MEDIA CONTACT: Randolph Yunker (516) 571-5048
February 9, 2007
ASSESSOR LEVINSON: "SETTING THE RECORD STRAIGHT ON REASSESSMENT"
(A reply to the Town of Hempstead Supervisor's Opinion Editorial published in the December 2006 issue of the Nassau Lawyer)
(Mineola, NY) The New York State Office of Real Property Services (ORPS) calls it “common myths and misunderstandings” regarding the real impact of reassessment on property taxes. In an article published in the December issue of the Nassau Lawyer, the Town of Hempstead Supervisor asserted that a majority of homeowners in the township saw higher school property taxes above what was expected because of court-ordered reassessment and Department of Assessment “policies.” The facts prove otherwise: When comparing the changes in school and library tax bills from 2005-06 to 2006-07 after deducting the STAR Rebates, 122,051 homeowners (or 70 percent) in Hempstead saw decreases in their tax bills that were less than the change in the school levy; only 6 percent (or 10,138) of homeowners saw their actual school tax obligation increase by $500 or more.
When one steps back from the politics being played with the issue, even if reassessment did not take place, the property tax burdens imposed on homeowners by the Town of Hempstead, school districts and the other nearly 400 taxing jurisdictions throughout Nassau County would have increased each year. One only needs to look at towns in Suffolk County (that did not conduct residential reassessments for decades) to see that homeowners are facing the same property tax crisis as their neighbors in Nassau County.
In her 2007 budget message, the supervisor of the Town of Hempstead stated that the “18 percent average increase in assessed valuation” in the Town of Hempstead is a “result of ongoing assessment policies” that resulted in property tax increases. This is not so. Unlike New York City, the increased assessed values on the tax roll in Nassau County are used to lower property tax rates. For example, a home within the Franklin Square school and library districts valued at $400,000 paid school and library taxes of $4,647 (with Basic STAR) in 2005-2006; in 2006-2007, the same valued home paid $3,848. After adding this year’s STAR rebate check of $227, the actual property tax bill was reduced to $3,621 for a total decrease in the school and library property tax obligation of $1,026 - a 22% decrease.
When the Town of Oyster Bay released its budget for 2007, town officials acknowledged the fact that increased taxable value resulted in a lower tax rate. While Oyster Bay’s adopted budget increased by 7 percent, the effective tax rate per hundred dollars of assessed value for the town’s general fund decreased 7.7 percent because of reassessment.
One of the functions of the Chairman of the Nassau County Board of Assessors is to perform annual updates to ensure that the market value estimates upon which assessments are based will change each year in accordance with trends in the real estate market based on a specific point in time. The annual updates also permit the Department of Assessment to adjust assessments on future rolls to reflect any decreases in the real estate market. The Department of Assessment does not set operating budgets or tax rates, mail out tax bills, or collect taxes. Its statutory function is to determine the assessed values of properties under a four-class system that is mandated under Article 18 of the New York State Real Property Tax Law. Under the class system, written in 1981 by Senator Kemp Hannon (R-Garden City), residential property owners have benefited from a lower tax burden as compared to the other classes of property.
The Department of Assessment does not set the formula used to determine the percentage of the overall levy that will be paid by each tax class. The class share is mandated by the formula specified in §1803-a of the Real Property Tax Law and is not discretionary with the Department of Assessment. In addition, state lawmakers passed legislation throughout the court-ordered reassessment limiting the class shift (base proportion) for Class 1 (Residential) property owners to 2 percent in 2004-05 and 2005-06, and 1 percent in 2006-07. Shifts in the class share of property taxes have occurred prior to and throughout reassessment.
If there was a call for state law to be changed with regard to class system, the likely result is that property taxes paid by Town of Hempstead homeowners will increase - not decrease.
When calculating the increase in school taxes paid, the Town of Hempstead’s analysis ignores the fact that improvements and renovations (as reflected in building permits that were provided by the Town to the Department of Assessment) and loss of exemptions, as required by law, will result in higher taxes. Including these properties in the analysis skews the results. In addition, as property tax exemptions are granted to some properties within a school district, the property tax rate is increased and other homeowners must makeup the shortfall. This also was not taken into account in the Town of Hempstead’s analysis.
Furthermore, not only did the STAR Rebate checks authorized by the state legislature for the 2006-07 school tax year not appear on the school tax bill, the amounts of the rebates were ignored or purposely omitted in the Town of Hempstead’s analysis of a homeowner’s actual school property tax obligation. A fair and objective analysis of the increases in school taxes paid requires that the amount of the STAR Rebate checks be deducted from the 2006-2007 school tax bill.
The byproduct of annual reassessment is to add taxable value to the rolls each year. The additional assessed value effectively lowers the school tax rates for every school district in the county. Actual tax rates for the 2005-2006 school tax year were based on a Level of Assessment of one-half of one percent of full market value. Since the Level of Assessment was lowered to one-quarter of one percent of full market value for 2006-2007, to determine the true percentage of increase or decrease in the tax rates, the 2005-2006 rates were doubled for factual comparison purposes to properly measure tax rates based on equal levels of assessment. For example, the school property tax rate per hundred dollars of assessed value in East Meadow, when adjusted to equalize the level of assessment from 2005-2006 to 2006-2007, decreased from $654.426 to $581.232; Franklin Square decreased from $554.984 to $475.874; Wantagh decreased from $647.474 to $575.441; and so on. A complete list of effective school district tax rates are posted on the Department of Assessment Website at www.mynassauproperty.com and follow the link to “News and Other Assessment Information.”
It should also be noted that, with the exception of a handful of school districts, homeowners are only presented with the percentage of increase in spending when budgets are submitted to voters in May. Homeowners only discover what the actual tax rate is several months after the budget is approved. School districts had all the information they needed to present a clearer picture of what the approved tax rates would be prior to the budget vote - but most chose not to.
Are there any examples of homeowners who received school and general tax bills with property tax increases far above the percentage increase in spending? The answer is - yes. In the first years of reassessment, some homes were undervalued compared to similar homes within the same neighborhood. The undervaluation was “corrected” on these homes in the 2006-2007 tax year to insure fairness and equity in the assessment process.
Instead of blaming school districts or municipal budgets for annual increases in spending, since January 2004, as Chairman of the Board of Assessors, I have offered real solutions to find ways to reduce the property tax burden.
Some of these suggestions include: establishing a non-partisan statewide committee to study the proposal to abolish the school property tax and replace it with a modest income tax to be paid by renters and homeowners alike, while subsidizing poorer districts with state aid; sharing the commercial property tax base throughout each town; a complete overhaul of the STAR program and funding formulas; and, the dissolution of commissioner-operated special taxing districts and town-operated special districts such as garbage/sanitary and water districts. Fire districts, while retaining their local identity, would no longer operate or be treated as separate taxing jurisdictions and would be required to submit their budgets to the town for review and approval.
As voters in Nassau County will recall, there was a property tax backlash after the first reassessment was conducted under the supervision and direction of New York State Supreme Court Justice F. Dana Winslow and administered by the former Republican Chairman of the Board of Assessors. The “tax shock” that was experienced by homeowners in their October 2003 school tax bill resulted when Nassau’s unfair and archaic 1938 construction-based assessment system was replaced with a valuation system that relied on establishing the fair market value of a home (the price a willing purchaser would pay for a property) at a specific point in time. Unfortunately for homeowners, when the previous administration agreed to reassess residential properties at a percentage of full market value in March 2000, little was done to petition the court for a gradual phase-in of values.
Shortly after taking office in January 2004, I met with members of the state Senate and Assembly to request assistance in enacting legislation that would have moderated school tax increases in 2004-2005, 2005-2006 and 2006-2007 through a multi-year phase in of tax increases. While this legislative initiative was supported by both parties and passed unanimously in the Assembly, it was left to die in a Senate Committee.
Since the settlement of the class action suit in 2000, the residential reassessment has been under the jurisdiction of the New York State Supreme Court. The 2007-2008 assessment roll will be the first roll under the control of the Department of Assessment’s control and outside of the jurisdiction of the court. With residential real estate prices skyrocketing throughout the first three-years of reassessment, the Level of Assessment (the percentage of full market value at which properties are assessed) was reduced proportionately to capture the increases in values based on the new market-based assessment system. The change of the Level of Assessment was a court required component of the reassessment project that, in effect, set aside the law limiting assessment increases to six percent each year or 20 percent over five years.
In June 2005, I asked the Board of Assessors (and they unanimously agreed) to freeze the Level of Assessment for the 2007-2008 roll, so that the six percent cap was restored. This fact has not been disseminated to homeowners by the Town of Hempstead despite its many informational mailings on the assessment issue. Mark Twain said it best when he stated that there are three types of lies: “Lies, damn lies, and statistics.” It does not serve the people of Nassau County when statistics are used to suit political purposes.
Harvey B. Levinson has served as the elected Chairman of the Nassau County Board of Assessors since January 2004. Since assuming office, Mr. Levinson has received praise from the NYS Office of Real Property Tax Services for improving the accuracy and fairness of Nassau County’s assessment rolls. Prior to this position, Mr. Levinson served as the Chief Assistant District Attorney (Nassau County).
This well-known saying is part of a phrase attributed to Benjamin Disraeli and popularized in the U.S. by Mark Twain: There are three kinds of lies: lies, damn lies, and statistics. The semi-ironic statement refers to the persuasive power of numbers, and succinctly describes how even accurate statistics can be used to bolster inaccurate arguments.
Hempstead 05-06 to 06-07 with Basic and Enhanced Rebates and Budgets (~ 37 kb .pdf file - 1 page)
Town of Hempstead School District Class One Tax Rates (~ 76 kb .pdf file - 1 page)