An advisory panel’s work on overhauling New York City’s property tax system may be too little, too late, in the view of a group suing the city to make the first changes since 1996.
“Thinking through these issues is a good thing, but political inaction is why we went to court to force reform in the first place,” said Martha Stark, policy director of Tax Equity Now New York (TENNY), a coalition of real estate interests and community advocates. “Our lawsuit remains the best hope for New Yorkers being unfairly burdened by a broken, discriminatory, and unlawful property tax system.”
The panel, charged with making recommendations to Mayor Bill de Blasio (D) and City Council Speaker Corey Johnson (D) to help them develop formal legislative proposals to revamp the property tax system, is looking at ways to blunt the impact of changes on low-income residents and others who might face higher tax bills. Giving tax credits or other relief to property owners whose tax bills exceed a percentage of their incomes are tactics being used in other states, a pair of property tax experts from the Lincoln Institute of Land Policy in Cambridge, Mass., told the panel at a Feb. 28 meeting.
But the city has been discussing changes in the system for decades, and the current advisory commission isn’t the first body to examine the problems, said Stark, who is also a former city finance commissioner.
“After decades of lip service, commissions, and inaction, this feels a little like Lucy holding the football for Charlie Brown,” she told Bloomberg Tax in an emailed statement March 1.
The commission, created in May by de Blasio and Johnson, is charged with sorting out the complexities of how to improve the fairness and transparency of the system, which is widely seen as opaque, confusing, and riddled with disparities. Those problems were among the reasons the TENNY coalition sued the city.
The commission’s effort would lay the groundwork for the first changes in more than 20 years. But the TENNY lawsuit, which was among the factors that prompted formation of the commission, argued that the city won’t take its overdue actions without a court order. The lawsuit is on hold while the plaintiffs challenge a judicial stay of the proceedings.
Comptroller Urges Improvements
The advisory panel is right to be looking for better ways to ease the burden on low-income taxpayers, said city Comptroller Scott M. Stringer, who issued a report in September calling for improvements. “Our existing patchwork of property tax relief programs don’t provide nearly enough of a break to make a difference,” he told Bloomberg Tax in a March 1 emailed statement. “A major objective for the Advisory Commission should be to ensure that property taxes—whether paid directly by homeowners, or indirectly by renters—do not unfairly burden working class New Yorkers.”
The prospect of rising property taxes comes as many are already grappling with a higher tax burden under the deduction cap for state and local tax established in the 2017 federal tax law. “Taxpayers facing any potential increase in property tax that might be coming from reform may be subject to a double whammy,” said John E. Anderson, a Lincoln Institute scholar who is an economics professor at the University of Nebraska-Lincoln and was a senior economist on the President’s Council of Economic Advisers in 2005 and 2006.
Major reforms should be phased in over several years to avoid triggering political backlash and policy changes that would undercut the reforms, said Adam H. Langley, the institute’s associate director of tax policy and data initiatives. There is no optimal time span, he said, but three to five years seems reasonable.
“Research shows that efforts to provide property tax relief fail as often as they succeed, so it’s really important to get it right,” Langley said.
The commission’s final recommendations to the city, which in turn would lead to the formal legislative proposals, still hinge on getting more input, commission co-chair Marc V. Shaw told Bloomberg Tax before the meeting. Once the commission completes the current round of expert meetings, it will confer and then mount another round of hearings to gather testimony, he said. The next informational session with experts will look into valuation issues, commission Co-Chair Vicki Been told Bloomberg Tax.