Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out

New York State Property Taxes

VIEWS: 9 PAGES: 8

New York State Property Taxes document sample

More Info
									New York State Conference of Mayors and Municipal Officials
                            119 Washington Avenue, Albany, New York 12210 (518) 463-1185
                                     Toll free number for NYCOM members 1-800-446-9266
                                                                     Fax # (518) 463-1190




 Proposed Legislation Addressing Real Property Taxation Issues




     Testimony of the New York State Conference of Mayors

                       Presented by
 Barbara VanEpps, NYCOM Director of Intergovernmental Finance


                          Before the
       Senate Standing Committee on Local Government
                  Hon. Elizabeth Little, Chair
                           and the
    Assembly Standing Committee on Real Property Taxation
                   Hon. Sandra Galef, Chair




                          June 2, 2008
                       Albany, New York
       Good morning. I am Barbara VanEpps, Director of Intergovernmental Finance for the
New York State Conference of Mayors. I want to thank Senator Little, Assemblywoman Galef
and the members of their respective committees for the opportunity to share the opinions of
the New York State Conference of Mayors and the 589 member cities and villages NYCOM
represents, on the legislative proposals addressing real property taxation issues that were
referenced in the hearing notice.



Background
       As we all know, New York State has been given the dubious distinction of having the
highest tax burden in the nation. This is in large part due to the local property tax burden, of
which school taxes account for more than 60%. According to the Office of the State
Comptroller’s 2007 Annual Report, real property taxes were $1,768 per capita in 2005, or
56% above the national average. This, combined with a sluggish economy and the rising
costs of food and fuel, has made living in New York, particularly if you own a home,
essentially unaffordable for many of our residents.
       The issue becomes clearer, and to some extent, even more difficult to resolve when
you consider that the property tax is the single most important revenue source for local
governments. In 2005, property taxes (outside NYC) accounted for 43% of local revenue,
totaling $25.3 billion. (This number includes fire districts and school districts.) Given the
rising cost of providing essential municipal services and the limited ability to fund them, there
has been an increasing reliance placed upon this revenue source.
       And then there are our local officials who are caught right in the middle of this
dilemma, for they have not only a vested interest, but a fundamental responsibility to ensure
that their residents receive essential municipal services in the most cost-effective manner.
But they are also the ones who are criticized first, and perhaps most often, when quality
services are not provided and when property tax rates continue to rise. I can assure you that
no group is more interested in reforming the real property tax system than the local officials
who are responsible for the day-to-day operations of the cities and villages of this State.
       All of this brings me to the first bill identified in the hearing notice – S.1053-a / A. 1575-
a – or the “Circuit Breaker” bill. I don’t think there is a single local official who would not
support the concept of providing relief to their taxpayers, as this bill would, by providing
individuals with an income tax credit when their property taxes exceed a certain level of their
income. Furthermore, this bill would effectively hold local governments – whose dependence
on this revenue source exceeds any other – harmless from revenue losses since the “costs”
associated with this bill would be the fiscal responsibility of the State. It seems like a logical
solution on the face of it. However, when you consider the current economic environment
and the significant fiscal challenges the state is facing, one has to wonder how this might
work. In order for the state to absorb these costs, something is going to have to give. In
order to pay for these rebates, important state funding programs would be put at risk, and
undoubtedly have a negative impact on communities and their taxpayers. So while local
residents are gaining on one side, they might end up losing on another and then are they
really better off? Therefore, without a thorough analysis of the fiscal impact of a circuit
breaker program and the assurance that State aid and funding for other programs important
to local governments will be protected, NYCOM is not currently able to take a position on this
proposal.
       The other important point to be made is that, while a “circuit breaker” program will help
to relieve the property tax burden for those individuals who qualify for the credit, it is not going
to control the growth in property taxes. That being said, there is the potential that the cost of
this program will just continue to grow putting the fiscal health of the State at an even greater
risk. An effective strategy to lower property taxes must consider both sides of the equation
and include proposals to control costs and reduce spending.
       NYCOM has long argued that the real root cause of New York’s high property taxes is
state mandates. Even if the State provided significant increases in municipal aid, the
problem of high property taxes cannot be cured without giving local governments the ability to
reduce their expenses, particularly those associated with the salaries and benefits of
municipal employees. Since the essential services provided by cities and villages are
inherently labor intensive, workforce costs are the largest single
component of municipal operating budgets. Obviously, one sure way to achieve significant
property tax relief is by giving local officials the ability to control these costs. NYCOM
supports the reform of compulsory arbitration statutes and the repeal of the Triborough
Amendment to the Taylor Law. While we recognize that these proposals have been, and will
continue to be met with great resistance, at the very least the state must reject proposed
legislative changes to the Taylor Law that would undermine the collective bargaining process.
       With respect to the issue of local pension costs, although pension rates have been
declining in recent years, the tenfold increase in pension contributions that villages and cities
(outside NYC) experienced between 2003 and 2005 continue to plague local budgets. In
fact, in many cases, the AIM increases in recent years have been used primarily to fund local
pension costs. Although current contribution rates are in the same range as they were in the
1980’s, the base upon which pension costs are calculated – that is, salaries – has risen
substantially since then. NYCOM has argued that the State should undertake a thorough
analysis of the benefits, funding methodology, governance and oversight structures of our
public pension system. We also support legislation that would create a new retirement tier
with more affordable retirement benefits for new hires in both the Employees’ Retirement
System and the Police and Fire Retirement System. In addition, immediate relief might be
obtained by amending the system’s valuation and funding methodologies to ensure that local
governments are not paying any more than is absolutely necessary. These initiatives would
go a long way in helping to reduce the local tax burden.


       With respect to the remaining bills in the hearing notice, the following highlights
NYCOM’s position on each:


S. 2683 / A. 1572 – Would propose a Constitutional Amendment to require: (1) a single
statewide standard of assessment developed by the Office of Real Property Services ,
(2) a uniform three year assessment cycle, and (3) county-wide assessment.
       The New York State Conference of Mayors is not in favor of this legislation due to its
infringement on local home rule authority and its lack of funding to support its provisions.
New York is one of the few states that does not have a statewide standard for the level of
assessment (LOA). Most states require all property to be assessed at 100% of market
value, while other states require assessments at a uniform fractional percentage – for
example, 50% or 75% of market value. In New York, the law simply directs each municipal
assessing unit to determine its LOA at which all property will be assessed, and directs the
State to determine if that LOA was computed accurately within each particular assessing unit.
The fact that neighboring communities can have markedly different LOA’s results in both a
very confusing and complex system, one that requires the State to establish equalization
rates – a concept which I would argue, very few individuals can even begin to understand.
Consequently, when property taxes rise, many taxpayers blame their assessments, t heir
assessors and the perceived inequities that the current system engenders.
       NYCOM commends State leaders for the efforts they have made over the years to
improve assessment administration, primarily through local aid programs that help assessing
units keep their assessments current, accurate and equitable. We believe similar legislative
proposals that promote a partnership between the State and local assessing units will go a
long way to enhance the quality and uniformity of local assessment administ ration.
       Similarly, NYCOM sees the value of periodic reassessing provided there is money
available to support these local efforts. NYCOM is also in favor of a single statewide
standard of assessment as we think it will make the local assessment process easier,
enhance a better understanding of assessment administration among taxpayers and will
facilitate taxpayer equity. If the desire of the State Legislature is to make the assessment
process better, we suggest you give the local assessor the tools necessary to do their job
more efficiently and effectively. The imposition of an assessment cycle with a statewide
standard of assessment supported by a commensurate amount of state aid is one sure way
to accomplish this.
       NYCOM, however, cannot support the provisions in this bill that mandate county-wide
assessment. Current law provides for any County to take over the assessment
function after an affirmative vote of the electorate. However, history has shown that this is
not what the voters want. Many local officials and citizens alike strongly believe that
assessment is, and should remain, the responsibility of the local jurisdiction. They appreciate
the convenience and familiarity that comes with having their own appointed or elected
assessor right in their community.
       It is important to note that many of our municipalities have already given up their
assessing unit status or share an assessor with a neighboring municipality. The fact is they
have done so when it has made sense – both practical and economic sense – based on their
individual circumstances.


S. 7538 / A. 10613 – Would require local governments to prepare exemption impact
reports to be posted with annual proposed budgets.


       Since the local property tax is the primary source of funding municipal services, it
should come as no surprise to anyone that the erosion of the local tax base and the
accompanying burden it places on local taxpayers is of paramount concern to local officials
across the State. While much of this is attributable to population declines and decreases in
property values, particularly in our urban centers, the tax base is also compromised by the
imposition of real property tax exemptions. According to 2006 data, approximately 62% of
the 5.6 billion parcels in New York State are wholly or partially exempt from taxes. This
reflects $738 billion in exempt full value – 32% of the value of all property in the State. While
real property tax exemptions do play an important role in New York State’s property tax
system, it is important to note that exempting property from taxes does not diminish the need
for revenues; it simply shifts the burden of generating those revenues to the remaining
taxpayers in the community. Consequently, when you apply a standard 2.5% full value tax
rate, these exemptions result in more than $18 billion in taxes shifted to other non-exempt
property taxpayers. While this legislation would place an additional reporting requirement on
local officials, we appreciate the purpose that it would serve – that is, to heighten the
awareness of the true impact real property tax exemptions have on the local tax base, and in
turn, the ability, or lack thereof, to fund the essential municipal services that local
governments
provide without increasing the property tax burden on the remaining property taxpayers in the
community. However, we would point out that local governments already have the ability to
do this and whether mandating it is really necessary. NYCOM also believes that perhaps a
better, more effective solution would be to require that all legislation that would impose a
new, or enhance a current real property tax exemption, include a clear and accurate fiscal
impact so that both the public as well as those voting on such proposals will understand the
true impact on the tax base and local property taxpayers.
       Furthermore, let me state for the record that NYCOM strongly supports a bill not
included in the hearing notice but certainly worth mentioning here. S. 7909 / A. 11172 would
authorize property taxing authorities to impose service charges on otherwise tax-exempt
property. Sponsored by Senator Little and Assemblywoman Gunther at the request of the
Conference of Mayors, this bill would help local governments offset the costs of servi ces they
must provide to certain tax-exempt properties in their communities, that these particular
properties are not required to fund due to their tax-exempt status. This bill would provide
municipalities with the ability to recoup a portion of these costs, at local option, at a fraction of
the amount these properties would pay if they were taxable. Proposals such as this one will
certainly help slow the growth in municipal property tax rates.


S. 7727 / A.10730 -– Would allow municipal corporations to remove the limitations on
assessments on condominiums and cooperatives converted or constructed on or after
January 1, 2010 for municipalities subject to the provisions of section 581 of the Real
Property Tax Law.
       The Conference of Mayors has been a consistent and strong supporter of this
legislative proposal. Existing law requires assessing units to assess cooperative and
condominium property based upon its income-producing value, as opposed to its resale
market value. Currently, a single family home and a condominium may sell for the same
price, but the property tax liability associated with each will differ significantly. This occurs
because the condominiums receive the benefit of a valuation limitation while assessments for
single family homes are based upon market value. This inequitable mandate results in a de
facto partial exemption of approximately 30% for cooperatives and condominiums. This
resulting tax burden must then be borne by the remaining non-exempt residents of the
municipality. The proposed bill would begin to address the inequitable distribution of the
property tax burden, as well as remove the incentive to convert existing housing to
condominiums simply for the purpose of reducing taxes. Enactment of this bill, in our minds,
is long overdue.


      Conclusion
      Again, I thank you for the opportunity to share the views of the Conference of Mayors on
these important legisaltive initiatives. We recognize that there are no easy answers when it
comes to relieving the property tax burden. However, we strongly believe one essential element
is a strong State-local fiscal partnership. We look forward to working with you to strengthen that
partnership on these and other issues that will help ensure the prosperity of our communities and
the State as a whole.

								
To top