Last week we passed the first day of spring. That means its time for our property tax and water bills to go up, here in the Town of Vienna.
This looks at the Town’s recent proposal for the real estate tax rate. In particular, the Town is legally required to tell citizens how much their real estate tax bills are going up, on average. And, four years into this new legal requirement, once again the TOV made a math error and got that materially wrong.
I’m not even sure why I bother to do this, at this point. I guess, after four years, this is now a small-town tradition.
But, to me, it’s not really about the math error. It’s that incidents of this nature seem to reveal that our elected representatives don’t read the details. Nobody read this and said, hey, that doesn’t make sense. How can our budget show property taxes going up almost four percent, but our notice to the citizens shows them going up just 1.6 percent? It really wouldn’t take any more effort or attention to detail than that. Read the one-pager, and see if it matches what is arguably the single most important number in the budget.
In theory, I’m supposed to be a good do-bee and just quietly inform the Town of the error in their latest notice.
(Now let the pitch of your voice rise slowly as you read these next few sentences:) But, four years into a task that requires a three-line spreadsheet to do correctly? A task that’s a legal requirement for one of the Town’s most important revenue sources? That can easily be checked four ways to Sunday? And it’s still messed up?
I’m just not feeling the discretion this morning. If you don’t want to read about it on the internet, TOV, check your math before you publish the notice. I list four easy ways to do that, at the end of this posting. Pick one, any one. Chaos around this legally-required notice is entirely unnecessary.
It’s pretty clear that almost nobody in the citizenry cares about the taxes or the water bills. Most are unaware of the timing, e.g., that the Town is in the process of setting the rates for the coming fiscal year right now. Few show up for the (poorly-advertised but legally required) public hearings. Some years, for the annual hike in the water and sewer rates, literally nobody shows up.
It’s equally clear that nobody bothers to check the math used in that legally-required real estate tax notice. Except me. FWIW.
So, in a very real sense, we have gotten the government we deserve. And I’m talking to myself.
Which is liberating, because I don’t have to apologize for talking about the math. Equations, even. If you can’t stand the algebraic heat, stay out of my numerical kitchen.
For the few of you out there that are still bothering to read this, the bottom line is that real estate tax bills, on existing properties, are going up an average of 3 percent, in the Town of Vienna. The Town’s notice shows something around half that. But that can be traced back to a math error.
The only real importance here is that this notice is a legal requirement. The Town must, by law, inform its citizens of the coming tax increase. If the Town materially misinforms the citizens, does that count? Even if the citizens patently don’t give a crap?
Background: Post #218,Post #1128.
A brief note on #218. After being confronted by Town staff about that post, as I attended a Town Council meeting. I did the reasonable thing and removed it, and then made light of that in a subsequent post. I withdrew the post even though the numbers were right. And now it’s deja vu all over again. I’m no longer so sure that taking that down and making fun of myself, instead, was the right thing to do. Why? Because it’s four years later, and still, nobody checks the math.
The Commonwealth of Virginia requires that local jurisdictions show how much real estate tax bills will rise in the coming year. Local governments have to do the simple math to combine the change in assessments, and change in the tax rate, and show citizens the bottom-line number: How much will the tax bills increase, on average.
This is an obvious good-government measure. Rather than present citizens with a bunch of gobbledygook, local governments must put all the pieces together on one page, do the math, and show citizens the one number that matters to them: How much more will they have to pay.
While every other jurisdiction that I have looked at in Virginia manages to do this, we can’t seem to get this right, in the Town of Vienna.
The killer here is that concept really isn’t hard. If assessments are going up 10%, and the tax rate is unchanged, then the notice has to end by saying that tax revenues are going up 10%. By contrast, if assessments are going up 10%, and taxes are lowered to offset that fully, then the bottom line has to show that there will be no increase in total real estate taxes for the coming year.
The second killer is that you can (almost) guess the correct number with a simple quick-and-dirty calculation. To get it exactly right, you need to do the math. But to get close, all you need is a little common sense. (And so, if you have made a material mistake in your algebra, it’s really, really, really easy to spot it. If you care enough about it to check your work.)
OK, smart person, off the top of your head, if assessments are going up by 9%, and the tax rate is going down by 6%, how much will the tax bills increase?
If you guessed, um, like 3%?, then you’d be um, like, almost right. Not four-significant-digits right. But definitely in the ballpark.
The exact arithmetic is this:
- Prior assessment * 1.09 * prior tax rate * 0.94 =
- (Prior assessment * prior tax rate) * (1.09 * 0.94)=
- Prior bill * 1.025
Or 2.5 percent higher. So the simple guess was 3 percent, but the correct answer is 2.5 percent. My point being that it takes more-or-less zero effort to get close. And so you can easily have confidence in your algebra, if it comes out close to the simple-minded guess.
Let me just pull some numbers out of nowhere, and for no particular reason, redo that calculation for a 9.1 percent increase in assessments, and a 5.555 percent reduction in the tax rate.
New tax bill = old tax bill * 1.091 * 0.9444 = old tax bill * 1.03 = 3 percent increase in taxes.
Hold that thought, as we take a look at this year’s legally-required notice of the proposed real estate tax rate for the coming fiscal year, as posted with the materials from the last Town Council meeting (at this .pdf link).
Notice of tax increase 2022 for FY 22-23
In order to do the calculation, you need to know the current tax rate. Which the Town of Vienna does not bother to list in that notice. And never has. So you have to find it in other Town documents, such as this one, to see that the current rate is 0.2250.
So, the data are:
- Assessments are going up 9.1 percent.
- The current tax rate is 0.2250 (dollars per $100 of assessed value)
- The new tax rate is 0.2125 (ditto).
I’m not here to question the assessment data. I’ll just accept that. But, given those data, how much are real estate tax bills going to increase the Town of Vienna?
First, how much is the tax rate going to fall? The new tax rate is 94.44% of the old one (.2125/.2250 = .9444, to four significant digits, same as the rest of the calculation).
Now do the simple calculation. How much are tax bills going to go up, in the coming year? What is 94.44% of 109.1% of current taxes? It’s (.9444*1.091 = 1.0303), that is, …
Three percent higher, plus rounding error.
If the TOV notice doesn’t say that, then it’s wrong. Because the entire point of that tax notice is to let the citizens know how much their tax bills are going up.
Well, nope. The Town says that tax bills are only going up 1.6 percent.
That’s wrong. That’s a bit over half of the actual number. And please note, this isn’t an opinion. It’s a calculation. Aside from acceptable rounding error, there is no ambiguity here. Either my math is wrong, or the Town’s math is wrong.
Now let me drag out the spreadsheet that I’ve used the past three years — and made public so that anyone could download it (say, to check their arithmetic) — and see what the prior “known good” calculation shows.
In the meantime, don’t be fooled by the arcane language of that paragraph. Read the background posts if you want to know more. But that is, in fact, where the TOV is supposed to tell citizens what the net change in the average real estate tax bill will be.
Or, if you just want to do a common-sense check: Well, assessments are going up a little more than 9 percent, taxes are coming down a little less than 6 percent, so if you had to guess, you’d guess that the total tax bills are going to go up about 3 percent.
Here’s the exact calculation. Same spreadsheet I’ve used for the past three years. Same one that reproduces the calculations shown by other Virginia local governments, to within rounding error. And when I do the formal calculation, I get what I now know is the correct answer, 3 percent. That’s the second cell highlighted in yellow, below.
If you trace through it, all of the errors in the Town’s notice come from the fourth line — the revenue-neutral tax rate. Which, once again, is not hard to calculate. If assessments are going up 9.1%, and the current rate is .2250, then the revenue-neutral rate has to be 0.2250/1.091 = 0.2062, to four significant digits.
The Town, by contrast, shows it as 0.2092. Hijinks ensue.
But if you really want to drive yourself crazy, try comparing this official notice to what’s in the Town of Vienna proposed budget. And you will soon see that the 1.6% in this notice contradicts what’s in the budget. Apparently nobody, not even the folks voting on the budget, thought to compare this legal notice, for benefit of the citizens, to the actual budget numbers.
E.g., on page C2 13 of the proposed FY 22-23 budget, the town shows current and projected property tax revenues, from which you can calculate that the TOV projects a 3.9 percent increase in total property tax revenue. (That seems approximately correct, because that includes the additional value from improvement of properties, including both replacing small existing homes with larger ones, and the big new buildings along Maple Avenue). (I will note that elsewhere, you can find yet different numbers, but those appear to apply to the median property, not to the average property).
So it’s not as if the TOV can’t do the math. They just don’t seem to bother to check that the notice informing the citizenry is correct. And, in a realpolitik sense, that’s entirely appropriate, because as far as I can tell, almost nobody in the TOV cares about the taxes or water bills. Which is why I end up being the one to find an error, if there is one.
I count at least four easy ways to check the math. There’s the quick-and-dirty test outlined above. There’s the spreadsheet that I made available for download in prior posts. There’s all the notices by other local governments, where you could load their data into your calculation to see whether or not you can replicate their results. And there’s the simple comparison of what is said in this notice, and what is said in the Town’s own budget documents.
Anyway, the upside is that nobody (but me) cares. So this has to be classified as annoying but harmless. Anybody who actually cared about the rates could do the math themselves, I guess. Actually, substitute “must” for “could”, and you’ll have a more accurate picture of the situation here in the TOV.