Gurney's Inn
January 17, 2007

School Tax Alternatives Eyed

"We're dying a slow death from property taxes," Bill Lindsay, Presiding Officer of the Suffolk County Legislature, said last week, as he opened the final session of the Suffolk Homeowners Tax Reform Commission. Established in March of last year the commission was charged with examining alternatives for funding school districts.

As property taxes have risen, Suffolk County has earned the "dubious distinction" of leading the state in the number of people who move away each year, Lindsay reminded during his opening remarks. The exodus has been especially felt in volunteer fire and ambulance services, where recruiting volunteers has become a tremendous problem in most districts. If the trend continues and the county is driven to a paid fire protection program, the resulting cost would be "crushing," Lindsay warned. Additionally, he cited estimates that predict property taxes could escalate by 30 to 40 percent by the year 2012 if reforms are not rapidly adopted.

State officials alone hold the power to enact school funding reform, meaning the commission's role was purely advisory. The report of alternatives generated by the study group was presented to a number of state lawmakers, including Sandy Galef, chair of the New York State Assembly's Real Property Tax Committee.

At first, commission members favored moving to an income tax system to finance education. It was the most popular idea, Lindsay informed, offering his personal endorsement of the idea as "most equitable." But, the idea was fraught with administrative problems — such as the question of residents who underreport or don't report income at all, and how the system could be adapted to fund the 120 school districts on Long Island — that couldn't be overcome.

Recommendations focused predominantly on bringing equity to the Island in terms of how state aid is distributed, plus one suggestion Lindsay dubbed the most "innovative." He'd like to see Suffolk County establish a local income-based STAR program. Whereas the existing STAR program primarily benefits senior citizens, the Commission's version would benefit any homeowner whose income makes him or her eligible for a subsidy.

The commission estimated it would take some $150 million to fund the program every year. Members propose using three sources of revenue to amass the cash: a "sin tax" of $2 per pack on cigarettes, the placement of video lottery machines at a county OTB site, and a luxury tax on large homes.

When her chance to chime in arrived, Assemblywoman Galef offered an overview of legislation that's been proposed to address the issue. The lawmaker predicted changes to the state aid formula in the near future, and outlined reforms that include exempting school districts from the strictures of the Wick's law.

The Wick's law sets regulations relating to public construction, and can mean costs that are 10 to 25 percent higher than private sector building. Given that the budgets in many districts include building projects, exemption from Wick's could mean a huge savings. Also in the hopper is a constitutional amendment requiring all counties to undertake property re-assessments every three years. Galef said Suffolk and her home base, Westchester, are "culprit counties" when it comes to overdue reassessments.

The state has convened a Blue Ribbon Commission to assess school spending, comparable to a group that just completed a study of the state's hospitals. The report on education spending is expected soon, as is a report from a county task force studying the same issue.

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