Math matters

During Monday’s City Council meeting, City Administrator Matt Podhradsky was asked by Ward 2 Councilor Greg Boe what the median property tax would be if the tax rate were not increased.

Let’s review the scenario in question.  In 2010, the median home value in Chaska was $216,216.  For 2011, they are anticipating a decrease in market value of 7.4%.  As such, the new median home value will be $200,216.  The current tax rate is 0.2189, and the new proposed tax rate is 0.2335.

Firing up the handy-dandy Brick City Blog calculator, we see that the property tax on the median home in 2010 is $473.  For 2011 — using the reduced market value and the increased rate — the proposed property tax on the median home is $467, a reduction of $6.

When asked by Boe what the property tax would be if the rate were not increased, Podhradsky answered it would be about $10 less, or $457.  But, that’s not correct.  In fact, if you multiply $200,216 by 0.2189, you get $438.

I’m not attempting to imply that Podhradsky was trying to shade the truth here.  He was speaking off the top of his head.

But people following the discussion (and those who read the Chaska Herald article that also re-prints the bad number) should be clear on what the true impact of this proposal is.  It’s not the difference between a $6 reduction in tax and a $16 reduction — it’s the difference between $6 and $35 for a $200,000 home.  And the more your home is worth, the bigger that gap gets.

The tax rate increase will result in $300,000 more in revenue for the city than if they had left the rate where it was.  In these tough economic times, raising a regressive tax like the property tax should be the last resort.  It should be incumbent on the Council and staff to produce a budget scenario that includes no tax rate increase so that Chaska residents can weigh the trade-offs that would have to be made.

[UPDATE 9/20]:  After reviewing my analysis and bringing it to the attention of the City Administrator, the Chaska Herald will be running a correction in this week’s paper.

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2 Responses to “Math matters”

  1. I like you analysis on this. I have one follow-up question… given that the numbers are calculated using the median (not mean) of the data set, how did you arrive at the 300k number for city revenue? Is there a data for the total number of single-family residences in the Chaska city limits?

    -CJ
    (Chaska resident)

    • I did not do any calculations to come up with the $300,000 number, I took it from the Herald story that was posted. If you take 6.7% (which is the value of the rate increase) of the total $4.88 million levy, it works out to be about $325,000.

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