I've gotten about a dozen emails and phone calls from homeonwers in Highland Township freaked out about the property valuation reassessments they received recently from the Highland tax assessor. Some have seen dramatic jumps in their assessments; I've heard through the grapevine that some owners have seen their assessments more than double, while others have seen more modest hikes.
Most people I talk with are under the mis-impression that, say, a 50% hike in their assessment will translate directly to a 50% hike in their property taxes. But that isn't how the system works. Townships are supposed to periodically review all the properties in the township and adjust assessments to bring them to market value (or some agreed upon percentage of market value). That's just what Highland has done. Without a periodic township-wide reassessment, some properties have assessments that remain well below their market value, while other properties (particularly new construction) are assessed closer to market value and bear an unfair tax burden.
When the tax grievance process is complete (sometime this month), the assessor will have a final tax roll. That's the total of the assessed property in that township. Let's say, for the purposes of argument, that prior to the reassessment the total tax roll in Highland Township was $50 million and after the reassessment it is $100 million. That doesn't mean that taxes will double because the township then takes its total expenses and divides that by the tax roll to get the tax levy — effectively the tax rate. So if the township expenses were $1 million and the tax roll was $50 million, the levy rate was 2%. Now, with the tax roll doubling, that same $1 million budget would result in a levy rate of 1%. There are also other entities (county and schools) that rely on the assessment to levy taxes and there are complicated formulas to adjust for percentage of fair market value, so when a township reassesses and the total assessment say, doubles, there isn't necessarily a doubling of the school tax for owners in that township.
A reassessment will result in increased taxes for some, but not necesssarily all, homeowners, and will create some hardship. I've often thought that there should be some system where homeowners on fixed incomes or otherwise unable to pay a higher tax bill should be able to have a lien placed on their house for a portion of their taxes so when they sell their house (and benefit from the appreciation that resulted in those higher taxes) the township can get paid, but the homeowner can remain in the house.
A question I get often from buyers is whether the assessment on a house they're buying will rise to market value upon sale. The general answer to that is 'no', for reasons that are related to the principal in New York that houses that are comparable in a township must be assessed equally. But I do warn them that if a house has a particularly low assessment (and low tax bill), they should be prepared over time for the property taxes to rise into a normalized range, which for most townships in Sullivan County is about 1.8% to 2.2% of the property's actual market value. (The big exception to this is the Village of Liberty, with a much higher effective tax rate.) If you have an effective tax rate of 1% of market value, you should probably expect your taxes to rise, and if you have a much higher rate than that range, you could possibly have grounds for a grievance.
In many ways, doing a township-wide reassessment is a good thing to do. It brings fairness to the system. But its also excruciating, and not perfect. It will likely take a year or two for values to really equalize. The grievance process is particularly important to the assessors, because it provides them with a lot of information that, along with additional sales, helkps them fine tune the assessments. It is far from an easy process, and doesn't win the assessors any new friends. But ultimately its critical to insuring the fairness of the system.
Update on this thread May 29, 2008: If you're coming to this thread for the first time, the comments below may not make a lot of sense. This thread got totally out of control, with personal attacks. More troubling, though, is that some commenters impersonated other commenters (by using a signature just slightly different than another commenter). I've removed a number of comments on here, but tried to leave the general tone of the thread intact.