My colleagues and I in the New York State Senate recently passed legislation that could potentially result in the elimination of residential school property taxes.
Called the New York Stop Taxing Our Property Reform Plan, it would give school districts the authority to eliminate residential property taxes over five years, with revenue replaced by additional State funding; impose an immediate freeze on property tax assessments for seniors; create a Blue Ribbon Commission on Property Tax Reform and enact comprehensive mandate relief measures to help lower costs for school districts and municipalities.
Under the provisions of the bill (S.6119), every school district would be authorized to take 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 in conjunction with the school district budget vote day, which is the third Tuesday in May.
The proposition would be placed on the ballot only after the submission of a petition signed by at least 25 percent of the number of persons who voted in the previous school budget vote. 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.
Under the new proposed system, property taxes on 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.
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 new state mandated program imposed on municipalities or school districts.