Provides for the application of the veterans' real property tax exemptions in N.Y. city

Summary of provisions

Section one amends paragraphs 2 and 3 of subdivision 1 of section 458 of the real property tax law, paragraph 2 as amended by chapter 488 of the laws of 1998 and paragraph 3 as amended by chapter 733 of the laws of 1959.

Section two amends subdivisions 2 of section 458 of the real property tax law, as amended by chapter 63 of the laws of 1976.

Section four amends subdivision 2 of section 458-a of the real property tax law.

Section five grants an exemption pursuant to section 458 and 458-a of the real property tax law.

Section six is the effective date.

Justification

The Veterans Property Tax Exemption is different from other property tax breaks in the system. With most exemptions, the exempted value is fully excluded from the property tax. However, with the current Veterans exemption, the exempted value is only partially non-taxable: the property owner must still pay the School Tax Rate on the exempted value.

This School Tax Rate is the share of the Property Tax that pays for public schools {DOE). This means the more money the City pays for its schools, the closer the School Tax Rate will be to the Property Tax Rate. And so the closer the School Tax Rate is to the Property Tax Rate, the less a Veterans Property Tax Exemption will be worth. The School Rate varies from year to year, which causes the relative value of a Veterans Exemption to fluctuate year to year as well. In the last two fiscal years, as the City has increased its local share of spending on DOE in response to reductions in State and Federal education aid, the value of the Veterans Exemption has decreased.

To eliminate these fluctuations in the exemptions value, this bill would make the Veterans Exemption like the others and exempt that value from the School Tax. That means the Veterans Exemption will go from being only partially nontaxable, to fully nontaxable. This would also mean that the value of the exemption would rise consistent with increases in assessed value and/or the appropriate class property tax rate.(1)

In order to maintain the value of the exemption at approximately its recent historical level while fully eliminating taxation of the exempt portion, the nominal value of the exemption will be set at 40 percent of their current values(2). Thus, a 15% exemption under current law would be set at 6% under the proposed amended law. Chart 1 shows an illustrative example of the value of the exemption under current law and as it would have been under the proposed amendments.

CHART 1 EXAMPLE OF EXEMPTION UNDER CURRENT LAW AND PROPOSED AMENDMENTS

CURRENT LAW PROPOSED

2008 $191 $232 2009 $237 $243 2010 $286 $256 2011 $268 $260 2012 $248 $273

Example based on $15.000 assessed value and 25% exemption (10% under proposed amendment)

Fiscal implications

Undetermined.

Legislative history

2013: Reported and Committed to Finance 2012: S.6523-Referred to Finance / A.9377 Referred to Veterans

Effective date

This act shall take effect immediately and apply to assessment rolls based upon the taxable status date occurring on or after the fifth day of January next succeeding the date on which it shall have become a law.

Footnotes

(1) Some class tax rates have risen as a function of shifts in the share of total market value of taxable property attributable to the different classes. The individual tax class rates are determined by formula and not by legislative action of the City Councilor the State.

(2) The one exception to this is the "Eligible Funds" exemption for seriously disabled veterans. The value of that exemption will remain unchanged as it is already exempted from the School Tax and therefore needs no reform.