BILL NUMBER:S8435

TITLE OF BILL:  An act to amend a chapter of the laws of 2010 amending
the education law and other laws relating to contracts for excellence,
as proposed in legislative bill numbers S.6607-B and A.9707-C, in
relation to gap elimination adjustment offset

PURPOSE OR GENERAL IDEA OF BILL:  Directs that restored state funds
payable to school districts for general support of public schools during
the 2010-2011 school year shall be used solely for the reduction of
local property taxes of those parcels that qualify eligible to receive
an exemption under the NYS STAR exemption program.

SUMMARY OF SPECIFIC PROVISIONS:  Enacts a chapter amendment stipulating
that notwithstanding any other provision of law to the contrary, a
restoration in the 2010-11 education, labor and family assistance budget
of the amount of state funding for public schools payable to school
districts for the 2010-2011 school year, exclusive of those districts
designated as high need or those districts identified as a "Big Five"
school district, shall be used solely for the reduction of local proper-
ty taxes. The funds shall not be used to add additional appropriations
to proposed, enacted or adopted school budgets, nor shall the funds be
deposited in school district reserve funds or retained in unreserved
fund balances after levy of taxes.

Such a reduction shall apply only to those parcels in the district that
              

are eligible to receive an exemption under section 425 of the real prop-
erty tax law (The NYS STAR exemption program).

JUSTIFICATION:  New York State is struggling with an unprecedented budg-
et deficit. As state lawmakers determine the budget cuts necessary in
order to enact a balanced budget that best advances the interests of the
state, there is a need to restore a portion of state aid for public
schools previously cut in the 2010-11 Executive Budget.

With the state's public school districts having proposed, enacted or
adopted budgets reflective of these proposed cuts in state aid, the
burden of financing next year's school budgets will fall disproportion-
ately on the state's already overburdened property taxpayers.

The Commission on Property Tax Relief issued its Preliminary Report and
Recommendations on June 3, 2008. The Commission's report explores the
root causes of the growth in property taxes and highlights several key
facts:

* New York State's local taxes are the highest in the nation, and are
79% above the national average;

* Outside of New York City, school property taxes make up 62% of the
property tax burden;

* Nine of the top ten counties in the country with the highest tax rates
relative to home values are in upstate New York;

* Nassau, Suffolk, Rockland and Westchester counties are in the nation's
top ten in terms of the percentage of household income that must be
devoted to paying property taxes; and

* Property tax levies are currently rising at more than twice the rate
of inflation and salary growth.

In light of the dire need to reduce the crushing burden of property
taxes on local residents, which stands to be even more severe due to
cuts in state aid to public school districts, this legislation will
ensure that any restoration of state aid for public schools for the
2010-2011 school year will be used solely for the reduction of local
property taxes.

Pursuant to real property tax law, school districts have adopted their
budgets and are now in the process of preparing school tax rolls and
determining the tax levy required to support 2010-11 school year budg-
ets. Also under current law, in preparing warrants for the collection of
school property taxes, school districts may hold in reserve a limited
amount of funds that are not applied in determining the amount of the
school tax levy. This legislation will ensure that restored state aid
for public schools for the 2010.2011 school year will not be deposited
in school district reserve funds or retained in unreserved fund
balances. This legislation will also ensure that restored state aid will
not be used to add additional appropriations to proposed, enacted or
adopted school budgets.

With regard to limiting the relief to only those parcels that qualify
for the NYS STAR exemption program, we are ensuring that the relief goes
directly to those who are dealing with the crushing burden of property
taxes--the homeowner. The NYS STAR exemption under section 425 of the
real property tax law applies only to owner occupied, primary residences
such as one, two and three family houses, condominiums, cooperative
apartments, and manufactured homes.

PRIOR LEGISLATIVE HISTORY: None.

FISCAL IMPLICATIONS:  Fiscal implications at the state level will be
determined upon restoration of state funds to be appropriated pursuant
to enactment of the 2010-11 education, labor and family assistance budg-
et.  Adoption of this bill would assist in addressing the crushing
burden of local property taxes.

EFFECTIVE DATE:  This act shall take effect immediately.