On May 27, Nassau County announced that for the first time since County Executive Edward Mangano froze property values more than four years ago, every piece of property – commercial and residential – in the county will be reassessed.
Is this good news? Bad news? Or inconsequential to the bottom line of Nassau County taxpayers?
Nassau County is truly a unique place when it comes to assessment and tax issues. Consider the fact that assessments generally have been reduced in the County over the last five years. Not taxes. Not necessarily values. Assessments. However, it is not an over-generalization to say that taxes have definitively risen each year during the same period. Why? Tax rate increases have offset reductions. Why do tax rates continue to rise? The answer is complicated, but the primary reason is the under-discussed and misunderstood County guaranty of the school district budgets, buried in the Nassau County Charter in 1948. The guaranty, in short, insulates the school districts from liability when a taxpayer successfully demonstrates the County has over assessed its property.
The standard justification for this guaranty is that the school districts do not participate in setting assessments, so why should be held responsible for reimbursement when the assessment is proven excessive. That justification has superficial and political appeal, but it is a red herring. School districts do not set assessments anywhere in New York State. In fact, most taxing entities are not assessing bodies. However, everywhere else in the state, the taxing entity that collected the tax, including school districts, are responsible for their share of reimbursement for overpayment resulting from over assessment. Only Nassau County school districts benefit from the insulation that the guaranty provides.
We think County Executive Mangano should be applauded for his focus on the vexing assessment and tax system in Nassau. However, reassessments historically result in higher values and higher taxes, and usually shifts in tax burdens from residential to commercial taxpayers.
In Nassau, the guaranty exacerbates this reality. The County Executive and Legislature recognized this in 2010 when it attempted to rescind the guaranty by local law. School districts challenged the rescission. The lower courts upheld it, recognizing the equity of the move and the problems the guaranty created. The appellate courts ultimately determined the rescission was improper on technical grounds. The Charter needs to be changed in Albany, not locally. It seems pretty clear that the determination was made after this decision that reform in Albany would prove impossible. The guaranty remained in place, as did the status quo and the unfettered increase in school district tax rates.
In Nassau County, the real underlying cause of rising tax bills is the county’s guaranty of school district budgets, and payment of the school district portion of property tax refunds. This is a unique structure in New York State and results in a complete disconnect between assessments and taxes; the school districts can, and have, simply responded to assessment reductions by raising rates dollar for dollar. School districts in the rest of the state have skin in the game and are active participants in the process: the natural result being some restraint on tax rate increases. While this remains the system, a reassessment simply cannot fix the tax issue in Nassau County.
The new assessments are expected to take effect Jan. 1, 2018. Annual reassessment was court ordered over a decade ago, and began in 2003, running through 2012. Taxes rose almost universally in Nassau County during that period, and through today. The situation speaks for itself. Simply reference your tax bill.
The latest move is a consequence of a Mangano pledge in 2010 to put Nassau on a four-year assessment cycle. Effective January 2011, Mangano froze increases in property tax values.
Reassessments superficially seek equity and a fair allocation of tax burdens across tax classes. This is not usually the result. The result is usually just shifts in burdens toward the commercial tax base. Assuming for a moment Nassau County could achieve the impossible by doing a perfect reassessment. The impact would be offset by the school district guaranty.
We asked a question at the beginning. Will the 2018 reassessment be good, bad or neither for Nassau County taxpayers? Our educated guess is that if you use your tax bill as a gauge, the best you can hope for is neither – and that hope is probably misplaced.