Last fall I wrote two columns on the mechanics of the state’s property tax system—how assessments are established, why we have this process of “equalization,” and how uneven is the administration of the system. Boring stuff, no? Worse, I can’t claim that fixing the problem would actually cut property taxes, just shift the burden around. Oh, a perfect reform would cut back the amount of money spent by the state on the equalization process, but better administration would probably cost more in the beginning (think “deferred maintenance”) and not save any in the long run.
Is there a constituency out there for fairness and transparency? Probably not, but Assemblywoman Sandy Galef (from Westchester, the epicenter of bad property tax administration) is trying. She chairs the NYS Assembly Committee on Real Property Taxation and has sponsored or co-sponsored a number of bills aimed at fixing the mess.
In time-honored fashion, the centerpiece proposal is the creation of a blue ribbon commission on property tax reform. These commissions get to wrestle with the really tough questions and deliver unpopular recommendations that the Governor and Legislature can endorse with a bit of political insulation—“the Commission made me do it.”
Galef’s bill suggests that the Commission explore the idea of shifting the burden of funding local public education to the income tax, an idea that deserves closer scrutiny. To the degree that support for public education is financed by taxing property wealth, then the resources available to educate children will be greater in Scarsdale than in Mount Vernon. While only nine miles apart, these Westchester County communities represent the opposite poles of relative prosperity. For every child in the Scarsdale district there is $1.5 million in full value of real property, 3.6 times the amount in Mt. Vernon (2005). NYS reports that 0% of Scarsdale students qualify for free or reduced price lunch; 66% qualify in Mount Vernon. And despite the fact that an effective education for poor students is more costly, Scarsdale spends 1/3 more per student even though Mt. Vernon’s property tax rate is 50% higher. Incidentally, Scarsdale received $9.3 million in state school aid in 05-06 (much of it through STAR).
State school aid is intended to equalize resources available for education, but this is extraordinarily difficult in the face of such disparities. Completely replacing the local property tax with an increase in the state income tax would turn the state’s public education system on its ear. The uber state aid formula required would dramatically alter how educational services are delivered in places like Scarsdale. If the money is all coming from the state, local school boards lose much of their autonomy. Taxpayers would argue that they have a right to tax themselves to support a better education system for local children. Scarsdale’s tax rate may be lower than Mount Vernon’s but the tax bill in Scarsdale is much higher. And would the shift mean a dramatic reduction in the extent to which we tax wealth in NYS? Or would we replace the local property tax with a state property tax? I’d don’t think I’d want to campaign for dog catcher on THAT platform!
There are other property tax reform bills pending. A real hot potato is a bill requiring regular reassessment. Assemblymen Paul Tonko and Kevin Cahill propose a mandated jurisdiction-wide revaluation, reassessment or update of all real property no less frequently than every ten years (Assembly Bill A 127).
Assemblywoman Galef’s A 1572 contains the most substantial changes to the property tax assessment system of five pending bills, proposing a constitutional amendment to establish tax assessment standards, require a system of uniform real property assessments, uniform assessment cycles and—my favorite—county administration of tax assessment. It would include a uniform three year assessment cycle, as compared to the ten year cycle proposed in A 127.
There are other ideas on the table such as a change in the timing of tax assessments of property held by nonprofits and the elimination of preferential tax treatment for condominiums, but the overall message is pretty clear: Our system of local property taxation is in serious need of overhaul. Unfortunately, these are mind-numbing topics to most. Boring or not, they are too important to ignore.