Mary Jo O'Hagan, Vice President of the Nassau-Suffolk School Boards Association, entreated the Nassau County Legislature at its March 5 special meeting not to appeal a court ruling declaring Nassau County's repeal of the "County Guaranty" unconstitutional.
The County - in its latest scheme to shift fiscal burden, had sought to make school districts, towns and all taxing municipalities liable to repay tax certioraris - amounting to an $80 million a year burden on school districts.
It would be a disaster for school districts, particularly, which are already under a 2% cap on tax revenue increases, but would have been forced to set aside an undetermined amount of money for future refunds.
"The county tried to unilaterally hold itself harmless from tax certiorari," she told the Legislature. The resulting judicial ruling was "Consistent with governing case law, municipal home rule provisions, the Court of Appeals has already commented on the propriety of county guaranty. I speak for school districts and ask that county forego appeal."
The absurdity of making the districts liable is that the County assesses the propertyowner's tax rate, handles the grievance, decides the reduction which results in the tax refund. The school districts have no control over any of this process, yet would be the ones to pay.
Nor would the guaranty save taxpayers money - just switch pockets from which the payments come.
The argument the county made that the school districts somehow benefit from the higher assessments on those property owners is also untrue, because school districts set a budget, then divide the responsibility for paying the taxes to meet the budget based on the assessment. the assessment is merely the propertyowner's share of the total budget, or budget "pie." If one taxpayer pays less, another pays more, which is why even though school districts are limited to a 2% increase in tax revenues, individual taxpayers see higher increases in the amount they pay.
O'Hagan put the blame for the county's absurdly high amount of tax refunds on the fact that the County's policy is simply to award the reduction, and told the County to get its assessment house in order.
"85% of those who file win reductions - one-quarter of residential properties," she said. "Either a quarter of assessments are acknowledged as wrong, or the County is abrogating its responsibility, and granting all of them, but the result is to drive up tax rate."
Baldwin, where O'Hagan is a trustee on the school board, is made up of working class homeowners, a limited tax base. She said that if the County is successful, Baldwin school district would be responsible for repaying $250,000 a year -equivalent to the pricetag for all K-12 extracurricular activities, or all high-school electives.
"Like many districts in Nassau County, Baldwin is reducing staff, closing buildings, and reducing program. We haven’t received a penny more …
"The court has rendered its judgment. We ask that you accept its decision and move on."
Minority Leader Kevan Abrahams noted that the Democratic members of the Legislature did not go along with the County Guaranty, which was passed by the Republican majority.
"Our side never voted for the removal of County Guaranty; that was done with my colleagues to the right and the county executive. We plan on strongly urging the County Executive and colleagues that seeking outside counsel and appealing is a misguided approach for the County.
"Passing along the expense of tax grievance, tax certioari onto school districts is nothing more than passing the buck. A truer way to create savings for the County is to fix the system –the system broken for many years, under many county executives, so best way to insure savings for school districts, county, town is to fix the system.
"We will strongly urge the county executive to not spend countless dollars on wasteful appellate proceeding. Hopefully that will give you some comfort, because you are going through budget process at school districts.
School districts are under pressure already because of drops in state and federal aid, combined with the 2% cap, and the extra burden to set aside a reserve fund against the possibility of paying out tax refunds would force school districts to shift meager resources away from educational programs.
"We plan to work with the school districts to stabilize property taxes," Abrahams said.
Legislator Judy Jacobs (D-LD16), representing Syosset-Plainview-Jericho, commented, "I feel strongly about what you said. The confusion that people have in their minds is that by putting this, changing the guarantee to school districts somehow in some way saves money to the residents we represent. It’s a wash, except that it costs you, as a school district with 2% cap, a fortune of money and makes it almost impossible to deliver early intervention services."
Jacobs, a former teacher, said, "I, know what you guys go through just getting regular budget passed. This thing always disturbed me, gives a false sense to community that somehow if county puts to school district, saves money. Everyone us still paying, just taking from one pocket instead of the other."
Jacobs, said that if the guaranty were repealed and districts held responsible for refunds, "it would have to be done methodically, with thought, because puts school district in horrible situation with 2% cap. We all have children, very often people buy houses based on excellence of schools – when have special needs children, or have kids who aren’t brilliant, both ends of spectrum are hurt."
Legislator Dave Denenberg (D-LD19) commented, "Aside from fact that members of minority said all along that it's illegal to revoke the guaranty and would cost taxpayer money to fight, not just the schools but every district under Nassau would have to pay –towns, fire districts, no one exempt. And whether retrospective or prospective, how do you budget when you don’t know what [refunds] will cost.
"The county sets the assessments, takes the challenge and sets the refund. If the schools get money in error – you’re not getting anything in error – the schools, fire districts, towns, come up with budget, then tax rate is set based on assessment that county sets – you don’t get a penny more. Where were you going to come up with the money? You would have had to budget more money within the 2% cap – and taxpayers would have to pay anyway."
Denenberg said that in that period of trying to shift the responsibility to localities, the county added $300 million to its backlog of refunds, "because instead of fixing system, were going to dump onto towns, schools, fire districts."
Judi Bosworth (D-LD10), who before becoming a County legislator served as member and president of Great Neck Board of Education for 16 years, commented, "so I understood the extraordinary burden this would place on school districts. Certainly it is a shifting of burden from county to districts, but the bottom line it’s the taxpayers who pay.
"What’s most frustrating is that the only budget people get to vote on is school budgets, so these budgets are crafted carefully. With the 2% cap, there is already a great deal of stress on all involved to stay within the cap. Talk about a perfect storm – the elimination of county guaranty, 2% cap, lessening of state aid - but at some point, we still have the responsibility to educate kids, early intervention, making sure every child has opportunity to have wonderful education. .... My great hope this wouldn’t be appealed. So much has been spent already. This is just another burden on taxpayers."
None of the Republican Legislators made any remark.
In a prepared statement when the court ruling was announced, Minority Leader Abrahams said, "The Democratic caucus voted against the unconstitutional law of shifting this $80 million annual cost onto school taxpayers. We're all in this together, but we need Mangano to start delivering real solutions to the problem he promised to fix.”
The New York State Appellate Division Court voted unanimously to overturn a state Supreme Court ruling which would have passed a portion of Nassau County’s property tax settlements onto local municipalities, including school districts.
Nassau County Attorney John Ciampoli reacted to the decision by saying the County would appeal.
Nassau is the only county in New York that offers a guarantee and sits at the heart of the county’s financial debate as it has had to heavily borrow in order to pay for past refunds.
Karen Rubin, Long Island Populist Examiner
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