Senator Flanagan Sponsors Property Tax Overhaul To Provide Relief To Homeowners


Senator John Flanagan (2nd Senate District) announced that the New York State Senate has passed major property tax reform legislation that will alter the property tax structure throughout New York State and provide needed relief for residents. The main component of this legislative package is the possibility of the complete elimination of residential school property taxes in school districts that vote to phase out property taxes over five years, with revenue replaced with additional State funding.

"The number one concern that taxpayers on Long Island have is their ever-increasing tax burden. This program is a dramatic step in our fight to provide the relief that our families and our seniors need and it is a step we must take now," stated Senator Flanagan. "In the past few years, I have fought for property tax rebates, increased aid to our schools to lower the burden on our homeowners and for other tax relief measures but now is the time to take a dramatic step to reform our entire tax system."

The New York "Stop Taxing Our Property" Reform Plan (NY-STOP) would:
ELIMINATE RESIDENTIAL PROPERTY TAXES: Every school district would be authorized to hold a public vote to determine if real property taxes on primary residences (STAR eligible properties only) would be phased out over five years and be replaced with additional State funding. This vote would be held on the third Tuesday in May, which is the same date as the school district budget vote day.

The proposition would be placed on the ballot only after the submission of a petition which contained at least 25 percent of the persons who voted in the previous school budget vote. School districts which enter into this system would be required to reduce residential real property taxes on primary homes by 20 percent annually until such tax was eliminated after five years.

A new state aid formula would be created to fully reimburse districts for this reduction in local tax collections. After five years, the formula would provide districts with an annual school aid cost-of-living increase.

In 2006, primary residential homeowners paid approximately $9.5 billion in school property taxes. If every school district entered the optional system, the 20 percent reduction in residential tax levies would reduce school property taxes by $1.9 billion annually. Eventually, if every school district were under this new system, State funding would fully replace the $9.5 billion paid by homeowners in school taxes. This amount is equal to the $9.5 billion in proposed school aid increases and property tax relief proposed by Governor Spitzer in his Executive Budget this year.

Under the new system, property taxes on other properties (i.e., second homes, apartments and businesses) would continue under the current taxing system. Districts which do not enter into this financing system would continue under the existing property tax structure.

FREEZE PROPERTY TAXES FOR SENIOR CITIZENS: School districts would be authorized to freeze the school tax rate for seniors over the age of 65 to provide immediate tax relief to hundreds of thousands of seniors across the State. This would be accomplished by freezing the real property assessed value of their homes at a fixed rate, while also providing state reimbursement to municipalities for any loss in real property tax revenue.

The legislation would establish a fixed real property assessed value for persons sixty-five years of age or older who own a primary residence. Eligible seniors must have an income of less than $100,000 and would be required to apply annually with their assessor to participate in this program.

Under the terms of the bill, the local assessor would be charged with notifying all local real property owners about the program, and would have to provide a statement on tax bills stating, "Your tax savings this year resulting from the fixed real property assessed value is $__". Assessors would also be responsible for applying to the State for reimbursement for the loss in property tax revenue.

BLUE RIBBON PROPERTY TAX REFORM COMMISSION: The legislative package would also establish a Blue Ribbon Property Tax Reform Commission. The eleven-member commission, which would include experts in the fields of education, municipal finance and assessment administration, would examine the property tax system and offer reforms to relieve homeowners and other property owners of their increasing tax burdens. The commission members would be appointed by the Governor and the Senate and Assembly leadership.

The commission would report at the end of calendar year 2007 on a reform plan for schools and local governments to lower local tax burdens with a focus on enhanced accountability, alternative financing methods, governance options, property assessment plans, and tax containment policies. The commission also would be charged with examining possible alternatives to the real property tax for funding schools and changes to the property assessment system.

This part of the package was actually passed in May but not acted on by the Assembly.

MANDATE RELIEF PLAN: The Senate’s reform plan also includes a comprehensive mandate relief plan in order to help reduce costs to school districts, municipalities and local taxpayers.

The measure would require the State to pick up the cost of any state mandated program imposed on municipalities or school districts, which created an annual net additional cost in excess of $10,000 or an aggregate annual net additional cost in excess of $1 million.

"State mandates place an unfair burden on our taxpayers and this legislation will help to fix this inequity," added Senator Flanagan. "This entire package is aimed at relieving the pressure that school taxes place on the homeowners of our state and is a true overhauling of our current system. The time has come to stop taking small steps in providing piecemeal relief. This Senate proposal provides critically needed broad sweeping changes that protect our taxpayers while maintaining educational excellence."

The entire package was sent to the Assembly for further action.