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Find the will to fix broken tax system

The Nassau County Department of Assessment in Mineola,

The Nassau County Department of Assessment in Mineola, seen on Thursday, Jan. 12, 2017. Taxpayers come to the office if they have questions about their property taxes. Credit: Newsday / John Paraskevas

Nassau is a wealthy county, yet its budget is in shambles and it borrows endlessly to pay the bills. It owes more than $3 billion, double what Suffolk does. It consistently struggles to fund the services residents expect, and it creates onerous fees and fines to bring in cash.

The reason is a property-tax system run amok. The losers are Nassau’s taxpayers, particularly lower-income residents, but also many wealthier ones who file for and receive large tax reductions.

The real winners are tax-appeal firms, which donate millions of dollars in campaign contributions, mostly to Republicans. The firms, according to a Newsday investigation, took in at least $500 million in the past six years as their cut of refunds or reductions they secured for property owners.

That $500 million is taxpayer money. It’s a reason Nassau County has to cut much-needed bus routes around the county. It’s a reason youth services are regularly on the chopping block. It’s a reason for revenue-generating law enforcement “innovations” like red-light cameras and school-zone speed cameras. And it’s a reason for strangling hikes in fees related to buying and selling homes and operating small businesses.

Politicians blame the so-called county guarantee, a unique state law passed at the behest of local politicians in 1948 that requires Nassau County, because it does the assessing, to pay 100 percent of property-tax refunds, even though it only gets about 17 percent of the overpayments. The rest goes to school districts and other taxing bodies. But what’s unique is that in Nassau, the county assesses. Other assessing bodies, the towns in Suffolk, for instance, are always responsible for refunds. In Babylon, for instance, there is a line on the town property tax bill that covers the cost of refunds and varies annually as refunds do. It hasn’t been a problem.

In 2011, County Executive Edward Mangano tried to cut the cost of the refunds by settling nearly all the residential ones before the tax roll is set and a refund would be generated by an appeal. This worked, saving about $20 million a year, but it also incentivized appealing. The appeal success rate is about 75 percent. The effect has been a huge shift in the tax burden from wealthier residents who know to appeal, because it never costs them anything, to less savvy, poorer ones.

The problem of assessments and refunds is fixable. Ideally it would involve changes in state law that would create a margin of error beneath which refunds would not be due, eliminating the complexity of having four assessment categories and putting those appealing assessments at risk of increased taxes if the valuation is found to be too low. Albany also could move assessing in Nassau from the county to the towns, because smaller local municipalities are much better at accurate valuations.

But the companies that make all the money on refunds, whose input largely designed the current system, have given millions to politicians who would have to fix this to save taxpayers a fortune. That would mean politicians putting residents ahead of big donors. The lack of willingness to do so is the problem that’s really tough to fix.

— The editorial board