TAX ACTIVITY - UPDATE APRIL 14, 2005
Over the course of the last 6 months, the subject of property tax inequity and the resultant burden it is placing upon the residents and taxpayers of New York State has reached a crucial level.
While property values, as based upon 2004 sales, continue to rise, the resultant impact on property owners has reached confiscatory levels.
Local officials, individuals, and various interest groups have lobbied heavily with our state and county legislators to aggressively enact funding and tax reform.
The following summarizes some of the major activity underway. While these efforts have shortcomings, the fact that bills are being introduced and being prepared for public comment does indicate that tax and funding reform is now high on the mind of our Legislators in Albany.
The details behind these bills are found on the NY State Senate website, (www.senate.state.ny.us/). Just click on bills/laws in the upper left side of the page and then enter the bill number.
Included are my comments regarding the adequacy of these efforts for consideration.
NY STATE ASSEMBLY:
A384 - GUNTHER, THIELE
Permits the financing of public schools in New York State within the context
of the following objectives: (1) the elimination of the real property tax to
support public schools, (2) the retention of present levels of local control by
school districts, and (3) the guarantee of quality and equality of educational
opportunity for all children of the state; provides that the state shall assume
all of the costs of basic quality education, including all general and special
educational services which the commissioner, under guidelines established by
the legislature shall define as necessary; provides that such costs shall be
borne by increases in statewide business and individual income taxes in
conjunction with the elimination of school real property taxes.
COMMENTS:
We should follow this one closely and embrace it since it has the basic elements that need to be implemented. RGG
A2975 – SAYWARD, TERESA
Adds a new section 306 to Article III, Title One of the real property tax law to provide that every level of assessing units in the state shall provide a jurisdiction-wide re-evaluation of all real property every 10 years or less. Existing assessing methods in such jurisdictions may continue so long as all real property not assessed in accordance with the new section is reassessed within two years of the effective date of this section, and that all property recently assessed in accordance with the new sectionshall be reassessed within 10 years of the last documented assessment.
COMMENTS:
This bill also gets at one of the great inequities in the State i.e. Towns / cities that have not reassessed in upwards of 40 – 50 years. The existence of this gross underassessment results in an undervalue of properties and potentially allows the undervalued towns to get more State and Federal aid than they deserve. This should be supported. RGG
A5667 – SAYWARD, TERESA
Allows a freeze to be placed upon real property taxes assessed against persons 65 years of age or older having earnings of not more than $32,000 and who have held title to the property for at least two years prior to making an application; provides that nothing in this section shall be construed to freeze the assessed value of such property;
COMMENTS:
While the thrust of this bill is in the proper direction, the earnings cap must be more realistic. The Plan for New Jersey ( referenced below ) sets caps on property taxes at 5% for people earning $100,000 or less. This bill should be watched, updated, and supported. RGG
NY STATE SENATE:
S1265 - LAVALLE, ALESI
Enacts "the education finance reform act"; permits the financing of public schools in New York State within the context of the following objectives: (1) the elimination of the real property tax to support public schools, (2) the retention of present levels of local control by school districts, and (3) the guarantee of quality and equality of educational opportunity for all children of the state; provides that the state shall assume all of the costs of basic quality education, including all general and special educational services which the commissioner, under guidelines established by the legislature shall define as necessary; provides that such costs shall be borne by increases in statewide business and individual income taxes in conjunction with the elimination of school real property taxes.
COMMENTS:
This bill is fundamentally the same bill as A384 – Gunther, appearing in the State Senate. RGG
S2847 - LITTLE, MEIER, SEWARD, WRIGHT
Establishes a real property tax exemption for increased value of property in a hamlet or moderate intensity use area in the Adirondack park where such property is purchased or constructed on or after January 1, 2006; requires the state to reimburse municipalities for such exemptions from revenue derived from the additional real estate transfer tax.
COMMENTS:
This bill is an attempt by Senator Little to provide growth in affordable housing in the Park by exempting taxes on a sliding scale over a ten year period for new owners. My own view is that it could change the character of towns with small hamlet or moderate intensity areas by turning much needed commercial establishments into housing areas. In addition, the limited available property would begin to demand premium prices, and potentially defeat the original desire for affordable homes. RGG
S2846 - LITTLE
Provides for the imposition of a fixed real property assessed value on residential property owned by persons 70 years of age or older; provides for state reimbursement to municipalities for tax revenue lost pursuant to such fixed real property assessed value; imposes a tax on the conveyance of such real property.
COMMENTS:
This bill has all the elements of a reverse mortgage for people over 70. The assessments would continue to increase with time. There is a cap for owners based upon when they reach 70 years of age. The State reimburses the municipalities for the difference. When the property changes hands, the back taxes are paid to the State, along with some applied interest. I view this to be of little value. RGG
In November, a panel of judicial referees recommended that the
State of New York provide New York City schools an additional $5.6 billion for
operating expenses and $9.2 billion for facilities.
Immediately, CFE and a coalition of organizations formed a task force and began drafting a bill that would transform the court's New York City-focused order into statewide legislation.
This bill, called the The Schools for New York's Future Act, sets forth a forward-looking, simplified education funding system that will deliver resources and reforms to every student in New York State. The bill will ensure:
·
AN ADDITIONAL $8.6 BILLION FOR
OPERATING EXPENSES to be provided
to districts across the state. The bill takes the same funding reforms that the
court ordered for New York City and applies them to every district in New York State. This means that hundreds of districts throughout the state will receive
substantial increases-a total of almost $3 billion-in addition to the $5.6
billion that the court ordered for New York City. No district's current state
aid allocation would be reduced. The bill calls for a four-year phase-in of
these new funds, with appropriate adjustments for inflation and student
enrollment.
·
AN ADDITIONAL $10 BILLION FOR
IMPROVING CAPITAL FACILITES to relieve
overcrowding, reduce class sizes, and other maintenance and facilities
projects. Of this amount, $9.2 billion would be used for projects in New York City.
·
A TRANSPARENT, SIMPLIFIED FOUNDATION
FORMULA that consolidates over 30
existing state aid categories into a single funding stream, providing districts
with predictability and transparency in the way their schools are funded. The
foundation formula starts with a base level of funding-about $8,000 per
pupil-which is then multiplied by the number of enrolled pupils in the
district. This figure is then adjusted to make sure that schools with high
rates of poverty, children with disabilities, and English language learners
receive substantial extra resources. Finally, the amount is adjusted by a cost
of education index and a sparsity factor.
·
A CLEAR, FAIR FORMULA FOR
DETERMINING EACH DISTRICT'S STATE/LOCAL SHARE that is based on the local district's ability to pay and its
relative enrollment of students with high rates of poverty. The formula
substantially increases the state's overall share of education funding. For
many districts, this means that the proposed formula will result in lowering
the proportion of total expenditures paid by local taxpayers. For New York City, and certain other districts that have not been successful in providing
their students a sound basic education, this fair share local contribution
would be mandatory.
· AN ENHANCED ACCOUNTABILITY SYSTEM that will guarantee that the influx of funds is used in ways that actually provide all students a genuine opportunity for a sound basic education. New York City and other districts whose students are currently not meeting state standards would be required to develop a four-year comprehensive sound basic education plan that will replace most of the current planning requirements. The commissioner will issue regulations that will ensure that districts' comprehensive SBE plans set forth annual and long-term benchmarks for measuring outcomes, and that there is extensive public engagement of parents, teachers, administrators, and school-based planning and shared decision-making teams throughout the process.
Details can be viewed at (www.nysecb.org), (www.cfequity.org) where this summary was obtained.
The subject of Property Tax reform is not unique to New York State, but rather exists as work in progress across the 50 States. The Alliance to Reform Taxes has proposed a comprehensive plan for reforming New Jersey property taxes. The plan would expand an existing property tax credit that provides targeted tax relief to homeowners and renters for whom property taxes are especially burdensome, paying for these cuts by increasing the marginal income tax rates paid by those in the upper income brackets.
The plan uses a two-tier percentage of income thresholds, rebating taxes in access of 5 percent of total income for homeowners with total income less than $100,000.
Details can be viewed at www.theplan4ny.com .
COMMENTS:
The elements of this plan are fundamentally sound and it is recommended that this plan be considered as an option to New York States situation . RGG
TOWN OF HAGUE RESOLUTION #44
By action of the Hague Town Board, adopted at its meeting on April 14, 2005, it was
RESOLVED that the following recommendations be submitted to United State Senators Hillary Clinton and Charles Schumer,New York State Senators Betty Little and Joseph Bruno, New York State Assembly Representatives Teresa Sayward and Sheldon Silver, and Governor George Pataki, on behalf of the citizens of Hague urging their immediate attention.
WHEREAS the residents of the Town of Hague have collectively considered the local issues of greatest concern to them and identified high property taxes as one of the highest priority among them; and
WHEREAS funding for local governmental services, including public education, is provided primarily through a tax on the estimated value of property; and
WHEREAS the welfare of Hague homeowners is jeopardized by the rapid increase in the costs of public education and the inability of many homeowners to pay these increased costs; and
WHEREAS the increasing burden of public education on taxpayers also impacts on the ability to raise other taxes to provide services and to fund Town-specific and local initiatives important to the well being of the community.
THEREFORE, the Hague Town Board appeals to New York State public officials to implement new measures for financing public education, including the following suggested actions:
1) Develop legislation that would provide for a gradual transition to full state funding of education to eliminate the irrational reliance on property values as a criterion for school budget decisions. This is in the best interests of the schools as well as the taxpayers.
2) As an interim measure, revise state aid formulas to increase the weight given to income -- as opposed to property values -- as the criterion for a district's perceived "ability to pay".
3) Refrain from imposing state mandated requirements upon school systems without corresponding state funding.
4) Adjust the formulas on revenues earmarked as aid to education from state lottery and other future gaming activities so that the annual percentage is substantially increased from current levels.
5) Maintain the enhanced STAR exemption for the town's neediest citizens, but also increase the STAR exemption (or other property tax relief measures such as the circuit breaker) for senior citizens specifically at ALL income levels.
6) Recapture lost tax revenue from the above actions through the income tax and/or sales tax.
Resolved and Executed at Hague, New York, this 14 day of April 2005.
Medicaid is a dominant share (approximately 1/3) of Warren Counties budget. The amount to be raised by taxes represents $8,000,000 out of a total budget of $26,900,000.
The local levy is again based upon assessed property value.
New York has the most generous program of all the States.
Medicaid Expenditures Fiscal Year 2003
Source: Urban Institute estimates based on Medicaid accounting statements (CMS-64)
Minnesota $4.9 Billion
Tennessee $6.4 Billion
North Carolina $7.3 Billion
Michigan $8.0 Billion
Illinois $9.4 Billion
Ohio $10.3 Billion
Florida $11 Billion
Pennsylvania $12.9 Billion
Texas $15.3 Billion
California $30.4 Billion
New York $40.6 Billion
The Governor’s Budget advances an historic initiative to significantly reduce the burden of Medicaid costs on local governments so that they can lessen the property tax burden on their taxpayers. Under this initiative, local government costs would be capped at 2005 levels, with modest growth rates. Transitional funding would provide counties outside of New York City immediate relief in 2005.
Effective January 1, 2008, the State would assume fiscal responsibility for the entire Medicaid program. To partially offset this cost, local governments would have the option of adjusting the local government/State sales tax sharing arrangement or continuing the indexed cap liability, whatever is more advantageous to the individual local government.
Thursday, March 31, 2005
The New York State Senate today passed 2005-06 State Budget legislation that restores more than $762 million for hospitals, nursing homes and health care that the Executive had proposed to be cut, and takes steps to rein in the spiraling cost of Medicaid to local property taxpayers.
Health care related highlights contained in the 2005-06
State Budget include:
Ÿ Medicaid Cap- State
takeover of local Medicaid costs, beginning with the takeover of costs that
exceed an annual growth rate, set as follows: 3.5 percent in 2006, 3.25 percent
in 2007 and 3 percent in subsequent years. Together with the takeover of the Family
Health Plus program, the cap will save local taxpayers over $3.3 billion
annually when fully effective. In exchange for the State takeover, counties
will be required to remit a set level of local revenues to the state, and will
be subject to new accountability standards aimed at checking excessive local
spending growth.
COMMENTS
Medicaid has been recognized as a major driver of spending at the State and County level. These actions are a step in the right direction, the resultant impact on property tax relief has yet to be quantified. RGG
STATE AID TO EDUCATION
Thursday, March 31, 2005
The New York State Senate today approved 2005-06 Education
budget legislation that provides $24.6 billion, reflecting an increase of $848
million in formula driven and other educational assistance to schools across New York State. The Budget adds $322 million to the Governor’s proposed $526 million
increase over last year.
"This year’s budget proposal reaffirms our bedrock commitment to education
by continuing our record increase in state school aid. Since 1995, we have
increased school aid by over 65 percent, which is double the rate of
inflation," said Senate Majority Leader Joseph L. Bruno. "The school
districts in this state will receive a 5.5 percent increase in aid that will
enable them to provide a world class education, while providing localities with
the resources they need to keep property tax under control for homeowners and
small businesses."
________________________________________
2004 – 2005 2005 – 2006 CHANGE PERCENT
EXPENDITURE $13,329,899 $14,264,656 $934,757 7.01% Health Ins
ERS / TRS
Salaries
BOCES
Buses
REVENUE State Aid $4,575,323 $5,044,188 $468,865 10.2%
Tax Levy $7,954,576 $8,185,468 $230,892 2.9%
Other $ 800,000 $ 800,000 0 0
Assm’t 0 $ 165,000 $165,000 NA
IP 0 $ 70,000 $ 70,000 NA
TOTAL $13,329,899 $14,264,656
NET: 7.01% increase in spending = 2.9% increase in tax levy.
_________________________________________
Budget Schedule:
April 26. 2005 Hearing and Adoption of proposed budget
May 10, 2005 Public Hearing on Budget
May 17, 2005 District Vote
ITS TIME TO GET ON WITH THE REFORM:
The solutions start with the balancing of spending cuts at all levels – Town, County, State, Federal, and School District - balanced with reform in the areas of School funding and its over reliance on Property tax.
Spending increases must be challenged at all levels.
A freeze on any reassessments while we work on reasonable resolutions is in order.
A cap on year to year increases in assessments to integrate the wide swings in Demand Driven Market Sales, often with limited data should be applied.
A transition to full State funding of education to eliminate the irrational reliance on property values
A foundation level of funding by the State to insure a proper education for all students must be provided.
NO unfunded State or Federal mandates should be accepted.
A tax rate linked to earned income using a model that recognizes and sets reasonable limits on income and home value.
An adjustment of State aid formulas to increase the weight given to income and reduce the dependency on property tax.
A thoughtful letter to the following legislators is always helpful.
The Hon. Hillary Rodham Clinton
Leo W. O’Brien Federal Office Bldg.
1 Clinton Square, Room 821
Albany, New York 12207
The Hon. Charles E. Schumer
Room 420 Leo W. O’Brien Federal Office Bldg.
Albany, New York 12207
The Hon. George E. Pataki
Governor of the State of New York
State Capitol
Albany, NY 12224
The Hon. Joseph L. Bruno
Majority Leader and President Pro Tem
New York State Senate
Room 909 Legislative Office Building
Albany, NY 12247
The Hon. Sheldon Silver
Majority Leader
New York State Assembly
Room 932 Legislative Office Building
Albany, NY 12248
Senator Betty Little
21 Bay Street
Glens Falls, NY 12801
Assemblywoman Teresa Sayward
21 Bay Street
Suite 206
Glens Falls,
NY 12801