“Property tax cap: a 'Trojan horse?'” plus 3 more |
- Property tax cap: a 'Trojan horse?'
- Property 'tax lightning' raises ire
- County's property tax increases, assessed value declines
- Tax bills rise as property values shrink, again
| Property tax cap: a 'Trojan horse?' Posted: 22 Aug 2010 02:30 AM PDT It seems everywhere there's a politician, there is talk of a property tax cap. Gov. David Paterson's plan for a 4 percent cap passed the state Senate this month; and when the Assembly failed to take up the matter, politicians in the Finger Lakes region put the pressure on to make it happen. "Property taxes are the number-one issue in the state," said Assembly Minority Leader Brian Kolb, R-Canandaigua, who wants an up-or-down vote on a property tax cap "so people know where their representatives really stand on tax relief and other issues." State Sen. Michael Nozzolio, R-Fayette, who voted for the cap Aug. 3, called such a cap "an important first step in bringing property taxes under control, helping to reverse the destructive practice of skyrocketing property taxes, and beginning to provide homeowners with long-overdue tax relief." But talk to folks in the community — from retirees to business owners to school and county officials — and you get a wide range of reactions to the cap that mostly cover levels of skepticism, fear or downright anger. "Nothing makes my blood boil like a property tax cap," said Ontario County Administrator Geoff Astles. "The state has not been satisfied with bankrupting itself, so now it wants to bankrupt counties, too." The state this month passed one of the latest state budgets in history — one that contains a $9.2 billion deficit. What Astles and many other officials faced with balancing budgets see is the state passing its fiscal burden onto local jurisdictions. With localities responsible for paying more and more of the rising cost of state-mandated services and programs, local leaders are forced to make tough decisions taxpayers aren't going to like. "It shifts the blame, which is pretty outrageous with the state's track record lately," said Astles. The state has already shifted millions of dollars in costs to counties in paying for workers' compensation, health care, legal services and other areas, he said. Ontario County, traditionally fiscally conservative, had a tax levy increase from 2009 to this year of less than 4 percent, at 3.4 percent. Other counties had much higher increases, though, and a number of counties in the Finger Lakes region were cited as examples by Paterson as to why the cap should pass. In a statement supporting the cap, Paterson said: "New York currently holds the dubious distinction of having the highest property taxes in the nation," at 79 percent above the national average. Nine of the top ten highest-taxed counties in the nation are in upstate New York, the governor said, including Wayne, Niagara, Monroe, Erie, Chautauqua, Onondaga, Cayuga, Chemung and Schenectady counties. "Property tax levies are rising at more than twice the rate of inflation and salary growth. Hardworking New Yorkers deserve better," Paterson stated. Under the plan, tax-levy growth would be capped at 4 percent annually, or 120 percent of the rate of inflation, whichever is lower. The rate of inflation, calculated by the Consumer Price Index, increased 1.2 percent over the past year. That means if the cap were in place now, property tax levies could not be raised more than 1.44 percent. Though exceptions are written into the legislation — a two-thirds vote by a county legislature could override the cap, for instance — many say it presents an impossible situation. "We need to do something about taxes in New York state," said Mike Midey, superintendent of the Bloomfield school district, who said he wasn't sure a tax cap would allow the district to maintain services and the quality of education people expect. "We are policing ourselves, and we need to go with what the community needs and keep taxes as low as possible," he said. But if the cap passes and the school continues to experience cuts in state aid, he said, "we will have to cut programs — and that is cutting opportunity to our kids." Two Ontario County residents with concerns over taxes and the state's fiscal crisis are no more positive about the cap. Retiree Earl Smith of Canandaigua said he thinks the hype about the tax cap is mostly a distraction from dealing with the issue of the state spending more money than it has. "Most people in politics want you to hear what they want you to hear," said Smith, a city resident. Right now, it's the tax cap idea — but the bottom line, Smith said: "They will always find ways to get your money." Taxpayers have to live within a budget and so should the government, said Signa Trowbridge, a business owner and teacher who lives in Cheshire. A wife and mother of two who owns A's Sweets and Treats on Route 21 in Cheshire, Trowbridge said she doesn't know a lot about the property tax cap. But she said she does see the effect of Albany's fiscal mess on average working people. The cost of the state's huge government, with its multitude of programs it can't pay for and layers of bureaucracy, falls on taxpayers, she said. According to some highly regarded polls, however, the property tax cap has wide support. Kolb and others cite a May 2010 Siena Research Institute poll that found a majority of taxpayers support it. Kolb said more than 74 percent of municipalities across the state have already gone on record in support of property tax-cap legislation introduced through Assembly bill A.2796, the New York State Property Taxpayers Protection Act, in 2007. Kolb said in addition to the property tax cap, other issues should also be brought to the floor for up-or-down votes when the Assembly returns to Albany. Those include banning unfunded mandates and enacting a statewide economic development plan. Would banning unfunded mandates — responsibilities placed on municipalities without providing the money to pay for them — do the trick? Astles said the state has promised such concessions before, but they never happened. For example, when the state enacted workers' compensation reform, increasing benefits, it never "reformed how it would be paid for," he said. Now, Ontario County has to come up with $2.3 million over the next three year to pay for it, Astles said. Likewise, under a state proposal to take over administration of the Medicaid program, touted as saving counties money, Ontario County would actually ending up paying $2 million more in legal and indirect administrative costs, he said. "I don't see a cooperative effort here," between the state and localities, said Canandaigua City Supervisor David Baker, a member of the Ontario County Financial Management Committee. He called the cap "a "Trojan horse," a tactic typical of Albany in presenting what seems like genuine solutions that are actually destructive, as evidenced by the state already owing Ontario County about $14 million in reimbursements for state-mandated programs. But Joseph Stefko, director of public finance at Center for Governmental Research Inc., said there is reason for optimism. Depending on where you sit, the cap has merits or not, he said. "The tax cap can be part of the solution, but it is not the entire solution," Stefko said. It would force some difficult decisions, he said, "but it could be a step in the right direction." This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Property 'tax lightning' raises ire Posted: 21 Aug 2010 05:24 PM PDT The Payne's property taxes jumped 60 percent the year after they purchased their Curry County home. James and Robbie Payne were victims of what is being called tax lightning. Tax lightning is caused by a 2001 state law that put a 3 percent annual cap on how much assessed value could rise for residential properties. The law was driven by a desire to hold down property tax increases, particularly for residents of areas where prices and property values were soaring. However, the cap does not apply to homes that change ownership, so people often see their assessed values jump significantly the year after they purchase a new residence. James Payne said the retired couple's property taxes went from $964.57 in 2005 to $1,576.71 in 2006. "It's a big problem," he said. "When we bought the house, we didn't know about it. I've lived in this state all my life. The Realtors didn't know. It was a real shock." In 2006, the Payne's protested the increase but the protest board ruled that the increase was correct because it was in line with the law. Payne says he plans to take it to the board again this year and if they claim the same thing, after two district judges ruled that parts of the law are unconstitutional, he plans to go to court. "If I can scrounge up enough money," he said, explaining that the couple's fixed income is already being stretched thin. "It's sad that an individual has to take it to court." Payne said he wants taxes to be equal. "If they roll ours back, the county has to get its money somehow. I guess they can increase the mill levy or quit spending so much," Payne said. "They could roll everyone up to market value. That's gonna hurt some people but it's going to help other people." New Mexico candidates for governor both say they support taking on the "tax lightning" phenomenon that has caused significant increases in the tax bills of new homeowners. But Democrat Diane Denish and Republican Susana Martinez have different approaches to the problem — which requires a legislative solution. The governor's role would be public support or opposition to various proposals, and deciding whether to sign or veto legislation. While each approach would end future tax lightning cases, both candidates acknowledge the issue is complicated and say it needs further study to resolve all the complications tax lightning has raised. Some recent homebuyers are paying up to three times more in property taxes than neighbors with similar homes because their property — unprotected by the cap — is now assessed near market value. In addition to an unequal tax structure, tax lightning has other problems, such as holding down home sales. The candidate positions are relatively simple, but each has ramifications. Denish favors a rollback of property values for all homes to where they were at the time the 2001 law that created tax lightning took effect. That would provide relief for homeowners already paying the higher tax bills, but would likely mean higher property tax bills for everybody else. That's because something close to the same amount of revenue would still be needed for government bodies that rely on property tax, such as counties and public schools. The tax burden would just be distributed differently than it is now, and homeowner impact could be reduced some by shifting more of the burden to commercial properties. Martinez would extend the 3 percent cap to include homes that change ownership from now on, but her plan would not roll back the assessed values — and higher taxes — for homeowners already hit by tax lightning. Martinez's proposal does not include a provision often associated with expanding the cap to include new purchases, which involves bring all home values up to near market levels before that happens. Her plan provides more protection for longer term homeowners who have not been hit with tax lightning.
Court decisions Parts of the 2001 law have been ruled unconstitutional by two state district judges in Bernalillo County, and a state appeals court has agreed to review the decisions. The court rulings led Bernalillo County Assessor Karen Montoya, a Democrat seeking re-election in November, to roll back values on about 40,000 homes to levels where they were before the law took effect, and then add 3 percent for each year since. Montoya was facing more than 1,000 lawsuits filed by tax lightning victims when she made the decision. Her actions drew criticism from Bernalillo County officials and the administration of Gov. Bill Richardson. Denish's plan mirrors what Montoya is doing, except it would apply statewide. The 3 percent cap would be extended after the rollback to ensure that homes, regardless of a change of ownership, are protected. "In the last (regular) legislative session, there were several attempts to fix this problem, but no bill passed," Denish said. "That is why I would push for careful examination of the rollback model. This solution may be the best one available to establish equity in the tax system." At the same time, she acknowledged the political reality that led to enactment of the law to begin with. "In certain communities where property values have increased far faster than the average income, this cap has protected working families from losing the house they have had in their family for generations," Denish said in a statement. "That said, there needs to be protections for new buyers — many young families and first-time homeowners — who get hit with an unfair increase in their property taxes." Denish said she would not favor undoing Montoya's rollbacks in Bernalillo County even though values have not been rolled back elsewhere; Martinez declined to give her position.
Key difference Martinez said extending the cap wouldn't be the end of her property tax reform. "I will assemble a team of experts to take a further look at the tax lightning situation and recommend reforms that will prevent tax lightning and keep property taxes low, fair and stable," she said in a statement. Martinez said Montoya's rollback efforts were understandable. "Nearly 40,000 property owners have benefited from the reversion or rollback, which is especially helpful in this difficult economy," she said. Despite that, Martinez would leave assessed home values at current levels, plus any future increases of 3 percent or less. Her plan would, however, prevent any more properties from being struck with tax lightning. Martinez said bringing all residential values to near market levels before extending the cap would be too much of a burden on New Mexico homeowners who have not been hit by tax lightning. "I am not afraid to make tough choices, and I believe citizens are always served best when doing what is right overrides other political considerations," Martinez said.
Critics Both plans have faced criticism. Denish's plan would lower the total property values in the state, which could lead to lower bond capacity — or at least lower capacity than what the state and counties would have had access to without a fix. Lowered bond capacity would only become more pronounced over time. That could mean less money for the state, counties and municipalities to spend on capital projects. Lower values also could raise tax rates to compensate and to keep state, county and municipal revenues somewhat stable — causing higher tax bills for some people who have been protected by the 3 percent cap. "I like the equity the rollback option creates, but it also has drawbacks," Denish said. "In the end, though, this option may be the best choice we have to ending the tax lightning problem and establishing equity." Martinez's plan would not give any relief to the roughly 40 percent of the state's homeowners who have already been hit by tax lightning. The existing disparities in tax bills among neighbors would grow, as people with higher tax bills would see a greater 3 percent increase every year than those with smaller bills. Martinez said she would be open to allowing individual counties to decide whether or not to roll back their own residential values, but that could create higher tax burdens on non-participating counties and the state. "Property tax law may be the most complex of all our tax policies and there is no easy solution to this situation, which is why I advocate broad-based reform," Martinez said. "The status quo is unacceptable. There may be merit in a local option to roll back assessed values for tax purposes for those individuals who have already been struck by tax lightning." The real estate industry has also warned that houses with higher tax bills would be branded with the scarlet letter of a perpetually higher tax bill, making them harder to sell.
Time is short Legislative Finance Committee chief economist Tom Clifford said earlier this year that the 2011 session would be the last good opportunity to address any of the existing inequities among tax bills. After that, he said, any changes toward making tax bills equitable would be harder because of a bigger gap in tax bills between homeowners. Sen. Steven Neville, R-Aztec, pushed legislation this year that would have brought all residential property up to current value before imposing the 3 percent cap — effectively raising tax bills for some of those who have been protected. Martinez rejected that approach. "In these difficult economic times, we cannot ask taxpayers that are already stretched thin to shoulder more of a tax burden," she said. Both candidates acknowledge there are problems with the current tax law that their plans do not address, such as how new home construction values should be entered into the tax rolls. The candidates have both said they support more study of the issue. The Associated Press contributed to this report. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| County's property tax increases, assessed value declines Posted: 22 Aug 2010 11:15 AM PDT Graham County's property tax rate increased for the 2010-11 fiscal year from $$1.555 to $1.8132 per $100 assessed, value, but tax rates for several public school districts decreased. The Graham County Board of Supervisors approved the new tax rates after a taxation hearing Aug. 16. This year's tax levy is $3.943 million compared to last year's tax levy of $3.450 million — an increase of $493,000. The new tax rate is $0.2582 more than last year's rate. This means the owner of a $100,000 home will pay $25.82 more for property taxes — unless the home's assessed value decreased. According to taxing information released by the county, Graham's assessed value decreased from $221.875 million last year to $217.455 this year. For homeowners, the assessed values of their homes are equal to 10 percent of the full-cash value. The tax rate decreased in several county school districts but increased in others. For the Safford School District, the primary property tax rate was set at $3.19 per $100 assessed value — $1.06 per $100 less than last year. The tax rate decreased also for the Thatcher School District from $2.745 per $100 assessed value to zero. A secondary tax rate of $1.1700 in Safford and $1.4499 remains in place. Secondary tax rates are used to pay off debts. The primary property tax rate increased slightly in the Pima School District — from $3.1651 to $3.5528. The secondary tax rate dropped, however, from $1.0200 to $0.4278, according to taxation information from the county. The primary tax rate also dropped in Solomon and Bonita. In Solomon, the rate decreased from $4.3850 to $1.109, and in Bonita, the rate went from $3.5660 to $2.8325. In Klondyke, the school property tax increased from $1.9446 to $2.4094. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
| Tax bills rise as property values shrink, again Posted: 22 Aug 2010 12:16 PM PDT Property values fell statewide and in each of the 26 communities on the South Shore for the third straight year, according to a report from the state Department of Revenue. Meanwhile, tax bills increased in every community, except for Quincy where the bill for the average single-family home remained the same as in 2009: $4,373. The average value of a home in Quincy fell 5 percent during the same time, to $330,755. Milton and Rockland were among only nine communities in Massachusetts that saw double-digit increases in average annual property tax bills during the fiscal year that ended July 1. Voters in both towns approved Proposition 2 1/2 tax overrides in 2009. Rockland was hit by a double-whammy: a 14 percent decline in home values and a 15 percent rise in tax bills. Town assessor Debra J. Krupczak said the unusually steep decline in property values may also have been due to when property was revalued. Because the town had so few housing sales, the outside firm used sales figures from July 1, 2007, to June 30, 2009, a two-year period rather than one year, to make comparisons, Krupczak said. A Rockland family that paid $3,172 in property taxes in 2009 paid $3,655 in 2010, with about 70 percent of the increase attributed to the $2.8 million override. Milton voters approved a $3.42 million override in June 2009 and tax bills went up 11 percent while home values went down 2 percent last year. The average home value in Milton dropped to $519,035 and the average tax bill increased to $6,929. Cohasset had the tenth highest average tax bill among the 337 communities surveyed. The average bill in Cohasset increased 3 percent to $858,006. Home values fell 1 percent. Cities fared the worse in the tax bill and property value survey. Brockton property values plunged by 18 percent – the biggest drop among 337 cities and towns in the state survey. Some other cities experiencing big declines in home property values were Lynn (14 percent), Revere (15 percent) and Worcester (11 percent). "Cities in general have had problems, and Brockton in particular, with a lot of foreclosures," said Vincent Valvo, group publisher at the Warren Group, which publishes the newspaper Banker and Tradesman that tracks the real estate industry. "When you put a lot of foreclosed properties into the (real estate) market, you have a big downward effect on prices." While single-family home values declined in 281 of 337 communities surveyed, the average drop was 4.61 percent. The Department of Revenue also found: The statewide increase of 3.3 percent in property taxes was the lowest percentage increase of any year in the past decade. The increase added $140 a year to the average bill statewide, which is now $4,390. The DOR said data collected from the Division of Local Services showed that "whether property values are moving up or down, property taxes will increase … given the need to provide ever more costly services. This is particularly true during times when there is little state aid, stagnant local receipts and little new growth." The DOR survey did not include 14 communities that have adopted a residential exemption shifting a portion of the tax burden from lower-valued single-family homes to multi-family properties and apartment buildings. They include Boston, Cambridge and Somerville. Check out Monday's Patriot Ledger to see how your community fared in the most recent roundup of property values and tax bills. READ MORE about this issue. This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php |
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