Authorizes real property taxing authorities to impose service charges upon otherwise tax exempt property

Section two - adds a new section 403 to the real property tax law in relation to limitation on exemptions granted. All real property for which exemption is allowed, exclusive of property used exclusively for charitable, hospital, educational or cemetery purposes, shall be subject to service charges and to such special ad valorem levies and special assessments, except that real property owned by a municipality within such municipality shall be exempt; or real property owned by a municipality outside its borders which is otherwise wholly or partially exempt from taxation shall also be exempt

Section three - adds a new section 420 to title 2 of article 4 of the real property tax law providing for limitation on exemptions granted. Notwithstanding sections 421-a, 424-428, 432, 434, 438-444, 450, 452, 464, 472, 474, 486, and 488 of the real property tax law, real property for which exemption is allowed by any such sections, exclusive of property owned by a corporation or association organized or conducted exclusively for religious, charitable, hospital, educational or cemetery purposes, shall be subject to service charges, special ad valorem levies and special assessments

Section four - amends section 490 of the real property tax law, as amended by chapter 87 of the laws of 2001 to add service charges

Section five - adds a new section 495 to the real property tax law relating to service charges and defines chargeable services and improvements as services, and improvements necessary or convenient in providing such services, for the following purposes: police protection; fire protection; street and highway construction, maintenance and lighting; sanitation; and water supply. The amount of the service charge shall be based on the assessed value of the tax exempt property and the amount which the county, city or town or village expended, in the year preceding the year in which such charge is assessed, for chargeable services and improvements. Any federal or state aid received for such aforementioned purposes shall not be considered. The expenditures for services not provided for certain real property shall not be considered when a service is currently funded by another special ad valorem levy or special assessment. The service charge rate shall be determined by dividing the expenditures determined pursuant to paragraph (a) of this subdivision by the assessed value of all real property located within the county, city, town or village imposing the service charge, including nontaxable property. Under no circumstances shall the amount of such service charge exceed ten percent of the property tax liability if the property were subject to taxation. The provisions of this section shall not authorize the imposition of any charge by any municipality on real property otherwise exempt by law from taxation unless such municipality shall hold a public hearing and adopt a local law, ordinance or resolution.

Section six - contains the effective date

Justification

Local governments in New York State continue to face a myriad of fiscal challenges, particularly with respect to the financing and delivery of essential municipal services. Since the property tax is the single most important revenue source for local governments, the erosion of the local tax base and the accompanying burden it places on local taxpayers is of paramount concern to both state local officials. While much of the erosion is attributable to population declines and decreases in property values, particularly in the state's urban centers, the tax base is also compromised by the imposition of real property tax exemptions.

According to 2006 data, approximately 62 percent of the 5.6 billion parcels in New York State are wholly or partially exempt from taxes. This reflects $738 billion in exempt full value -- 32 percent of the value of all property in the State. While real property tax exemptions do play an important role in New York State's property tax system, it is important to note that exempting property from taxes doesn't diminish the need for revenues; it simply shifts the burden of generating those revenues to the remaining taxpayers in the community. It is also important to consider that many of the state's tax exempt properties require the same, or in some cases, more municipal services than other taxable properties in the community yet they are not required to help fund the costs associated with these services due to their tax-exempt status. This bill would provide local governments with a mechanism to recoup a portion of those costs, at local option. at a fraction of the amount these properties would pay if they were subject to taxation.

Legislative history

2008: S.7909 Local Government Committee/A.11172 Gunther, Real Property Taxation Committee

Fiscal implications

To be determined.

Local fiscal implications

This would assist local governments in providing services.

Effective date

This act shall take effect on the first of April of the calendar year next succeeding the date on which it shall have become a law, and shall apply to all assessments made with reference to a taxable status date which falls on or after such effective date.