Taxes: Pick Your Poison.

(Yes, it’s got a bunch of Simpsons images throughout. Be thankful I’m not referencing the show otherwise.)

There’s no question that every sector of government has work to do in cutting costs and improving the quality of its services.  All businesses do that – the job is to maximize shareholder value (that is an August of freshman year business school statement).  However, I feel we think about it the wrong way in our country – we prefer to cut taxes, sometimes without worrying about how it’s going to affect the quality of life in our community, or how it will ultimately affect us getting what we need.

Taxes are the ultimate “Not In My Backyard” argument in the world.  No one likes them, but everyone still wants to maximize their benefits from them.  If they go towards a program or project that does not benefit them, they will find ways to rage endlessly about them; however, they rarely question a windfall that comes their way due to tax money used for the program they like.  In short, taxes are always a ripe topic for reasonable discussion.  Unfortunately, no one seems to be interested in being reasonable about it.

Face it, we are going to get taxed in any way possible.  That begs the question – what is the best way for individuals to have taxes collected from us?

People are generally aware of the major taxes we encounter out there – income taxes, property taxes, and sales tax.  They are the big revenue generators for governments, from the federal government to your municipality.  There are other taxes tucked away that we don’t always think about but still show up – specific taxes that appear on phone and television bills, utility bills, and lodging in many places.  There are even things like “jock taxes” to mess with visiting athletes.

One particular form of taxes people have been angry over as of late is property taxes.  This is especially becoming a notable issue in Upstate New York (including my hometown of Olean), where many cities are facing significant budget gaps for various reasons – from significant inflation across the board over the past few years to federal and state mandates, as well as challenges with a shrinking population.  As a result, these communities are presenting budgets with some large property tax hikes suggested before negotiations start to make the budget more reasonable.  At the same time, there is a huge push from some in the opposite direction – to do away with property taxes altogether.  People have a slew of arguments against them, with the primary one being that it is a wealth tax that is collected without consideration of the property owner’s income.

I can understand the sentiment of doing away with property taxes, especially when it comes to the current economy.  Wage increases for most people have generally not kept up with the significant inflation we’ve seen over the past five years, so people already have less spending power than they did before COVID.  People with fixed incomes, such as retirees and the disabled, are stuck spending more on property taxes and therefore less to make ends meet in other parts of their lives.  On top of it, some people manipulate their property tax values to try and get the lowest levy possible – often by making sure their property looks worse; yet this drives down the value of the neighborhood as a whole, economically and in terms of quality of life.  It’s a classic issue, as some people are willing to deal with the blowback from neighbors to save themselves a few bucks; if you have that issue with a neighboring property owner, good luck with that.

Some people would argue that the only people that are affected by property taxes are the owners.  However, a lot of people that do not own pay for it too.  A landlord always passes the costs of property taxes along to their renters; businesses also factor the costs of their facility (including their tax costs) in their prices.  If you take away those property taxes, are the business owners and landlords going to drop the prices they charge to you?  Of course not – they’re going to enjoy their windfall.

Another counterargument to doing away with property taxes is that the taxes only affect local residents.  Think of all the corporations that own businesses in our community that are headquartered outside of town and whose owners are not in this community (the classic example being Wal-Mart).  By paying property taxes, they are contributing to the community’s expenses that allow them to set up shop and make money here, such as the roads and other local capital projects.

There has to be a balance in how we go about collecting taxes by using the various means available.  Doing away with property taxes can have a lot of unintended consequences in other ways that actually end up driving prices higher for the masses.

For instance, consider the consequences of getting rid of property taxes in Olean.  

There are three property taxes we pay as residents of the city of Olean – the city (municipality) tax, the county tax, and the school tax.

If the city has no property tax income, it basically functions at a shell of its current ability.  The Olean city budget, aside from the water and sewer funds (which are collected based on usage), was about $19.8 million.  To balance the budget, the city needed to collect around $8.5 million in property taxes.  

To cut the budget to $11.3 million (the amount without the property tax income), you’d have to cut a ton of services.  There are mandated services that come from being incorporated as a city – in particular, public safety and infrastructure, like police and fire departments, street lighting, and waste disposal.  The police and fire departments, which must include full-time staff, had a total number of costs around $7.55 million by themselves.  You’ll definitely need money for accounting and an auditor; a city clerk to collect fees like the water bills and fines; a lawyer; a safety inspector; an engineer; a public works department for road maintenance, like plowing snow; street lights; and the cost of having facilities to do business in.  At this point, you’re up to around $10 million of that $11.3 million budget.  Add in paying off bonds the city has taken out, and you’re already over the budget number.  Meanwhile, you haven’t paid most of the employees and you have no budget for the parks, the city’s recreation program, the Olean Area Transit System, and an animal control officer.

You could argue that some of the expenses that would disappear from the budget would be fine.  For instance, if you spun off the parks and recreation department, you’d be able to sell the William O. Smith Recreation Center, Bradner Stadium, and the John J. Ash Community Center.  However, the people that buy these properties are not buying them for benevolence, but to make money.  Realistically, can an ice rink make money in Olean?  How about a stadium that gets used for 40 dates a year at most?  Can most parents afford to have their kids pay to go to recreation activities?  Is someone going to dip into their own pockets to maintain our parks?  On top of it, if you lose these, you lower the quality of life in town, which leads to lower tax receipts from people coming in and spending their money in the city.  Once again, the budget is off, and you’re back in the hole in no time.  You also might be able to spin some services off to the county level… only to have the county have to raise their taxes to balance their budget.

The City’s Mayor is a full-time paid position, making $50,000 per year, or, for a 40-hour workweek, about $24 per hour.  This is a flat salary; you make that $50,000 regardless of how many hours you work, and let’s be realistic – when you are an elected official that lives with your constituents, you’re generally having people bug you about your work any time they see you.  The mayor is in the lower half in pay for city employees despite being the chief executive of 150 workers (although there are many city employees that make more because they work overtime).  I think it’s actually a bit of a bargain to have a mayor for $50,000; we’ve been paying that much since the role was made full-time in 1994.  If pay for the job had a cost of living adjustment of 3.0% yearly since then, the job would now pay about $128,000.

Overtime is also a targeted concern of many.  I know that overtime is accumulated in many instances by fire and police to fill shifts while others are out or because certain jobs have not been filled yet.

An outside-the-box argument would be to dissolve the city, either into the town, or step down to being a village.  Still, a lot of these costs are going to creep up in one way or another, such as shifting law enforcement duties to the New York State Police or the Cattaraugus County Sheriff’s Office.  Slower response times from the emergency services due to stepping back to volunteer status creates its own problems, as well.

What if we did away with county property taxes?  The 2026 Cattaraugus County fiscal year budget was about $297 million, with $60.4 million coming from property taxes.  79% of the county’s budget is mandated by state and federal law, with the rest of the budget equaling about what the property tax revenue created.  

Some states shift costs away from property taxes to sales tax, which works if you have a lot of business created by tourism.  For instance, property taxes in South Carolina are some of the lowest in the country, the sales tax rate is increased to make up for some of that gap, with a 9% general sales tax and an 11.5% sales tax on prepared food in the Myrtle Beach metropolitan area.  (They also benefit from being Myrtle Beach, part of the longest continuous beach area in this country, attracting around 15 million visitors a year; an a metropolitan area that’s grown from less than 200,000 people to around 425,000 in just a quarter century.)  For Cattaraugus County to make up for the amount lost in property tax revenue with an increase in sales tax to compensate, the county would have to create a 10.75% sales tax, which would not include the 4% state rate.  I somehow doubt people are going to think twice about going out of town to make any sizable purchases, especially if they can save over 6% of the cost just by driving out of the county limits.  This hurts the business climate as a whole, and the cycle perpetuates.

People might want to see some of the mandated programs disappear.  For instance, in Cattaraugus County, Medicaid is the biggest budget item, with about 35% of the budget being appropriated for that alone.  Want to get rid of everyone on it?  That’s dumping over 25,000 people off of health insurance altogether.

If that happened, Olean General Hospital would definitely not survive, as the hospital generates about 65% of its revenue from people covered by Medicaid and Medicare (the two revenue streams are not split apart, but given state averages, it is probably about a 55-45 split.)  The hospital generates over $300 million of economic activity itself, and, most importantly, without it, you have to drive 50 minutes in any one direction for emergency medical care.  Urgent care facilities would not survive without those funds, either, taking that option off the table for immediate needs – meaning you have to travel, no matter what.

There would be other costs to our communities without Medicaid, as well.  The volunteer ambulance companies would have a big issue because there would be plenty of people that would need the service that could never reimburse them; they would either have to charge more for everyone or turn to local taxpayers to pay for their decreased revenues.  Medical transportation costs would increase, too, because a lot of doctors would have to set up shop elsewhere to maximize the number of patients that can afford them.  It’s enough of an issue to get doctors to come to rural and poorer counties as it is; removing the hospital and Medicaid from the equation would make it almost impossible to attract any medical care to the area.

All that I’ve presented so far does not even include the moral side of the equation – are you okay with one-quarter of your neighbors being unable to afford basic medical care?  Most people will not get care if they can’t afford it.  I don’t want people dying unnecessarily when treatment is available; I’ll happily live with that expense.

Let’s move on to the third property tax in the area – school taxes.

Schools are not cheap, to say the least.  The budget for the Olean City School District for the 2025-26 academic year was a shade under $58 million – yes, almost three times larger than the city’s budget.  The district employs about 330 people and takes care of over 1,900 students between prekindergarten and 12th grade.  The tax levy provides a little more than $14 million of the school’s budget.

About half of the budget ($28 million) is to pay for salaries.  Some people may feel that teachers are generally overpaid, but in Olean, they are well below the state average – with that blow lessened by a lower cost of living in Olean when compared to other parts of the state.  You also accept that when you pay less, you have a harder time keeping the best talent in the field available to you.  People criticize teachers all they can, but they have tough jobs.  Do you want to manage keeping 15 or more kids focused on various topics for hours a day and trying to get them to learn?  Remember, no phones, no video games, an expectation that they’re going to show some retention of knowledge, and keep them from being destructive or aggressive… That’s a tall ask for most people with their own kids, not to mention having all of their friends and some of their enemies with them.  It’s not easy to be successful in the profession.

One person offered a legitimate question on Facebook about a week ago – why should people have to pay property taxes for a school that they do not use or have anyone that makes use of it?  Could you argue that it’s inherently unfair to pay for something you or your family may never use?

In my view, it is important to pay for it, as we all make use of the school system, even if we never send a child there ourselves.

I believe that an educated population helps improve the quality of life for everyone.  I see some of the major benefits of schooling for kids as including learning mathematics; being able to read, write, and speak effectively; being able to understand how concepts in various situations work; and, as much as anything, learning how to navigate relationships with people from all walks of life.  These are all basic life skills, and we pick most of them up over the 2,500 days of our pre-college education.

There’s a reason that many jobs have educational requirements  – we need people to achieve some educational background for almost every function in our society.  If you know any adults that have functional illiteracy (I know a couple in different walks of life), they will probably tell you how difficult it can be to get by in some situations.  People that have poor socialization skills struggle in most workplace settings.  Even when considering apprenticeships, which are an important part of building the workforce, we need to have some of the skills we learn in school to get the work done.  If people don’t have the most basic skills, they become unemployable, and then you’re faced with a different societal cost, both financially and in the quality of life.

If you were to divert the property tax costs in the school budget to strictly being paid by the caretaker of each student, that equates to about $7,400 per child per year.  (The actual per-pupil cost is around $22,000 per year.)  In Title I calculations from the 2022-23 academic year, 25.4% of district students lived in homes below the federal poverty level; I do not see a way most of these kids could afford to go to school without subsidies provided from another source (meaning grants created by creating or raising some other tax).

You may see homeschooling as a solution, but then the question becomes another issue – who do you want to teach your kids?  If you do it in-house, you probably have to take one person out of the workforce at least part-time, meaning you have even less money to make ends meet for all of your other expenses.  Some people can afford to do this, and do it well – but not everyone is compensated in a way that it would work.  If you pool groups of kids together, you may be able to get someone to do it for you for free or at minimal cost, but you have to keep that relationship intact for 13 years, or you’re going to be scrambling if things go south
(figuratively and/or literally) at some point.  Also, you have no clue of the quality of education the kids are getting unless they are compared to standards put out there – standards that are almost always measured by the government entities… usually the State Department of Education.  And, honestly, there are people that are incapable of providing their children with a quality education.  Some people can homeschool effectively, and more power to them; however, there’s a lot of children that would suffer academically without formalized instruction.

Driving up school costs would also disincentivize people having children. It’s another cost that would have to be weighed when having a child, and many two-income couples may not think having a child is worth it. Meanwhile, those who have nothing to lose by having children will still have kids. (This is starting to sound like the setup of the movie “Idiocracy”. I’ll see myself out of this conversation.)

Another potential issue that creeps up when considering having access to free elementary and secondary education is that some parents will not worry about educating their kids at all, and the kids will be able to do as they please.  We may think it would be easy to police that, but realistically, people can lie their way out of many situations.  Kids roaming the streets throughout the day bring costs in other places, especially if they create mischief, which can ultimately drive business away from places altogether.  If almost every kid is expected to be at school, the question of where they should be is minimized.

It’s possible to take away some programs to lower costs, but then there is a decrease in the quality of life.  Sports and clubs are extra expenditures, but they also get the kids to stay involved at the school for longer periods of time, keeping them from being unsupervised in the period between them getting off of school and their parents getting off of work.  Also, activities create a stronger sense of community for everyone involved in the school, which benefits society as a whole.

The argument that it is unfair to people that do not send their kids to the school they are paying for is lost on me.  My family and I have enjoyed significant privilege compared to many community members.  I went to private schools from kindergarten to high school graduation.  My parents never complained about the idea of paying school taxes.  I also sent my kids to private school until the beginning of the 2024-25 school year, when they were going into 4th and 6th grades; no tax money went towards tuition costs.  I knew that and accepted it.  My value system includes that I would not want to decrease the quality of education for other kids based on the choices I make with educating mine.

There are definitely a lot of places that can be cut in all three sectors of government that receive property tax revenues.  I’ve got a few in each domain that quickly come to mind.

In the city, we pay for an airport that gets little use and currently has little utility to the community.  It is possible we could sell it, but who wants to buy it?  Is there any business or person out there nearby that is going to pay for a paved strip of land on top of a hill in Ischua that’s located over a mile from a main route?  The city also has other facilities that could be sold, but then we would have to rent them out if we had any need for them.

In the schools, combining administrations across districts would be helpful.  For instance, there are 12 school districts that have their offices located within Cattaraugus County, not including Randolph Academy Union Free School District, which operates under a separate charter and system.  That’s 12 business offices, 12 human resource departments, and (most notably) 12 superintendent’s offices, as well as other things.  You could probably cut a bunch of costs just centralizing some of those costs among multiple districts.  The state has already encouraged a lot of school districts in the area to combine either activities (Hinsdale combines with other districts for many sports) or the entire school system altogether (Allegany-Limestone, Bolivar-Richburg, Cuba-Rushford, Cattaraugus-Little Valley); this could be another step towards streamlining the system’s costs.

In all three systems, the biggest expenditure is personnel.  You could argue that taking away the unions could make it easier to get rid of problematic and unneeded employees and hold down costs.  However, there is a significant cost to bringing in new employees in terms of the training and onboarding costs that may financially outweigh the improvement in the quality of services.  It also deters leaders from coming in and installing their own people at a whim; that would make it harder to attract and retain employees, especially good ones that want to work for you.  

Cuts actually do occur.  Cattaraugus County actually cut 84 jobs in the 2026 budget – most of them were already vacant, but others will be eliminated, with the plan being that people in positions being eliminated can bump into other jobs in the county system so they do not end up unemployed.  Getting rid of employees without following the proper human resources protocol put in place by the entity also creates problems with litigation.

Ultimately, there are solutions out there to getting the tax burden for everyone to go down.  We just need to be planful about it.

(I probably should end with a picture of what I’m suggesting we do to raise revenue for the city.)