Tax Rate, Class Shares, Oh My!

On June 6, 2017, the City Council approved the budget for the fiscal year that begins July 1st. For, the first time in more than three decades, the City budget was adopted just a day later than the date required by the City Charter. The practically on time adoption meant that the tax bills payable on July 1, 2017 could have reflected the new tax rates and the Finance Department would not have had to send an adjusted, and often confusing, tax bill to owners at the end of the year. However, Finance has opted to send the July tax bills using the tax rate from the fiscal year that will end on June 30th. The homeowner tax rate that was adopted tops 21 percent. Though the nominal rate is higher than all other tax classes, the median effective tax rate is .77 percent if exemptions are factored in and just .84 percent without exemptions. The City Council has asked the State to adopt legislation that does not allow the share of taxes paid by any property owner to increase at all. This legislation has been introduced but has not yet been adopted. Tax Rates Here are the tax rates that were adopted by the City Council and that will go into effect if the State does not pass legislation to limit the adjustment in class shares: Class 1: Current 19.991% rate increases to 21.289% Class 2: Current 12.892% rate decreases to 12.729 Class 3: Current 10.934% rate increases to 11.128% Class 4: Current 10.574% rate decreases to 10.442% If the legislation is adopted, it does not mean that the homeowner tax rate will go down. The legislation will simply further exacerbate the differences between the homeowner tax class and other tax classes. Abraham Lincoln is credited with saying: “the best way to get a bad law repealed is to enforce it strictly.” New York City’s bandaid approach to addressing the myriad of problems in the property tax just prolongs the agony and does nothing to address the inequities in the system.