In the six years since Nassau County froze property assessments, there have been 800,775 grievances filed by homeowners. But there are only 386,101 parcels eligible for such protests. It’s a broken system: No one can afford to forgo fighting an assessment repeatedly, and everyone loses out except the tax-reduction companies many homeowners pay to generate savings that in the long run don’t exist.
Successful tax grievances do not lower the tax burden. They lower the assessed values of properties, which means a higher rate needs to be charged on all property to make up the difference.
About 75 percent of residential grievances succeed in Nassau, and each lowers the assessed value of property in its taxing districts. For the past two years, the average decrease in assessment won was 8 percent. Since 2010, Nassau’s total taxable assessed valuation has gone down 28 percent. But the value of residential property has increased 12 percent.
The assessments are diverging from reality. So tax rates on the shrinking base are expanding.
The average school district tax-rate increase in Nassau in 2016 was 4.86 percent, but the average tax levy increase was just 1.69 percent. In Long Beach, the rate increase was 8.21 percent, but the levy increase was just 3.19 percent. In Rockville Centre, the rate increased 8.13 percent, but the levy increased just 2.81 percent. If you do not grieve and your tax rate goes up 8 percent, so do your taxes. Someone who gets an 8 percent reduction in assessed value and faces an 8 percent rate increase would pay no more in taxes that year, but also have no savings.
Anyone who didn’t win a grievance suffered a huge hike in their taxes. But anyone who won a grievance didn’t get the savings he or she might have expected. Most everyone is filing grievances and most everyone’s rate is going up over time as assessments go down. And millions of dollars are going to tax-appeal companies, which get a piece of what they say they’ve saved clients.
County Executive Edward Mangano is hamstrung by a county-guarantee law that says Nassau must refund all tax overpayments created by successful assessment appeals, even though 84 percent of the overpayments go to other taxing entities. So he now settles almost all residential appeals before the tax roll is set. That has eliminated $20 million a year in refunds, but the county has smoothed the process by lowering the assessments of homeowners even if properties are fairly valued.
Several law changes are needed in Albany to fix the problem, which exists across the state, although not as severely as in Nassau:
- Property owners who grieve should face the risk of having their assessments increased, as in New Jersey and Connecticut.
- State law should create a margin of error below which owners get no rebate. In New Jersey, a valuation must be off 15 percent before a court can change it. In New York, any discrepancy creates a reduction.
- The county guarantee, unique to Nassau, should be repealed.
And, of course, Nassau should regularly and accurately assess properties, something it has never been much good at.
This system is a disaster, with no winners except tax-grievance companies.— The editorial board