A charge levied by a county that covers the cost of a service rendered, like recording a mortgage or updating a tax map, is a fee. A charge levied by a county that wildly exceeds the cost of a service rendered is a scam. And such scams, as popular as they are with politicians, are neither proper nor legal.
Now, a lawsuit has been filed in Suffolk County, and another soon will be in Nassau, that seek to roll back inflated fee increases from the past few years, stop new, egregious hikes before they take effect and get refunds for those who have paid. These suits could blow even bigger gaps in both counties’ already seriously holey budgets. They could necessitate massive tax increases or huge cuts in services. And they are bad news for the politicians who’ve relied on faux fees to avoid responsible budget fixes.
The Government Justice Center, an Albany nonprofit organization, filed suit Tuesday in state Supreme Court asking that the Suffolk County’s $200 tax map verification fee, increased from $60 in 2015, and its $300 mortgage recording fee, created in 2016, be struck down.
The Real Property Tax Service Agency, which collects these fees, has an annual budget of $1.2 million, but it brings in $66 million in fees.
That means these are not fees, but taxes labeled and levied improperly. Fees, instead of taxes, are passed to avoid the primal screams that come from residents when traditional hikes are announced. And it’s done now to avoid the need for a 60 percent county legislature vote to bust the property tax cap mandated by the state. This deception also keeps taxpayers eligible for state rebates paid when municipalities stay under the tax cap.
In Suffolk County, the property tax levy is comparatively tiny, providing less than 2 percent of county revenue, while the real money is in the police district and county sales taxes. A 60 percent property tax hike would have been necessary to capture the more than $30 million in revenue the 2015 increases on the tax map verification fee created. Another equally huge hike would have been needed in 2016 to supply the funding the mortgage recording fee brought.
Instead, County Executive Steve Bellone touted flat general fund property taxes, while the burden to taxpayers increased massively and unfairly.
In Nassau County, it’s much the same. Nassau County Clerk Maureen O’Connell says her office brings in $45 million a year in fees, but has an operating budget of just $6 million. And the proposed 2018 budget calls for more huge fee hikes.
Outgoing County Executive Edward Mangano has submitted a budget that includes an unspecified hike to the $55 traffic surcharge created last year to bring in another $35 million next year. That’s in addition to $100 hikes for filing tax map verification, to $455, and block maps, to $400, to raise another $25 million. In 2006, the tax map fee didn’t exist and the block map fee was $10, said O’Connell.
The Nassau budget proposes a property tax increase of 0.8 percent, but if all this fee revenue were instead raised through taxes, the hike would be about 7 percent, enough to get voters howling. The proposal has legislators from both political parties balking at its fee increases, but not its spending, so by Election Day, the likelihood is that a budget will have passed that isn’t fully funded.
In the past, people tended not to balk at fee increases as much as taxes. They figured they won’t get a ticket, or they’re not buying a house or satisfying a mortgage anytime soon.
Now, with red-light tickets in seemingly every mailbox and more people getting tagged with real estate fees, the environment is changing. The voters are calling for change. And soon, the judges may join them.
Lane Filler is a member of Newsday’s editorial board.