Pre-COVID-19 pandemic, in March 2019, Milton E. Ezrad chief economist at Vested stated, “The city is running a deficit … already in a financial spot but would be in a difficult situation with any kind of setback.” Paul C. Earle, respected economist from the American Institute for Economic Research remarked, “NYC could go bankrupt, absolutely.”
In April 2020, the bi-partisan political watchdog, New York City Independent Budget Office projected NYC to lose $400 million in real-property tax revenue for fiscal years 2021 and 2022. June 2021 Bloomberg News estimated these losses to be in the $1.6 billion range. The Citizens Budget Committee determined property taxes account for nearly 45% of city tax revenues. Property tax is an undeniable staple of New York City’s revenue stream. This begs the question: How will NYC close this financial defecit?
Recent recommendations by NYC Advisory Commission on Property Tax Reform suggests property tax increases are on the horizon. This City Hall-appointed commission released a 72-page report with several undetailed recommendations. The following items drew immediate attention:
1-The Commission recommends a sale-based methodology to value all property in the residential class.
2-The Commission recommends assessing every property in the residential class at full market value.
3-The Commission recommends a circuit breaker within the property tax system to lower property tax burdens on low-income primary resident owners, based on the ratio of taxes paid to income.
4-The Commission recommends a partial homestead exemption for primary resident owners in residential class dwellings with incomes below a certain threshold.
Full market value is the price a property would sell for under normal conditions. Currently, property tax rates are based on assessed value, a fractional percentage of full market value, that will not exceed 6% of market value.
In Spencer Estate, 1-3 family homes are designated Tax Class 1 and taxed at 21.045% of assessed value minus exemptions. A dramatic change from assessed valuations to full market valuations could place financial burdens on hard-working middle class families, retirees, senior citizens and anyone on tight budgets or fixed incomes.
In typical fashion, City Hall-inspired policy change elicits more questions than answers. What is the tax to income ratios and income thresholds? What are the financial effects of the partial homestead exemption and circuit breaker? Will the homestead exemption or circuit breaker replace current STAR, Enhanced STAR or other exemptions? Will the circuit breaker include an interest accruing deferred tax payment plan that could place vulnerable properties in lien status? Can overlap situations occur with the homestead exemption, circuit breaker structures? If so, how are these handled?
With the tradecraft of skilled illusionists, the term-limited de Blasio NYC political machine shielded its motivation to close fiscal gaps by defunding hard-working middle class homeowners. This late stage NYC property tax reform is expected to await blessings from a new City Council and mayor before attaining state approvals.
It should be noted: Assembly Bill A4744 and Senate Bill S857, addressing the circuit breaker, are already in committee minus specific fiscal details. The Property Tax Reform report is available through the website www1.nyc.gov.
Low-density communities are middle class neighborhoods primarily comprised of essential workers, first responders, civil servants, teachers, fixed-income senior citizens and retirees. Many multiple generation families made sacrifices and commitments to build, improve and stabilize these communities. It is our civic duty to ensure specific details are publicized before change is made to the property tax system. Structures or processes that increase our property tax obligations should not be up for discussion. We must unite to make those that preceded us proud so those that succeed us have a community to appreciate. Let your voices be heard, contact local elected officials to demand Property Tax Reform clarity and transparency.
Councilman Mark Gjonaj 718-931-1721
Assemblyman Mike Benedetto 718-892-2235
Sen. Alessandra Biaggi 718-822-2049
Monthly meetings resume in September; however, the traditional summer respite could be interrupted by circumstances requiring ad hoc attention.
If we want to keep and reap the blessings of our fine quality of life, we must endure the fatigue of supporting it. Our community has traditionally exhibited a “We are Family attitude.” Now is the time to let it shine. Communicate; make that phone call, text message or send that email. Please check on family, friends and neighbors, especially the elderly and vulnerable. Any area homeowner or renter interested in the Spencer Estate Civic Association, send an email to email@example.com.
Remember: Community=Common-Unity and Inclusion brings Solutions.