Following a debate that began as far back as 2006, last year the Senate finally came to agreement with the Assembly on a bill that allows school districts to extend property tax exemptions to veterans. It was signed into law by Governor Cuomo in late-December, a perfect Christmas present for the men and women who were willing to potentially give up their limbs or life for American interests and national defense.
Despite the positive intentions of the bill, the chances are good that you’ll also see a belabored debate about the exemptions in local school districts. Most school boards have already discussed them in detail, likely a little in public and a lot more behind closed doors -- and they still don’t have any answers. In order to meet the parameters of the new state law, school boards would have had to approve local exemptions by last Saturday to make them available for the 2014-2015 budget year. Only a handful of districts across the state have done that, most opting instead to delay the decision to a later date.
As simple as one might first think it is to grant the tax breaks (who wouldn’t support a vet?), it’s not. The boards are finding it difficult to balance altruism with fiscal planning, especially since the burden of making up for the lost revenues falls onto the communities, not onto the state as is the case with the long-lived STAR program.
In some cases, it’s not chump change that we’re talking about. Take the Wellsville School District for example. They have nearly 400 veterans living in the district who would receive some sort of exemption (the state law has 3 levels of breaks). Those exemptions would account for $2.3 million in displaced revenue, which would have to be collected from the other Wellsville property owners. With a total budget a smidge over $27 million, they would be looking at an 8.5% increase in their property tax bill just to accommodate the veterans’ exemptions -- and there would still be the annual, overall spending increase to account for, too! Further confounding the issue is the near-certainty that as the exemptions are granted, those properties removed from the tax rolls will yield smaller STAR payments to the district. It’s a damning predicament for a village whose residents routinely pay the highest effective tax rate in the state.
The numbers are considerably less-frightening – therefore, the tax breaks are more attractive -- in the Lockport School District which is a larger district than Wellsville and is blessed with a much stronger economy (far more retail operations and factories). In Lockport, non-veteran taxpayers would see their taxes rise by 1.3% to cover the exemptions. For a $100,000 home, that’s an extra $36 per year.
Even so, Lockport decision-makers are finding it difficult to do their duty and come to a decision. Like all other districts, they are left wondering, “Who do you please? Who do you offend? Veterans or the majority of taxpayers?” They considered putting it to the voters as a referendum on the May school budget ballot, but that idea was shot down: It is illegal under state law; the boards themselves must make the final decision.
One district – Batavia -- has decided to take it to the polls anyways. They will be holding a straw vote in May. The results will be non-binding, but it will give them the understanding of public sentiment that they need to make their decision (which will be based entirely on the outcome of the straw poll).
That’s probably the route other school boards will take once word of Batavia’s actions spreads. Few board members want to be labeled as the bad guy who says “no” to vets, so a straw poll will serve as an adequate shield for that. That’s especially true given that most school board members across the state are actually against the tax exemptions: Of the 600 of them who responded to a recent School Boards Association survey, 70 percent were opposed.
It’s a really perilous decision for boards to make. They all know that property owners are burned out by the amount of taxes they already pay, yet at the same time some understand that veterans are worthy of something for the blood, sweat and tears (and friends) that they gave for our nation.