March 29, 2006

Legislators Consider Alternative Tax Revenue

While studying their tax bills, homeowners on Long Island are likely grousing, given studies that show a growing percentage of them are disgruntled by their rising property taxes.

To that end, Suffolk County Presiding Officer William Lindsay (D-Holbrook) co-sponsored a bill with Legislator Lynne Nowick (R-Smithtown) to create a Homeowners Tax Reform Commission, which would examine alternatives to property taxes for funding schools. The bill was approved by the Legislature on March 14 and is awaiting approval by Suffolk County Executive Steve Levy.

The Long Island Index shows that 42% of residents in Suffolk and Nassau counties believe high property taxes are a "very serious" problem. Around 66.5% of property taxes in Suffolk go to schools, and on the East End that number is even higher.

In fact, over the last three decades, the tax bill for the average homeowner in Suffolk for all taxing jurisdictions — including schools, towns, county and special districts — has increased at a compounded rate of 5.61% per year, while inflation has risen 4.75% in the same period. At this rate, the legislators warn, property taxes will rise from an average $7237 in 2006 to over $10,000 in 2012.

At the top of alternatives to be considered by the task force is replacing the real estate tax with an income tax, a submission that has garnered some positive feedback from residents. This worries Legislator Jay Schneiderman.

"The idea has a lot of momentum, and it scares the heck out of me, frankly, because it would really hurt this area," he said, of the East End. "We have some of the highest income people around, but their incomes are in other areas."

Schneiderman abstained from the March vote, airing a word of caution about the potentially detrimental effects a switch from property to income taxation for school funding could have on the North and South forks, which have a high number of second homeowners.

"We'd end up losing out," he said last Wednesday, noting that many homes out east are seasonal, and the owners of these dwellings do not have children in the school system. With 60-70% of their property taxes going to schools, a lot of money is doled out without any impact to the schools' infrastructures. "We benefit greatly from the current situation; in fact, our taxes aren't that bad. Our property taxes are much lower than in other areas, and it's largely because we have a base of second homeowners."

Lindsay clarified that the bill would exclude second homeowners, focusing on owner occupied, single-family residences.

"We're very aware of the second home issue," he said. "To take them off the real estate rolls would be devastating to a lot of the East End school districts."

Despite some skeptics who claim that changing the taxation system will only shift the financial burden over to another group, Lindsay maintains that the goal in forming this commission is to "correct some of the inequities within our taxing system," adding that, ultimately, only the state has the authority to change the formulas for taxation.

The commission will be comprised of 17 members representing various organizations and interest groups from across Long Island. Once created, it would hold at least three public hearings to give residents a chance to voice their opinions. A report complete with recommendations would be issued within 180 days from the time the resolution is signed and effective.

"I really think people are at their limit and they're willing to look at alternatives," said Lindsay.

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