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Tax Rates Soar

Residents across Nassau County are being hit with sharp school tax rate increases, leaving politicians pointing fingers and school administrators blaming a broken property assessment system and specifically, valuation reductions on commercial properties.

“I felt blindsided by the increase,” says Adam Weiss of Sea Cliff.  “It makes no sense to vote and have one number approved when it turns out they can unilaterally make it more.  So the vote is meaningless.”

The latest school tax bills, reflecting the higher rates, will be mailed to Locust Valley and North Shore residents this week.

District figures show the school tax rate for North Shore school district homeowners increasing by 6.17 percent. Locust Valley homeowners face a rate increase of 6.1 percent. The City of Glen Cove does its own assessments and does not use county assessments for school taxes.

While not as big a jump as last year—Locust Valley residents saw an 18.4 percent increase  and North Shore residents saw a 12.2 percent increase—the latest figures from both districts show tax rates far exceeding what was expected when voters passed school budgets in the spring.

School administrators say the sharp increase is caused by lower property valuations, especially commercial properties. Many owners have challenged their assessments through the Assessment Review Commission (ARC), an independent agency which reviews the valuation set by Nassau County. If it finds a property excessively overvalued, the ARC reduces the assessment, which lowers the taxes—and sometimes includes huge rebates—for that individual property owner.

But the school budget calls for a specific amount of tax revenue; if the value of taxable land  falls then the tax rate must rise to bring in the same amount. Thus, those lower property values are forcing another year of dramatic rise in school tax rates.

“People need to be careful to emphasize that this is a tax rate increase, not the percentage their taxes went up,” says Dr. Ed Melnick, superintendent for North Shore School District.  “For example,  the tax levy remains the same, however, if the overall assessed property value goes down, the amount we pay in taxes per dollar goes up.”

Nassau County uses a tax class system, segregating different types of properties. Classes 1 and 2 include properties that are primarily residential. Class 3 consists of utility company equipment and special franchises. Class 4 contains all other property, including commercial, industrial and institutional buildings, and vacant land. Each class contributes a different percentage of the overall tax bill, called the “adjusted base proportion” or “ABP.” Those rates were changed last year, too, by the county, raising the portion of taxes paid by residential homeowners.  

Secondly, owners in every class are eligible to challenge their assessments. But the impact on revenue of revaluing a home—worth about $400,000 on average countywide—is negligible next to the impact of revaluing a commercial property—worth well into the millions in Nassau County. (And remember, when one taxpayer wins a reduction, the rest must make up the difference.) School officials are saying that hefty commercial property reductions are a major driver of the latest rate hike for residents.

“If there is a shift away from utilities and business to homeowners, than it is clear that the tax rate for homeowners rises,” says Melnick. “This is clearly what happened, as the ‘tax rate’ reported is significantly higher than the percentage increase in the school budget for both years.”

On top of that huge imbalance, there’s a difference in how much of the burden each class of taxpayer carries.

“The change in the ABP added an additional 1.2 percent to Class 1,” says Victor Manuel, Jericho School District’s assistant superintendent for business affairs.

“And assessment reductions added an additional 3.82 percent to bring the tax rate increase for Class 1 to 8.15 percent.”

When the Department of Assessment issued homeowners their 2012-2013 tax roll disclosure notice last year, Nassau properties had been given the lowest possible assessed values, according to the department.

“The lowest possible value was chosen because of our commitment to keep the assessments at a reasonable level that is fair and equitable to all property owners,” said Gregory Hild, chairman of the Department of Assessment’s transition team at the time.

However, these lower property taxes have caused school tax rates to rise, making up for, and in some cases far surpassing, the money saved on property taxes.

“County officials encourage homeowners to challenge their assessment and then proudly announce that 87 percent of the assessment review claims are granted,” says Joseph Dragone, Roslyn School District’s assistant superintendent for business.

School taxes rise when the district seeks more money than the previous year, but typically budget increases are relatively small. The bigger impact, according to school administrators, comes from changes in assessed value—both of people’s homes and of commercial properties.