In the closing hours of its 2016 session, both houses of the state legislature this week approved legislation that would give the Town of Greenburgh the authority to protect taxpayers whose assessments increased by phasing in such increases over a three year period.
The measure now goes to Governor Cuomo, who may or may not sign the measure.
In Edgemont, if the phase-in is signed into law, it could result in a substantial increase in Edgemont school taxes to pay for it – possibly between 4% and 13% — even if next year’s school tax levy of $48.9 million remains exactly the same as it is this year.
All of these risks of huge tax hikes for Edgemont taxpayers could have been avoided had the Town either adopted the state-sanctioned five-year phase in which would have phased in the new assessments in 20% increments over a five-year period, while affording anyone who was overassessed the right to grieve their taxes and get immediate relief.
Under the proposed law – the cost of which public officials have thus far not even discussed – the Town would be permitted to dole out “exemptions” to anyone who, as a result of reassessment, saw their assessments increase.
Because the measure is touted as “revenue-neutral,” meaning taxing jurisdictions like the school district, are not supposed to get any less money, the money to pay for these exemptions, which reduces the amount of property taxes that those whose assessments went up have to pay next year, has to come from somewhere.
Here is now it works:
In their first year of the phase-in, if a homeowners qualifies for the assessment, two thirds of the assessment increase would be exempted from property taxes, while in the second year, one third would be exempted, and in the third year, the exemption would expire.
When exemptions are given, the total value of assessed property is reduced, which means that, in order for taxing districts, like the Edgemont School District, to get the taxes they need to cover the school budget – known as the tax levy – tax rates must increase.
In Edgemont, the tax levy for the 2016-17 school year is $48.9 million. That means that Edgemont must raise $48.9 million from its taxpayers.
Based on reassessment, the total assessed value of Edgemont property is now $2.7 billion. Dividing $48.9 million into $2.7 billion results in a “mil rate” of $18.09 per $1,000 of assessed value. On a $1 million house in Edgemont, that translates into a school tax of $18,090.
But once the exemptions are issued, the total assessed value of property in Edgemont will be less than $2.7 billion. The greater the amount of the reduction, the higher the “mil rate” would be.
For example, if the total amount of exemptions granted under the phase-in in year one comes to $100 million, Edgemont’s total assessed value would drop to $2.6 billion. Dividing $48.9 million into $2.6 billion result in a “mil rate” of $18.78 per $1,000 of assessed value. On a $1 million house in Edgemont, that translates into a school tax of $18,780. The cost of the exemption in that example is $690, which is an increase of nearly 4%.
But would the exemptions under the phase-in law actually result in a reduction of Edgemont’s total assessed value by as much as $100 million?
The answer depends on how many homeowners in Edgemont apply for the exemption and how much total value the exemptions represent.
The way the legislation works, anyone who saw an increase in their assessment is eligible for the exemption, provided they qualify for STAR, which means family income is $500,000 or less.
In Edgemont, more than 90% of homeowners saw their assessments increase, with 45% experiencing increases of 25% or more and 11.5% seeing increases of 50% or more.
How much “property value” is represented by those increased assessments? Town officials know, but they won’t say.
However, it’s possible to come up with an educated guess. Before reassessment, the total assessed equalized value in Edgemont as of 2015 was $2.237 billion. (The assessed value was actually $69,118,218, but under the equalized rate of 3.09%, the value comes to $2.237 billion).
That means that if the total value of Edgemont’s assessed value post-reassessment is $2.7 billion, Edgemont’s assessments increased by $463 million.
Therefore, in theory, under the Town’s proposed phase-in legislation, if signed into law by the governor, as much as two-thirds of that increase — or as much as $306 million — is eligible next year to be exempt.
Thus, using the $306 million figure, the total assessed value in Edgemont goes from $2.7 billion to $2.394 billion. Dividing $48.9 million (the current Edgemont school tax levy) by $2.394 billion results in a “mil rate” of $20.42 per thousand dollars of assessment.
That means that on a $1 million house assuming a $2.394 billion total assessed value in Edgemont, total school taxes would be $20,420. By comparison, without the phase-in exemption, and assuming a $2.7 billion total assessed value, the total school tax on a $1 million house would be $18,090 – a total potential difference of as much as $2,300 – or 12.9% more next year in school taxes.
Whether the result of the Town’s three-year phase in results in school taxes next year being hiked by 4% or as much as nearly 13% could make a huge difference next spring when Edgemont voters go to vote on next year’s school budget.
That is not a concern for town officials like Town Supervisor Paul Feiner whose own quirky town budgets are not subject to public referendum like school budgets are.
But it was a concern for State Senate Majority Leader John Flanagan (R-Suffolk), who last week had placed a hold on the legislation because of unanswered questions about what the impact would be if the measure passed on the school districts affected by the phase-in.
No answers appear to have been provided to anyone. As a result, it is not yet known what last minute legislative horse-trading may taken place to allow the measure to be passed.
It is also possible that legislators may have concluded that school districts like Edgemont’s will be at risk no matter what the legislature decided to do.
Thus, because the Town had refused to adopt either of the two state-sanctioned assessment mitigation measures already in place, not approving the legislation now before the governor would have put many Edgemont homeowners in the unenviable position of having to fork over school tax increases next year of between $5,000 to $10,000 – even if the school tax levy for next year remained exactly the same as it was this year.
This year, while the Edgemont school budget came under the state tax cap of 0.12%, the Edgemont school tax levy actually increased by nearly 3%. The budget nevertheless won overwhelming approval.
But next year, even if the budget is within the cap and stays unchanged, if the exemptions total $100 million, taxpayers will face an increase of nearly 4%, and if school district must raise the levy by another 3%, as it did this year, the total tax hike could be as much as 7%. But if the total exemptions total $300 million or more, taxpayers could be facing a school tax hike next year of as much as 16% which, were that to occur, approval of the school budget would very much be at risk.
That of course is not a town concern; it’s an Edgemont concern.
To address the problem, town tax assessor Edye McCarthy and her staff are meeting with Edgemont taxpayers protesting their tax assessments in the hope that, if they can negotiate a significant enough reduction, they would shrink the number of taxpayers who will be eligible to apply for the exemptions, assuming the measure gets signed into law.
In the process, they hope to buy some political goodwill with those taxpayers who are able to get a significant reduction. Indeed, some taxpayers are reporting that when they met with Ms.McCarthy, she used the opportunity not just to reduce assessments, but to try to persuade Edgemont taxpayers to oppose current efforts underway to incorporate Edgemont as a village.