Implements the Middle Class STAR rebate program; establishes a maximum residential school tax credit; repealer

2. The real property tax law is amended to add a new section 1306b restoring the Middle Class STAR rebate program to its previous position in law.

3. Adds a new section 101-b to the education law directing the commissioner to eliminate and consolidate reporting requirements wherever possible to reduce the amount of paperwork required to be filed by school districts.

4. Amends section 215-b of the education law, as amended by chapter 301 of the laws of 1996 requiring the commissioner to reduce paperwork requirement on local BOCES in its annual reporting to the governor and state legislature about boards of cooperative educational services.

5. Repeals subdivision 32 of section 305 of the education law.

6. Adds a new section 308-a to the education law providing that new mandates shall not be effective until the next school budget cycle and requiring an annual report by the state comptroller on the annual fiscal impact of new state mandates. 7. Amends subdivisions 1 and 3 of section 416 of the education law removing non-capital expenditures from the permissible uses of school district bond issuances for school districts not in the "Big 5."

8. Repeals section 805 of the education law.

9. Subdivision 2 of section 806 of the education law to limit regent ability to impose mandates with regard to required instruction in highway and bicycle safety.

10. Adds a new section 1527 -a of the education law requiring detailed fiscal notes and state funding of new mandates on school districts costing more than $10,000 per school or $1,000,000 statewide.

11, 12, 13, 15, 16, and 17. Amends section 1950 of the education law to reduce required school district and BOCES paperwork.

14. Repeals subpar. 4(d)(2) of section 1950 of the education law that prohibits state aid for shared maintenance services by boards of cooperative educational services.

18. Amends subdivision 2 of section 2201 of the education law allowing the commissioner to study the possible reorganization of school districts not less than every five years upon a vacancy in the office of district superintendent.

19. Amends subdivision 5 of section 2802 of the education law to streamline requirements for the commissioner's annual report on school safety.

20 - 23. Amends sections 3602 and 3602-e of the education law to reduce paperwork and administrative requirements for school districts and BOCES.

24. Amends section 3635 of the education law to allow school districts with an area of 40 square miles or less to provide student transportation based on actual ridership patterns if it determines that there is a consistent pattern of eligible students not availing themselves of school bus transportation.

25. Adds a new section 178 to the tax law restoring the "Middle Class STAR" rebate program to its previous place in law.

26. Amends subparagraph (e) of paragraph 1 of subsection (e) of section 606 of the tax law to define "qualifying real property taxes" for purposes of calculating a circuit breaker tax credit.

27. Adds a new subsection (qq) to section 606 of the tax law to provide for a Middle class circuit breaker tax credit. The credit will be based on the income of the household and the percentage that said household pays for school taxes.

CIRCUIT BREAKER FOR CITY OF NEW YORK, AND THE COUNTIES OF NASSAU, SUFFOLK, ROCKLAND, WESTCHESTER, PUTNAM, ORANGE AND DUTCHESS : Household Adjusted Gross Income Maximum School Tax

$120,000 or less Net school taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage.

$120,001 - $175,000 Net school taxes paid in excess of 7% of said income can receive a personal income tax credit of 70% of the overage.

$175,001 - $250,000 Net school taxes paid in excess of 8% of said income can receive a personal income tax credit of 70% of the overage.

$250,001 + No credit.

Circuit breaker for all other counties in the state

Household Adjusted Gross Income Maximum School Tax

$90,000 or less Net school taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage.

$90,001 - $150,000 Net school taxes paid in excess of 7% of said income can receive a personal income tax credit of 70% of the overage.

$150,001 - $250,000 Net school taxes paid in excess of 8% of said income can receive a personal income tax credit of 70% of the overage.

$250,001 + No credit.

The circuit breaker income tax credit will equal seventy percent of the amount of net school taxes paid over the allowed percentage cap as provided above.

For property taxpayers living in Yonkers, Buffalo, Rochester and Syracuse, where school and other municipal taxes are co-mingled, 67% of property taxes will be counted as school taxes. In New York City, 50% of property taxes will be counted as school taxes for purposes of calculating the benefit.

Renters will also be eligible for the benefit with eligibility to be determined based on a "school tax equivalent" of 10% of their rent in New York City and 15% in the rest of the State.

Also defines the measure of income for families earning at least 50% of their total income from farming as modified adjusted gross income instead of adjusted gross income for purposes of the circuit breaker income tax credit. The exclusion of principal payments from modified adjusted gross income allows farmers to exclude the cost of equipment from their income, resulting in a lower measure of family income that more accurately reflects the farm family's ability to pay property taxes and results in a greater circuit breaker benefit.

29. Amends the general municipal law by adding a new section 25 requiring any new state law or regulation imposing unfunded mandates on local governments to include a detailed fiscal note and a designated source of funding if such mandate will impose a cost of $10,000 on a single municipality or $1,000,000 statewide.

30 and 31. Amends section 1950 of the education law to add 2 new powers to boards of cooperative educational services:

(1) To enter into contracts with the school districts of Rochester, Syracuse, Buffalo and Yonkers to provide services. (2) To form health insurance trusts with component school districts or districts of children who reside within the board of cooperative educational services to purchase and administer employees health insurance and workers compensation insurance. 32 and 33. Amends the tax law and the New York City Administrative Code to restore the NYC enhanced PIT credit to its former place in law.

Justification

The Commission on Property Tax Relief issued its Preliminary Report and Recommendations on June 3, 2008. The Commission's report explores the root causes of the growth in school property taxes, and highlights several key facts:

* New York State's local taxes are the highest in the nation, and are 79% above the national average * Outside of New York City, school property taxes make up 62% of the property tax burden * Nine of the top ten counties in the country with the highest tax rates relative to home values are in Upstate New York. * Nassau, Suffolk, Rockland and Westchester Counties are in the nation's top ten in terms of the percentage of household income that must be devoted to paying property taxes; and * Property tax levies are currently rising at more than twice the rate of inflation and salary growth

Incorporating recommendations from reports of the New York State Commission on Property Tax Relief, this legislation adopts a comprehensive approach that will reduce the crushing burden of property taxes on local residents by providing targeted income tax relief to New Yorkers who pay the highest school taxes, relative to their incomes and curbing the imposition of costly state mandates on school districts that drive up taxes and divert resources from educational priorities. The amended bill will also provide much needed relief to the three million New York State households that lost their STAR and Enhanced STAR rebate checks in the recently enacted 2009-2010 state budget.

The Middle Class STAR rebate program and New York City Enhanced PIT credit would be restored immediately for 2009 at the same level of benefits paid in 2008. And starting in 2010, rebate checks issued to homeowners under this program will subtract out the amount of any circuit breaker tax credit already claimed in the same taxable year. This will avoid duplication of benefits while insuring that homeowners receive the maximum amount available to them under either plan.

The circuit breaker tax credit will provide targeted tax relief, beginning in 2010, to households earning up to $250,000 per year and paying more than a threshold percentage of their income on local school taxes. The precise threshold of6, 7 or 8% would be based on rising household income categories, with the lowest income households (earning up to $90,000 per year upstate or $120,000 per year downstate) qualifying if school taxes consume more than 6% of their income.

To further ensure that schools of have the funding necessary to provide quality educational services, this legislation also institutes much-needed relief of some of the mandates that have contributed to escalating school district costs. In addition to rolling back many non-essential paperwork and reporting mandates, and transportation requirements that results in many schools funding half-filled school buses with seats for children who have never used them, this legislation imposes strict limits on the imposition of any new state-initiated mandates. Legislative and regulatory mandates not required by federal law or initiated by local request would be required to contained detailed costs estimates and a proposed source of funding if their implementation would cost any district more than $10,000 or if the cost would exceed $1,000,000 in statewide aggregate. Additionally, these new mandates would not be able to take effect in the middle of a school year and would be required to be funded in the next school budget.

District cost containment is also encouraged by an expansion in the powers of boards of cooperative educational services to offer shared services to reduce costs to their component districts. BOCES reduce costs to their members by offering voluntary shared services ranging from instructional and non-instructional services, purchasing and administration. This legislation would allow them to expand the cost savings even further by allowing them offer their services to districts in the cities of Buffalo, Rochester, Yonkers and Syracuse and form health insurance trusts with component school districts to purchase and administer employees' health insurance and workers compensation insurance. A restriction on their ability to receive state aid for shared maintenance services is also lifted.

Prior legislative history

2008 - S.8733 (same as previous S.1849 of 2009) - REFERRED TO RULES

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately, provided that: * The provisions of sections 1, 10 and 29 of this act shall be deemed to have been in full force and effect on and after April 1, 2009 and shall be deemed to apply to any general or special law imposing mandates on municipal corporations or school districts enacted on or after such effective date; and * The commissioner of education shall adopt any regulations needed to implement the provisions of this act on or before July 1, 2010; and * The provisions of sections 26, 27, and 28 of this act shall take effect on the first of January next succeeding the date on which it shall have become a law, and shall apply to taxable years commencing on or after such date; and * The provisions of section 7 of this act shall take effect on February 1, 2010 and shall first apply to the levy of taxes by school districts for the 2010-2011 school year and to school district meetings and elections held on and after such effective date; and * Sections 6, 12, 13 and 14 of this act shall take effect July 1, 2010.