 and from $634,000 to $496,000, to cite two examples.

Market conditions aren’t the only reason Kingston properties are going down in value; the high taxes are also a significant factor in deflating the values, Hoyt said. The houses and commercial properties that sell, he noted, “are being assessed independently of other properties in the neighborhood” — a phenomenon that obviously contradicts the whole notion of a fair equalization process. According to Hoyt, 75 percent of houses sold last year sold for less than the assessed valuations.

Actually, this year’s school budget was flat; the levy increase was necessitated by the district’s loss of $3.4 million in state aid, according to Tomcyzk. He said that the amount spent on administrators and teachers accounted for 3.64 percent less of the school budget than in 2009: $58.96 million in 2010-11, compared with $60.7 million the year before. The proportion of the budget that was spent in salaries was down this year, from 43.2 percent in 2009 to 41.9 percent in 2010-11. Tomcyzk attributed the decrease to layoffs, which included 50 teachers and one of the five assistant superintendents.

However, teachers, support staff and administrators continue to get salary increases. Under the terms of the Kingston Board of Education’s new contract with the Kingston Teachers Federation, teachers will get an increase in pay of 4.47 percent over the next two years and this week the school board OK’d a deal with the district’s support staff union which would give the more than 300 members of the Educational Support Professionals Union a 4.56 percent raise over two years.

Teachers also don’t contribute a cent to their health insurance. Insurance premiums are paid out of a union trust fund of approximately $18.3 million; Tomcyzk said the fund saves taxpayers 5 percent over what the district would pay if it were paying the premiums directly to the insurance companies. (This is a topic of considerable debate — former school board president Dr. David Fletcher has said the insurance policy that the trust fund is pegged to is a super-expensive features-laden Blue Cross plan that isn’t even offered anymore.) The premiums went up 13.4 percent this year, but the increase was absorbed by the fund, purportedly saving taxpayers additional increases on their bill.

Soldner said he hardly feels he is getting a deal. “[Union members] say they contribute, but it’s the taxpayer who put the money in the fund in the first place,” he noted.

The school district’s administrators are also getting raises. Under the terms of their 2005 contract, which expires in 2011, Superintendent of Schools Gerard Gretzinger is getting a 4.2 percent raise (2.2 percent of which is tied to the consumer price index) on his $182,804 salary. In 2009-10, Gretzinger got $45,883 in health care and retirement benefits alone (substantially more than the average Kingston income) plus $9,762 in “remuneration” (car allowance, life insurance, and the like). Three of the assistant superintendents are getting a 3.75 percent raise, with the fourth is getting a 3.5 percent increase. These increases are on salaries that range from $112,200 to $131,322, plus health insurance and retirement benefits that start at $26,299.

Overall, school district expenditures have increased from $111,277,987 in 2004-05 to $140,489,253 in 2010-11, a $30 million increase, even as the school population has decreased over the same time period from 7,943 to 7,020 students, a decline of close to 1,000 students.

Hoyt, who characterized the recent increase in school taxes as “unsustainable,” said he “was surprised the budget passed as easily as it did. I thought people would be voting against it.” Change will only happen when more citizens get out and vote down the proposed school budgets, said Soldner. Of the 6,000 or so residents who voted on the 2010-11 budget, he suspected the majority were members and supporters of the teachers’ union.

Jean Jacobs, a former Kingston school board president who hosts a local TV show, said the public needs to get educated about the importance of the school budget vote. “People have to become more involved in the process,” she said, noting that she herself was surprised by the amount of the tax rate increase. “You have 12 percent of the people determining the financial future of the city and district.”

Jacobs said she expects the problem to worsen in the future. “Is this a trend? Absolutely. The state aid won’t be there any longer. People aren’t involved enough, until they wake up one morning and their home is in foreclosure.”