Lawmakers question property-tax exemptions

Lawmakers question property-tax exemptions

By Cara Matthews • clmatthe@gannett.com • Gannett Albany Bureau • October 13, 2009, 8:00 pm
ALBANY -- As New York's property-tax rates have grown in recent years, so has the value of exemptions for non-profits, educational organizations and other institutions, which jumped from $441 billion to $797 billion between 2000 and 2008.

"This meant there was a $350 billion in additional property value that local governments could not tax to fund municipal operations and schools, thus making non-exempt taxpayers shoulder a heavier tax burden," said Sen. Liz Krueger, D-Manhattan, who chaired a roundtable discussion Tuesday on the issue.

Each year, New York's property-tax system wades deeper into crisis, Krueger said. Between 1995 and 2005, during the nation's longest-running housing boom, local property taxes grew by 60 percent. New York ranks second among all states for its property tax burden, she said.

Senate Democrats are considering whether to scale back the tax exemptions. They plan to introduce legislation based on a report that will be written on the meeting.

In 2008, exempt property accounted for 30 percent of all property value in the state, said Krueger, a member of the Senate Select Committee on Budget and Tax Reform. The state constitution exempts non-profits and charitable groups, educational groups and other institutions from property taxes. However, there has been a lot of controversy over what properties qualify for the exemption.

Lawmakers are seeking input on whether exemptions are being properly administered, what the state can do if there is evidence of abuse, and whether local governments want a change in the system.

"Really, ultimately, I think the state of New York needs to look at its tax system in total," Krueger said. "Is this a model that in fact works for the state of New York and its localities? Is the mix we have of property vs. income vs. business vs. excise logical in the 21st century?"

One thing that should be changed is to reduce the number of tax assessing units, she said. New York has 1,200 of them, compared to California, which has 60.
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"With 1,200 'governments' making decisions, you're guaranteed not to have a coherent system at the end of the day," she said.
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Krueger asked if the state should consider exempting properties not based on who owns them but what the land is used for.

Carol LaGrasse, president of the Property Rights Foundation of America, said exemptions should apply only to portions of property that are truly used for non-profit purposes. For example, hospitals may be non-profit, but a lot of private practitioners work there, she said.

There are some examples of religious or not-for-profit organizations that have purchased large tracts of land but only use small pieces of it, Krueger said. Some tax-exempt organizations have for-profit ventures within them, she said.

Hospitals provide jobs and are economic engines for the regions they are located in, said Sue Ellen Wagner, vice president of the Healthcare Association of New York State.

The number of residential property-tax exemptions that the state allows local governments to opt into has grown, said Frank Mauro, executive director of the Fiscal Policy Institute.

"From a tax fairness perspective, I think the issue that needs to be settled is, do residential exemptions overall make the property-tax system more fair or less fair," he said."

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Regional angle

Rank City # of exemptions Dollar value % of value exempt

Here's a breakdown of exemptions by county, city and town. County rank shows the county's position among all New York counties except in New York City. The top 62 cities and 24 towns were ranked based on the percentage of the exemption value.
Rank County # of exemptions Dollar value % of value exempt

3 Tompkins 7,124 $3,986,597 39.11

28 Cortland 5,302 $597,733 22.44

36 Cayuga 11,349 $1,057,229 20.50

50 Schuyler 2,887 $214,769 16.18

2 Ithaca 988 $2,344,023 62.12

27 Cortland 1,122 $288,870 35.51

32 Auburn 2,678 $394,665 31.02

Source: New York State Office of Real Property Services
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Lawmakers question property-tax exemptions
Tompkins No. 3 in N.Y.