Why Are Property Taxes In New York So High?

“Consolidating school districts could save New York homeowners — who pay the highest property taxes in the nation — millions of dollars, but surprisingly, some don’t want to hear anything about it, especially if it involves their own school district.” So said Thomas R. Suozzi,  in an article called “Streamline Education Through Consolidation” published in the Saratogian newspaper on Sunday, January 4, 2009. Suozzi is Nassau County Executive and chairman of the New York State Commission on Property Tax Relief.

New Yorkers pay the highest property taxes in the nation. I just wanted to repeat that so that it sinks in. New York property taxes are 78% higher than the national average. What is wrong with New York?

One of the recommendations that the commission made is to consolidate school districts that have fewer than 1,000 students. I don’t know why they picked that number. It seems to me that it could be done with larger school districts. It should be looked at on a district by district basis. What makes sense?

According to Suozzi, we spend more per student in New York than any other state in America. Suozzi also said that people in the education community and taxpayers like the idea of consolidation, except for communities that would actually be effected. He thinks people worry that schools will be closed and their school identity taken away. Consolidation has nothing to do with that.

Consolidation is about combining the administrative functions of a school district. It means having one school administration instead of two or three. For example, the school district in which I live, Schuylerville has 1,862 students. It could be consolidated with another nearby school district such as Stillwater (1312 students) or Saratoga Springs (6,857students) or possibly all three could be combined. Again, what makes sense?

Each school would retain its individual identity. Property taxes would be lowered due to greater efficiency of the district’s administration. If we can get the job done with one administration instead of three, let’s put that money back in the taxpayer’s pocket where it belongs. We can’t continue to keep doing things the same way just because that’s the way it has always been done. Especially when the citizens of a community can’t afford it.

I moved to New York a few years ago from Hamilton, New Jersey. The school district there has 13,000 students and one superintendent. He does have several assistants. They have 3 high schools, 3 middle schools, 17 elementary schools and one school for special education. The school budget is $182 Million. If you divide that by 13,000 students it comes out to $14,000 per student.

Saratoga Springs has a school budget of $107 Million.  If you divide that by 6,857 students it equals $15,600 per student.

Schuylerville has a school budget of $30.5 Million. If you divide that by 1,862 students it equals $16,380 per student.

I couldn’t find any information about the Stillwater school system budget.

The Town of Saratoga (Schuylerville School system) has a median family income of $48,000. Hamilton, NJ has a median family income of $67,000. The people who can least afford it, pay the most per student. Why is that? I can’t find median family income statistics for Saratoga Springs or Stillwater. If I do, I will update this information.

According to a story on Rnews.com in Rochester, Sharon Sweeney is director of the Four County School Boards Association. She says, “Let’s not punish our schools. They are the one thing New York State still has that attracts businesses to the state.” Oh really? Somehow I find that hard to believe. Name one business that is moving into New York state because of the quality of the schools. More than likely, they are getting a tax break from the state of New York to move here, like AMD and their $1.2 Billion incentive package. They also just got a break on $26 million or so in sales tax while they are building the new plant. That is another story.

Consolidating school districts using commonsense is not punishing our schools. It is using our available tax dollars wisely and giving the overburdened New York taxpayer a well deserved break.

Below are some excerpts from the final report of the Commission on Property Tax Relief. You can read the entire report here. The report is on the Fiscal Policy Institute’s website. You don’t have to read it all at once. If your head starts to spin, just take a break and go back to it later. The report is 94 pages plus 40 pages of supporting documentation. It is an interesting document and very well done. Appendix B contains all of the recommendations of the committee.

High property taxes have the most negative impact on low and moderate income working families, seniors on fixed incomes, and small business owners, who must shoulder this burden regardless of their ability to pay. Whether your concern is decreasing education costs, or increasing education spending, or addressing inequities in school funding, or improving programs, virtually all agree the answer cannot be to continue to increase property taxes at the current rate. The rate of increase in property taxes over recent years is unsustainable, and simply unfair to those who cannot afford to pay.

New York schools outside of New York City spend more per student than any state in the nation – an estimated $18,768 in 2008-09. New York’s per student spending is more than 50 percent above the national average. This results from high personnel costs; the number and complexity of mandates and expense of compliance, especially those that govern special education; and the large number of school districts, many of which are small.

The Commission proposes capping annual growth in the property tax levy at 4 percent or 120 percent of the Consumer Price Index (CPI), whichever is less.

The Commission recommends that, after a property tax levy cap is adopted, the State reexamine the STAR program, which provides payments to school districts with no relation to individual taxpayers’ ability to pay and has failed to effectively reduce property tax growth. A new STAR circuit breaker, targeted to relieve the tax burden on individual taxpayers based upon their income and ability to pay, would be a much more equitable way of reducing an individual’s property tax burden.

The Commission recommends that the State support school districts’ efforts to rein in the costs of salaries, pensions and health care, as well as general operating and capital expenses. These recommendations address the root causes of high property taxes by adopting the following proposed solutions:

Increase health insurance premium contributions by employees and provide health insurance coverage jointly with other public employers or school districts, including increased use of health benefit trusts.

Centralize and streamline school district reporting to decrease personnel and other costs associated with sometimes duplicated and unnecessary forms and other filing requirements.

Require consolidation of school districts with fewer than 1,000 students and grant the Commissioner of Education discretionary authority to order consolidation of school districts with fewer than 2,000 pupils to achieve economies of scale and to increase educational opportunities through expanded course offerings.

Create countywide property tax assessment and uniform statewide assessing standards.

Here are some more excerpts from the final report. I picked out what I think are some important points for those of you who don’t won’t to read the entire document. I recommend that you read the entire document though.

Homeowners are “voting with their feet” – selling their homes and moving to escape the high property tax burden. Indeed, census data consistently show New York leading the nation in the number of residents migrating to other states. Almost universally, we heard that the high property tax burden is one of the State’s most pressing problems – and it is only getting worse.

For example, there are almost 700 distinct school districts in New York State. Approximately 200 of these districts enroll fewer than 1,000 children.

New York State has the highest local taxes in America – 78 percent above the national average. New York’s local taxes also rank far above those of other large states. For example, New Jersey has the next highest level of local taxes, but they are only 18 percent above the national average. New Yorkers pay $84 per $1,000 of personal income in local taxes as compared to the national average of $47. When local taxes are combined with State taxes, New York has the highest tax burden of any large state – 35 percent higher than the U.S. average. It is important to note, however, that State taxes are not a primary cause of this high tax burden. New York ranks only 5 percent above the national average in state taxes (at $73 per $1,000 dollars of personal income). It is New York’s local taxes that are particularly high.

There is a significant disparity between the taxes paid by citizens of New York State, not including New York City, when compared to the rest of the nation. Outside New York City property tax represents the greatest proportion, 76 percent, of local taxes. Outside New York City citizens pay $54 out of every $1,000 of income in property taxes, 56 percent above the national average of $35. Total local taxes are 52 percent above the national average.

While property taxes have increased by a total of nearly 54 percent since 2000, wages have risen by only about 26 percent. This underlines how unaffordable property tax bills have become for typical New York families, which makes the State a very costly place to live.

The average teacher in New York earned $58,873 in 2005-06, the latest period available for comparing New York to other states. While the Commission recognizes that a higher cost of living in New York is a contributing factor, this average salary is 17 percent higher than the national average of $50,379.

Benefits, consisting primarily of health care and pension programs have the largest growth factor of any expense category. Benefits averaged 38 percent of salary expense in 2006-07.

There are approximately 700 school districts in New York State, ranging in size from New York City to districts with fewer than eight teachers. Far too many are quite small. About 200, or approximately 28 percent, had fewer than 1,000 students in 2006-07, and over 500 have fewer than 3,000 pupils. Small districts are not limited to rural areas. On Long Island, where there are almost a half million pupils, over one fifth of the more than 120 school districts have fewer than 1,500 students, with an average district size of under 800 students.

In comparison, Florida’s system of countywide school districts includes only 67 districts, and school districts in that state, and in Maryland, North Carolina and Virginia, which also rely exclusively or extensively on countywide school districts, average approximately 40,000, 36,000, 12,000 and 9,000 students respectively.

There are really two New Yorks: the “downstate” region, which includes the New York City metropolitan area, lower Hudson Valley and Long Island, and the “upstate” region. The state’s high ranking in terms of income is due mostly to conditions downstate. In contrast, upstate cities and their surrounding areas have been losing industries, jobs, and population for many decades – nearly a quarter-million people left New York for other states in 2006 alone. Seventy percent of all school districts have declining enrollment. Absolute population declines would have become an overwhelming trend had it not been for a steady influx of immigrants. However, these immigrants settle predominately in the downstate area, where job possibilities are better, with a relatively smaller proportion choosing to settle upstate.

The report contains many detailed recommendations as to what should be done and why, but it doesn’t say who is going to actually do the work. It doesn’t say when or how the recommendations are going to be implemented either.

I hope that members of the New York State Assembly and our State Senators will read this report and begin to act on the recommendations so that New Yorkers can quickly see real property tax relief. What could they be doing that is more important than this?

You can always call them or email them and ask if they have read the report and how soon they are going to act on the recommendations.

If we New Yorkers pay the highest  property taxes in the United States, maybe we should take the advice of the Commission on Property Tax Relief and start consolidating some school districts. Are there any volunteers to go first?

I would really like to know what you think. Leave a comment or send me an email. Thank you.

Note added 10/6/10 The Times Union of Albany recently published a story called New York’s Property Tax Nightmare. It was written by Bob Port and James M. Odato. Thank you Times Union. It is a great article about out of control property taxes. You can read it here: New York’s Property Tax Nightmare

Note added on September 24, 2009: If you do a Google search on “Why are property taxes so high”, this blog post will come up on the first page at number 6. However you found this site, people continue to read this post because I get “hits” on it everyday. A lot of people are concerned about property taxes. If you read the entire post, I would love to read your comments. What state do you call home? What did you think about the post? What answers were you looking for? Did this post answer any of your questions? Thank you in advance. I hope you enjoy the blog post. John Tedder