Under the guise of “reform” County Executive Ed Mangano wants to end the “county guarantee” – where the county pays for its assessment mistakes. Instead, the tax refund and any interest that might have accrued in the months and even years before tax challenges are resolved, will be put to the school districts, fire districts, towns, villages, and every other taxing authority that uses the County assessment rolls.
The legislation that would make this happen (assuming new York State Legislature agrees) is (laughingly) being called the “Common Sense Act of 2010”.
What would be “common sense” is what the Democratic Minority so vigorously advocated at the County Legislature’s Monday Oct 18 public hearing: fix the broken county assessment system, and then go about repealing the county guarantee.
In fact, the same proposal was made by Mangano just a year ago – when he was County Legislator Mangano, insisting that the County fix the assessment system, before overturning the guarantee.
Now, as County Executive, Mangano has made the repeal of the “county guarantee” a key ingredient to his “no tax increase” county budget for 2011 – without it, as Deputy County Executive Patrick Foy repeated 18 times, the County is headed for bankruptcy.
But like most of the other $240 million in so-called cost “savings” in Mangano’s preposterous budget, it is all smoke and mirrors, an illusion in the same way that the quarter that is taken out of your ear disappears but is recovered from your pocket.
In the first place, as even Deputy County ExecutivePatrick Foy noted, the first year this would go into effect where school districts would be liable for tax errors would be for the 2013-4 school year, based on the assessed roll that will become final April 2011. The change would have zero impact on the 2011 budget, when Foy, who insisted more than a dozen times at the podium that the County faces bankruptcy.
How can both of these ideas be true – that repaying tax certs will not impact school districts until at least 2013, and that overturning the tax guarantee will lower the county’s budget deficit for 2011? Because even though the shift in liability to pay tax certs onto the school districts might not take place before 2013, Foy acknowledged that the school districts and others would be liable for all the outstanding tax debt the county owes.
That means that it is not $60 million that would be transferred to Nassau’s 56 school districts. It is more like $150 million (the amount that includes debt service on outstanding debt).
That amount is presently $1.5 billion so school districts – and all the other taxing municipalities – would be paying and paying a very long time for the county’s decades of broken assessments.
It does seem unfair that the County pays the full amount of the tax refunds since it only takes in about 20 percent of the property taxes collected – which means that all the county pays for those who win tax refunds in, say, Carle Place. But unlike the County, which has a large tax base and multiple sources of revenue (sales taxes being the major one), school districts depend on local property taxes – that is the way the system was designed going back to the beginning of public education. School districts develop a budget based on the best calculation of true costs for the academic year, take out what state or federal aid or any other revenues are anticipated, and the rest is raised from property taxes.
Great Neck, which gets such a meager amount of state or federal aid, almost 95 percent of the budget comes from property taxes.
How that budget “pie” gets apportioned among property tax payers is determined by the assessment rolls that the County provides. The school district has no role in deciding who pays what amount. It didn’t get “extra” – it collected exactly what it needed – there is no “overpayment” that is stashed away. So if someone wins a claim that they paid more than they were supposed to, it is the other taxpayers who make up the difference.
Taxpayers have 15 months, from the time their estimated assessed value is sent, in January, until April 1 of the following year when the roll is finalized, to challenge the County’s assessment. Tax challenges that are settled within that time do not incur any refund.
But what has happened is that the County doesn’t address the tax challenges in a timely way – challenges can take years to resolve, all the while accumulating interest When they are repaid through bonding, that adds debt service, as well.
The Democrats are saying that the County should have its system in place to resolve tax challenges in the 15-month period, before it overturns the guarantee.
“If paying out $100 million a year wasn’t incentive enough to fix the [assessment] system, then $16 million certainly won’t be,” asserted Legislator Wayne Wink.
Foy pointed to the recently enacted Commercial Assessment reform, which narrows the ability to file for tax refunds, as cutting into the $80 million worth of tax refunds granted to commercial property owners a year. But Legislator David Denenberg challenged, “If you believed what you just said and would really reduce the liability.. you wouldn’t be worried about pushing it onto the towns and schools.”
Denenberg (who was repeatedly insulted by Presiding Officer Peter Schmitt who at one point chided him for “bloviating”) contradicted Foy’s claim that “99.9 percent of counties” do not pay tax refunds for other municipalities (the basis for Foy to suggest renaming the Common Sense Act, the “Level the Playing Field” Act). Instead, Denenberg pointed to Westchester and Suffolk which not only take on the responsibility of paying the tax refunds for the others, but actually have a budget line for tax refunds – a pay-go mechanism, instead of Nassau’s method of endlessly borrowing to repay.
But even taking the minimal figure – the annual $100 million (which s really $250 million including debt service), that would amount to $1.4 million for each of the 56 schools districts, with some school districts paying substantially more (and as it turns out, Hempstead would have to come up with the greatest amount, $8-9 million).
That amount is equivalent to some 2-3% increase in budget. So right off the bat, without spending a dime extra for state mandated increases in health care, pensions, or contractual obligations, or new testing under No Child Left Behind and Race to the Top or other unfunded state mandates, the entire school budget is blown up.
Even if school districts could create a $2 million line to have funds available to pay the tax refund liabilities, at best, that would increase the school budgets, inspiring more outrage among taxpayers who simply point to the fact that school budgets account for 65 percent of property taxes (if County taxes go down as a percentage, school taxes will go up as a percentage) to “prove” that they are too high.
Among all the budgets of all taxing authorities – federal, state, county, town, village, special districts, – – – school budgets are the only ones that gets voted on, and we have seen taxpayers take their ire out on school budgets, and as several speakers pointed out, they are at the breaking point of voting down school budgets altogether.
For years, school districts, mindful of economic hardship and taxpayer fatigue, have shaved costs, cutting to the bone, despite the fact that most of budget increases are mandated by the state and other authorities – only a small fraction of a budget is “discretionary” for such things as extra-curricular activities or the result of a shift in “base proportion” – putting more of the tax “pie” burden onto residential payers from commercial.
But what is more significant is that the State intends to impose a 4% cap on school tax increases; the gubernatorial candidates want to exceed even that much, by imposing a 2% cap.
What that means is that if the County now imposes a mandated expense that amounts to 2-5% of the school budget, that can only come from firing teachers, cutting programs, and increasing class size, and they will still likely have to raise taxes.
“Unlike county budgets, school districts are the only one that gets voted on – the more we push unfunded mandates, the more peril to school budgets getting passed,” said Wink. “We are public servants – all we are doing is tell them to sharpen pencils and do things we as a County have been unable to do – we would be putting them in harm’s way, when we won’t have incentive to fix. We’ve had years to work on this and now giving two years lead time to everyone else.”
Foy’s reaction was cavalier, in fact, drawing chortles from the packed audience, when he said that the schools could get more aid from the state. More aid? The State has been cutting aid to schools and short changes aid to Nassau County (we have 17% of school children but get only 13% of funding, with increasing pressure to shift state resources to urban schools), and only reluctantly restored some aid after receiving federal stimulus dollars which are unlikely to come again (especially if Republicans take more Congressional seats).
Foy suggested that he was working with school districts on ameliorating the impact. In fact, Foy held a meeting on Sept. 24 with Nassau County school superintendents in which he told them flatly that the county guarantee was being eliminated – a fait accompli, in effect – not that it was under consideration or that the measure required approval of the State Legislature.
“It would be financially catastrophic,” Dr. Raymond Malucci, President of Nassau County School Superintendents Association, told the Legislature. “It would mean cutting education programs, reducing staff, and actually raising taxes. [$1.4 million liability] translates into 22 teaching positions, higher class size and loss of support services – social workers, guidance counselors.”
But even those cost estimates do not take into account that school districts would have to hire specialists to manage and challenge the tax certs. Westchester school district, he said, had to allocate $800,000 in one year for attorney fees, an amount equivalent to another 12 teaching positions.
But the school districts do not actually know what their actual liability would be – the County has not provided that information.
Dr. Malucci put it right to the Republican legislators to figure out how much their own school districts would be impacted – North Bellmore, Carle Place, Rockville Center, Belmont, and others.
“How can you vote if you don’t even know the cost to school districts you represent?… We do not support shifting the burden to our taxpayers.”
(My own feeling is that the Republican legislators don’t actually care what happens to public education, because they are pushing for School Choice – vouchers for private and parochial schools.)
Louise Hochberg, president of the Great Neck United Parent Teacher Council, said, “Schools have a sacred trust to educate children. Our district can’t be dragged in to pay bill to fix a broken [assessment] system. Get passed the game of smoke and mirrors. Approach the problem with bipartisan spirit of honesty and openness. Fix the broken system. Don’t shift it onto the back of school children”
Pointing out that the vast majority of families move to Nassau County because of its schools, another school board member said “You are threatening the golden goose, the school system of Nassau County.”
Nassau County initially sought the guarantee in 1938 when it demanded that New York State adopt legislation making the County responsible for assessment – apparently Nassau is one of only two counties in the state that does the assessment (so the argument that the County is the only one that has this problem of a guarantee is disingenuous). The county, which has responsibility for establishing assessed values for more than 400,000 parcels, is second only to New York City.
“72 years of state statue and court decisions can be wiped away,” said one man. “Money is diverted from classroom to fund taxs certs.
“It is not commonsense to sweep the problem under the rug and shift from one pocket to another; there is no commonsense and making problem harder to fix; no commonsense in making property tax rise faster, and narrowed to a smaller tax base instead of a wider tax base available to the county (which also gets sales tax revenue); no commonsense in taking away the county’s responsibility to all the district. Commonsense would be fixing the problem instead of fixing the blame and passing the buck.”
Shifting the liability of tax refunds is not the only unfunded mandate that Nassau County would put onto school and fire districts and every other taxing authority: Mangano’s budget also proposes to pass along sewer taxes to tax-exempts and nonprofits, including villages, towns, hospitals like North Shore-Long Island Jewish, universities.
Why? Because the county’s Sewer & Stormwater Treatment Authority is going broke.
A representative from CW Post testified that it would cost the college $400,000, on top of the $600,000 in MTA payroll taxes – money that comes directly out of student aid and scholarships.
Presiding Officer Peter Schmitt had little sympathy: “Somehow, some way for the past 35 years, the institutions that have been constituting and sending sewage to our plants have not been paying for it, but pay for LIPA, gas – that’s an inequity, and if we are going to straighten out Nassau County’s fiscal house, .. An increase [to tax exempts may be] so painful, but that same increase is more painful to taxpayers and homeowners. We have the highest unemployment in 18 years – those property owners have to pay [sewer taxes] whether they have it or not.”
Other major initiative that are fundamental to the 2011 budget proposal, which is estimated to be $348 million in deficit raising fees including fees for fire permits, by $85 million (again, not saving any money, just shifting) and extracting $60 million in “concessions” from labor, which will be challenged (just part of the $273 million in budget cuts and forecasts that Comptroller Maragos said were “at risk”).
The whammies are not just double, they are multiple.
There are legitimate concerns that at this point only the Democratic Legislators seemed to be concerned about – cuts to Long Island Bus and a proposal to privatize it; cuts to EOC and other social agencies, which negates the notion of “shared” sacrifice but rather puts the burden on specific segments of the community are also troubling.
But the way the Mangano administration is going about this so-called “Common Sense Act” and pushing the radical proposals that underlie the 2011 budget is the sorriest example of partisanship.
A year ago, there was bipartisan support to address the fundamental problems of assessment, and bipartisan support to put off overturning a decades-old “guarantee” that the County had itself fought for.
That has disappeared.
Mangano has pulled out big guns – spending $75,000 at a clip (paid for with taxpayer money that is apparently being moved from his line to another line, so he can make the claim that he has cut spending) to flood County residents with glossy brochures touting his no-tax hike budget and vilify teachers and public workers, and Democrats. it is pure political propaganda and taxpayers – including teachers, public workers and Democrats – are paying for it.
But what has Nicolleto upset? That a school sent home in students backpacks a sheet of paper informing parents of the Legislative hearing and urging them to stand against an unfunded mandate that will be coming at them from the County.
The Oct 18 hearing on these proposals was packed – and there were at least 3 protest demonstrations going on. One of them was orchestrated in favor of “Commonsense Act”, another was by TWU Local 252 protesting cuts and planned privatization of Long Island Bus, and another was by teachers from various school districts, protesting the planned overturn of the “County Guarantee”
Mangano spokesman Brian Nevin issued a statement “on theatrics of today’s legislative proceedings” blasting the Democratic minority, using that Orwellian two-step that blames the Democrats for “choosing partisanship over the protection of taxpayers.”
Nevin was accurate in this respect: Mangano’s budget is smoke and mirrors, a sleight of hand meant to move property taxes from one level to another.
As the County Legislature public hearing was underway, Mangano’s press office was organizing a press conference for the next day in which he trotted out Association for a Better Long Island (ABLI) Executive Director Desmond toannounce his organization’s support of Mangano’s plan to end the “County Guarantee”
The ABLI is no different than the US Chamber of Commerce in championing business interests over community interests And here’s the interesting thing: businesses don’t pay property tax – landlords do, and the biggest reason that the county’s tax cert liabilities are so high is because commercial property owners file suit as a matter of course – $80 million worth a year. They are hardly good citizens who give a whit if classrooms have to cram in 40 kids.
Democrats have it right: fix the assessment system first – 15 months should be enough time to settle tax claims – then overturn the guarantee.
The County Legislature is expected to vote on the measures, including the County Budget, at its next meeting, Nov. 8.
–Karen Rubin, Long Island Populist Examiner
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