New York’s property tax nightmare

Times Union ^ | October 3, 2010 | BOB PORT and JAMES M. ODATO

[NYer]

Slowly, over the last decade, the American Dream of homeownership has turned for many New Yorkers into a nightmare of property taxes growing out of control.

For three decades, private and public studies have identified high taxes on real estate as a major threat to the state’s economy. Nationwide comparisons consistently put several New York counties, mostly upstate, among the most taxed anywhere. It’s a distinction shared with some counties in New Jersey, where a taxpayer revolt has begun to shift the state’s politics.

Five-figure annual tax bills on the best real estate have become a reality, driving retired New Yorkers to give up their longtime homes and rethink their lives, and forcing families to scrimp and defer dreams.

Even while the Consumer Price Index — a measure of our ever-rising cost of living — grew at a pace of only a few percentage points annually in recent years, growth of the property tax burden upstate has hovered close to 7 percent a year. Over the last decade, outside New York City — where a city income tax keeps the property tax low — the property tax burden has grown at a rate double that of wage growth.

People and businesses are being squeezed. Projections of what will occur to local tax burdens without major reform generate one chart after another with lines that shoot up geometrically vertical.

“We’ve gotten ourselves in this situation of unsustainability,” said Stephen Acquario, executive director of the New York State Association of Counties. “Albany is setting the property tax levy all across the state.”

The median annual tax bill for much of New York City’s suburbs has now risen above $8,000, and it is commonplace for owners of large or modern homes in Westchester and Nassau counties, which border the city, to owe more each year in property tax than the cost of a new car. Elsewhere upstate, where home values are lower, the tax burden is proportionally just as harsh.

In fact, “outside New York City” is the asterisk for all property tax debate and the statistics discussed here, because that’s where the problem is — much of it driven by a state legislature dominated by city interests, which mandates what local governments do without providing money to pay for it. Public schools account for almost two-thirds of local property tax burden outside New York City, and their annual costs per student now range from about $15,000 to $25,000 per year, far above the national norm.

Property taxes also support county government, but that comprises just one-fifth, roughly, of the typical property tax bill. Even so, that is now 79 percent above the average nationally, with 90 percent of the dollars raised mandated by state law — mostly to support the Medicaid coverage that costs more than in any other state.

But despite numerous gubernatorial, legislative and comptroller reports proposing fixes, almost nothing has been done.

But a grassroots attack on property taxes is growing. Proposals for tax caps, income-based tax breaks, government consolidations and widespread cost-cutting are in such demand now that this fall’s candidates for statewide offices — even for attorney general — are making the issue mainstream. Politicians on the right and the left alike promise they will bring about change.

But even with New Yorkers paying, by some measures, up to 40 percent of their income to sustain schools and local governments and help raise $45 billion in local property taxes statewide, activists are not so confident politicians will actually go to bat for them. They point to heavy lobbying and influence by supporters of the current structure, particularly from unions for public employees and teachers.

Said former Nassau County Executive Thomas Suozzi, who led a 2008 commission that recommended dramatic changes: “There are people that benefit from the status quo, and the benefits they receive from the status quo will not occur from a reformed system.”

The Legislature is in denial, said Stephen Berger, an investment company operator who headed a state commission on health care reform, which has led to hospital consolidations and closings.

“Nobody understands how broke we are,” Berger said. “Unless we start really cutting spending, we’re going to be in the toilet and they’re going to flush it.”

Suozzi has been calling for changes for years. The key recommendation of his commission is now at the heart of the debate: installing a cap on how much school districts and local governments can raise taxes each year.

He likes the one Attorney General Andrew Cuomo proposed late this summer after he began his campaign for governor: a cap at 2 percent growth of the tax levy or at the inflation rate, whichever is lower.

Gov. David Paterson earlier proposed a 4 percent cap. The state Senate overwhelmingly passed a bill in March to impose that 4 percent cap or 120 percent of the inflation rate, plus a “circuit breaker” – providing a substantial tax break based on a property owner’s household income, so that property owners making $150,000 and below would be spared a full bill.

The cost to the state for the circuit breaker relief would be about $1.3 billion a year, said state Sen. Jeff Klein, a Democrat representing parts of the Bronx and highly taxed Westchester County, who sponsored the bill. It gained no traction in the Democrat-dominated Assembly, so he introduced a tax cap bill alone in August and all but one senator, Sen. Bill Perkins, D-Harlem, a favorite of the New York State United Teachers, voted in favor. Again, however, the Assembly declined to take up the measure.

“The problem is well known; The public is very supportive of a property tax cap and the same problem we have in Albany in many different areas is what’s holding this up,” said Suozzi. NYSUT leaders and others, such as Assemblyman Richard Brodsky, D-Westchester County, say a tax cap won’t cure the problem because it still would allow taxes to grow. For instance, Brodsky notes, a 4-point cap all but assures 40 percent growth in taxes in a decade.

But Suozzi argues it is necessary to set a limit to bring about a serious discussion on what else needs to be done — namely, finding efficiencies from things like school district consolidations and more shared services.

Klein said his combination of tax cap and circuit breaker is the answer, but the tax cap is a necessary component. Otherwise, too many people would be eligible for the circuit breaker to make it even remotely affordable. He calls for paying for the relief by extending the temporary income tax increase on high-earning New Yorkers, which is set to at the end after 2012, and by drawing on revenues the state hopes to raise by taxing the sales of cigarettes by Native American merchants to non-Indians. Both ideas come with political risks and uncertainties.

Suozzi’s panel also strongly recommended school district mergers, starting with any district with fewer than 2,000 students, which is more than half the state’s 700 districts. Suozzi said countywide districts would cut spending on administrators and back-office operations and encourage sharing of expensive services, such as special education programs.

But the school consolidation idea, regardless of the savings, ignites protest.

“That’s like a third rail with potential negative voltage,” said Assemblyman Steve Englebright, a Long Island Democrat who has partnered unsuccessfully with various senators on property-tax relief bills.

It is unfair to frame the Assembly as hostile to tax relief proposals, Englebright said, because members are reflecting the will of their constituents, most of whom do not want to see their school district or town merged with a neighboring taxing authority.

“That’s the irony,” Englebright said. “People are demanding that we lower their property taxes, but the first tool to go to is something they find distasteful, that they don’t want to be part of. What’s a legislator to do? Or a candidate for governor to do?”

Another relief strategy calls for getting more taxable property on the rolls. That means making it tougher for non-profit organizations, including hospitals, colleges and religious organizations, to gain tax-exempt status. A 2003 study by a panel led by Sen. John Bonacic, R-Mount Hope, and Sen. Betty Little, R-Queensbury, led to a series of bills such as one that would force nonprofits to annually prove their properties were being used for a purpose associated with the tax-exempt status.

Sen. Liz Krueger, D-Manhattan, updated the study at the end of 2009 and showed that the earlier report did little to stem the problem. Indeed, more properties came off the rolls, as lawmakers worked to get more and more of their constituents a break. Today more than $805 billion in property valuation statewide is off the tax rolls, leaving $1.8 trillion in valuation available for taxation in the state. Among the exempt properties was $26.2 billion belonging to religious institutions, according to the state Office of Real Property Tax Services.

Bonacic and Little argue that the laws are too generous to nonprofits. They cite people living in tax-exempt properties, who they argued should pay tuition to school districts, and universities that own Adirondack camps that escape taxation.

“We want to make sure the properties are being used,” Little said. “If they are not being used they should be on tax rolls or sold.”

Bonacic said a fix, such as a constitutional change to reduce the number of entities that get automatic tax exemptions, is beyond his grasp because the Assembly’s ruling Democratic conference is dominated by downstate members, who are unmoved by suburban and upstate complaints about property taxes.

Asked why nothing has happened with relief ideas proposed, Bonacic said: “I’ll give you two words: Shelly Silver,” the Manhattan Democrat who is speaker of the Assembly. Silver would not take calls on the issue for this story.

Klein, who served for 10 years under Silver in the Assembly, did not dispute Bonacic’s assertion. He responded that the speaker needs to take the concerns of non-New York City members to heart. “It’s a political issue as well as a legislative issue,” Klein said.

Others blame special interests with clout. Asked why tax relief bills die in Albany, Andrea Vecchio, a director of anti-tax group Long Islanders For Educational Reform, offered a formulation like Bonacic’s, but with a different villain: “Two words would work: teachers’ union, and the influence of.”

She said she’s been fighting for relief for 20 years and her outrage has made her take note of Carl Paladino’s gubernatorial campaign. Paladino calls for deep cuts in spending, rather than caps on tax growth.

“The fact that everybody’s for a tax cap scares the life out of me, because that means something’s wrong,” said Vecchio, of East Islip.

Berger thinks a commission for school and municipal consolidations is needed, which might operate like the one he led earlier this decade that dealt with the politically difficult decisions of hospital and nursing home closures. Lawmakers don’t like such commissions because they lose control.

“A fiat from a commission in Albany is the last thing this state needs,” said Richard Iannuzzi, president of the 600,000-member NYSUT, the state’s dominant teachers’ union. He said the state must work on an income-based relief measure for individual property tax payers and figure out a way to pay for it.

But paying for anything is a problem. Both Paladino and Cuomo are talking about attacking spending, noting multibillion-dollar budget shortfalls projected for years to come. Against that backdrop, property tax relief may be in line only after the deficits are erased.

Despite widespread agreement that something must be done, any quick action appears highly unlikely, said Assembly Majority Leader Ron Canestrari, D-Cohoes.

“We’re all against higher real property taxes,” Canestrari said. “But I don’t know how you fashion a solution that either doesn’t cost the state a lot of money or doesn’t impose a huge burden on local governments.” He said he is warming to the concept of a circuit breaker somehow paid for with income taxes and other broad-based taxes, rather than from real estate assessments. But the state may not be in a position to pay for such relief for a while, he said.

“We can’t support the programs we have,” Canestrari said. “An issue this complicated has to be left to a new governor the first of the year. This is a three-month debate, at the least.”

As more people recognize the danger of ignoring the complex issue, efforts to shape a broad-based fix are drawing increasing attention. Some advocates echo Gioia Shebar, coordinator of Taxnightmare.org, one of several groups statewide joined as part of the Omnibus Tax Consortium. Shebar notes that New York’s dysfunctional government as a whole needs to cooperate.

“People are taking this issue with property taxes to do a lot of bad stuff,” said Shebar. “Teacher bashing, union bashing, public worker bashing, is not the answer.”

She and her husband, Charles, each in their late 70s, are retired New York City teachers, who relocated 15 years ago to Ulster County. They pay $9,600 a year in school taxes. The high costs mean their community cannot be as economically and ethnically diverse as the Shebars would like.

Her group likes Sen. Eric Scheiderman, D-Manhattan, who is running for attorney general, because he was an early supporter of the omnibus tax relief bill and one of the few Democrats to defy leadership and vote against the tax cap bill, which Taxnightmare followers describe as “fluff.”

Her group wants a circuit breaker for immediate relief and a total overhaul of the property assessment system. They also call for a serious look at tax exemptions, for more school consolidations and for a state takeover of the Medicaid costs borne by counties. Only with such a unified approach, Shebar says, can the problem be solved.

“People are bleeding together,” she said.

[NYer]

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[riri]

Why does anyone stay there?

I left NY 16 years ago. You can't drag me back there for any reason.

[NYer]

There is plenty more at this link.

Property subject to many taxes

October 2, 2010 at 11:12 pm by Chris Churchill

A property tax in New York state can be levied by villages, cities, towns, counties and special districts, such as fire prevention districts. It is also levied separately by school districts, of which there are more than 700.

It starts with local governments assigning an annual assessed value to each piece, or parcel, of real estate. That assessment can be governed by the village or city, or by the town, and it can be the property’s market value or some uniformly applied fraction of that value.

Calculating your property tax, which, ideally, is based on the true market value of your property, is relatively simple.

Multiply the tax rate established by your governing town, village, city, school district and county by the assessed value of your property.

So let’s say the tax rate established by the town is $50 per $1,000 of assessed value, and your home is assessed at $100,000. Multiply 50 by 100 to get your tax — $5,000.

Do the same for the tax rate established by your school district, village and county, then add them together to get your tax total.

Things get a little more complicated if you get property tax exemptions, such as the STAR exemption, which exclude some of the assessed value of a property from taxation.

In that case, you multiply the tax rate by assessed value after the exemption.

There are hundreds of exemptions available in New York state, although they vary widely by city and town. So contact your municipal government for a list of available exemptions.

— Chris Churchill

[EGPWS]

She and her husband, Charles, each in their late 70s, are retired New York City teachers, who relocated 15 years ago to Ulster County. They pay $9,600 a year in school taxes.

Oh, the irony.

[pnh102]

Property tax is just the government's way of reminding us that we do not own anything. We just rent it from the government.

Property tax at any level should be outlawed. It is a completely unfair form of taxation. Even the income tax is far more fair than the property tax.

[therightliveswithus]

NY’s in deep, deep trouble

[GlockThe Vote]

I live here and the taxes are unreal. I really cany tyope what I want over this issue.

[calex59]

Let’s think about property taxes. A person can afford to buy a house on some(real)property, could be large property or small and the house could be luxurious or plain. However, regardless of that the owner is taxed on the price of the house, year after year after year as if he/she makes that much money every year. Property taxes are totally wrong and the founding fathers should have recognized that. Paying rent to the government on property you own outright is outrageous and tyrannical. A one time tax, when the property is purchased is one thing, a yearly stipend to the government is totally wrong and should be done away with.

[ronnie raygun]

One word..........PALADINO!

[Gaffer]

She and her husband, Charles, each in their late 70s, are retired New York City teachers, who relocated 15 years ago to Ulster County. They pay $9,600 a year in school taxes. The high costs mean their community cannot be as economically and ethnically diverse as the Shebars would like.

I am heartened to hear this. The Great State Government of New York is doing its level best to force these two libtards into a 'new' community where their neighbors will be the ones whose government supported lifestyles will do their level best to divest them of all the crap they have......

[Tawiskaro]

[Tzimisce]

The greedy, thieving taxpayers are finally going to get what’s coming to them.

[Wally_Kalbacken]

This is exactly what will save Florida at some point in the upturn of the economic cycle (whenever the hell that is) - the driving out of heavily taxed New Yorkers (and other north-easterners) who will once again flock to FL. As long as FL resists the temptation to institute an income tax - we’ll be sitting pretty to pick up those with the discretionary income to buy a second home in FL or retire early or simply move here under any circumstances.

Another reason to move, tertiary to the tax motivation, would be the plethora of funny place names (like Cannarsie and Sacandaga, etc.).

[Cicero]

We lived in Scarsdale for a number of years, and had a fairly big house because we have a lot of kids. It was a convenient commute to the city, and the schools were liberal but excellent.

But we moved out in 1987, partly because the property taxes were getting unaffordable. I hate to think what they are now.

[cornelis]

But even with New Yorkers paying, by some measures, up to 40 percent of their income to sustain schools and local governments and help raise $45 billion in local property taxes statewide,

With all of that and the GOP still gets around 50% of the vote for the White House. What happens when the retired geezers and widows are no longer there to send $100 to DeMint & Co.?

[listenhillary]

“I really cany tyope what I want over this issue.”

You can say that again.

[SWAMPSNIPER]

My property tax here is now over 10% of my income, and they keep demanding more.

[Hojczyk]

There is no hope for New York..I left in 1981 ..went to Colorado Springs..paid 600 dollars for 20 years property tax and the schools were much better.. I lived North of Albany in Clifton Park...only moving will solve your problem..but move where you need a job..Forget Colorado the liberals have taken over that state..

[E. Pluribus Unum]

Democrat Mantra: “I see you have some money there. Give it to me.”