Assemblyman Harvey Weisenberg (D-Long Beach) has just introduced a bill (A.10676) that would exclude court-ordered tax certiorari refund payments from Nassau County school district tax levy limits under the state’s property tax cap. It’s the same measure introduced in the Senate a month ago by Sen. Jack Martins (R-Mineola).
If the bill is enacted, the added, uncapped school tax increases in Nassau County could come to at least $50 million a year, based on 2009-10 refund data cited by the Nassau-Suffolk School Boards Association in a memo to lawmakers urging passage of the bill. **See Update at bottom of post.**
The bill’s sponsors say the loophole is justified because Nassau County has (finally) ended its unique policy of guaranteeing property tax refund costs on behalf of local governments that shared in the benefits of tax overpayments. From the legislative memo:
School districts in Nassau County will now be responsible for a majority of the refunds resulting from such proceedings, and these figures must now be factored into the school districts’ budgets. Applying this unknown annual sum of tax certiorari refunds into the calculation of a school district’s tax levy will unintentionally adversely impact taxpayers.
In its own memo, the Long Island school boards group claims it is simply seeking a “technical amendment,” to put schools on an “equal footing” with cities, towns, villages and special districts within the county under the following provision of the tax cap law (Section 3-C of the General Municipal Law):
Whenever the responsibility and associated cost of a local government function is transferred to another local government, the state comptroller shall determine the costs and savings on the affected local governments attributable to such transfer for the first fiscal year following the transfer, and notify such local governments of such determination and that they shall adjust their tax levy limits accordingly.
The Nassau-Suffolk School Boards Association interprets this provision — which isn’t found in the Education Law’s tax cap provisions for school districts — to mean that the tax certiorari payments no longer guaranteed by the county must be calculated by the state comptroller and ultimately excluded from the cap for Nassau municipalities, but not for school districts. But that’s a novel interpretation, to say the least; the provision in question was actually written to ensure that the tax cap accommodates a shift of costs among localities that agree to merge or consolidate services — not to create a loophole for certiorari judgements. (If, indeed, Nassau municipalities and special districts are assuming they can exclude their own cert costs from the levy limit, it could and should prompt a taxpayer lawsuit.)
There’s no policy justification for excluding certiorari refunds from the cap in any case. For many years, Nassau’s municipalities and school districts alike reaped their own share of the bounty from the county government’s long-time practice of systematically over-assessing commercial property. Now that the county will no longer eat the cost (more accurately, bonding it out and sticking the entire county tax base with the debt service), the schools want to force their taxpayers to directly pay the penalty. But everywhere else in the state, tax certiorari settlements are not excluded from the levy limit; i.e., a court-ordered tax refund has to be financed within the cap.
If Nassau school districts ever get this bill enacted, the rest of the state’s school districts will be in line behind them for the same exclusion.
Once the tax cap became law, it was inevitable that state lawmakers would attempt to drill loopholes in it. Martin’s Senate version of the bill (S.7433) was introduced May 16 and appears to be on hold in the Education Committee. This late in session, there is only one way for the bill to get to the floor — through the personal efforts of Sen. John Flanagan, R-Smithtown, who chairs the Education Committee and sits on the powerful Rules Committee.
In other words, the bill would appear to be very much alive in both houses.
** PS — The bill is also premature, to say the least, seeing as how the school boards are in the early stages of appealing their unsuccessful court challenge to the county’s decision to stop covering tax refund payments. **