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Lette: Untangling The Property Tax Mess

 

Thank you so much for trying to untangle the mess that we call the property tax system in Nassau County.  Your explanation (see, “The Election: Not As Simple As The Slogans, The Roslyn News, October 30 - November 5, 2013) was excellent but did not go far enough.  In addition to granting reductions in assessment to a minority of homeowners, which has pushed the tax rate higher for the majority, the county has pushed part of the tax burden from Class 4 (commercial properties) to Class 1 (homeowners) thereby making the majority of homeowners pay a larger share of a larger tax pie!  Let me explain.  Although the county claims that 87 percent of the homeowners who ask for a reduction of their assessments are granted one, the fact is the majority of homeowners do not even ask.  They are the ones left “holding the bag” while the minority (and the tax reduction “specialists” who represent them) receive the windfall of lower tax bills despite higher tax rates.  In addition, the county Industrial Development Authority (IDA) routinely grants exemptions for class 4 properties that result in a lower share of the tax burden being paid by these businesses and thus a larger share being paid by the other classes—primarily homeowners—who are paying almost 80 percent of the school taxes in our school district.  As evidence of this shift, I have reproduced below for your reference a document prepared by the Office of Legislative Budget Review of the county itself.

 

Historic Nassau County Adjusted Base Proportions by Class, 2003 to 2013

 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Change

 

Class One 65.497 67.052 68.339 69.983 70.951 71.342 71.858 72.463 72.990 72.619 73.784 8.29

Class Two 4.360 4.200 3.973 3.619 3.706 3.726 3.578 3.578 3.443 3.477 3.318 (1.04)

Class Three 4.526 4.368 4.620 4.108 4.264 4.378 4.769 4.619 4.729 5.168 5.358 0.83

Class Four 25.617 24.380 23.067 22.290 21.080 20.554 19.794 19.339 18.838 18.736 17.540 (8.08)

 

From 2003 to 2013, the share of the property tax levy paid by residential homeowners (class one) has grown 8.29 percentage points. During the same timeframe, the percentage of the property tax levy borne by class two and class four (commercial properties) have fallen 1.04 and 8.08 percentage points respectively. Holding all other variables constant, as the share paid by class one properties rises, so too will class one property tax bills.

 

Contributing to this share re-allocation is the success of commercial property tax grievances. Since more commercial parcels grieve their property tax bills and are successful, their adjusted base proportion has decreased over time. Moreover, the difference in methodology used to assess a commercial property relative to a residential property makes it easier for a commercial parcel to win a tax grievance. A residential home is assessed based upon comparable sales. In contrast, a commercial parcel is assessed using an income approach. That is, a commercial parcel’s value is determined by how much it could be rented out for. Hence, in a down economy when commercial parcels make less rental income, they can successfully lower their property tax expense. No such mechanism exists for a residential homeowner. If a household earns less money, the house could still retain its value, hence, their property tax liability would not fall.

 

Finally, I would point out that this information is readily available to taxpayers in Roslyn on our website at www2.roslynschools.org/district-offices/Pages/tax-rates-2013-14.aspx

 

Joseph C. Dragone

 

Assistant Superintendent for Business

 

Roslyn Union Free School District