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In regard to property tax relief, Mayor Bloomberg had a golden opportunity in his State of the City speech to hit a home run for city homeowners. Yet, he managed to hit but a double in his proposal that rolls back the tax rate and merely extends the homeowner rebate.
First, state law requires that the city must roll back the tax rate in an amount at least equal to the total cost of the rebate if the city wants the rebate extended. This means that the mayor’s proper decision to extend the rebate brings an automatic tax-rate rollback of approximately 2%. The mayor’s generosity therefore really extends to an additional 3%, a rather measly sum for homeowners in a city flush with revenue.
Moreover, with property assessments going through the roof (pun intended), the 5% tax-rate rollback merely amounts to giving back to homeowners the additional amounts they are about to pay in increased assessments. In short, this rollback is a “wash” for homeowners and does not amount to a giveback as the city promised.
What will be a real boon for city property owners will be an increase in the homeowner rebate that I have proposed and that the mayor has overlooked. This rebate, unlike the across-the-board tax cut, focuses solely on the people who need it most – Class 1 and Class 2 property owners – those in one-, two-, and three-family homes, co-ops and condos.
My plan calls for the same 5% across-the-board property tax rate cut, but also maximizes the property tax rebate we give out, tripling the rebate to approximately $1,200. Here’s how we can get it done:
The calculations are fairly straightforward and involve the Retiree Health Benefits Trust Fund that received irrevocable funding of $1 billion through a 2006 budget modification and $1 billion irrevocable funding from the FY ’07 budget. In addition, in the FY ’07 miscellaneous budget, $1.4 billion is allocated for retiree health costs, also paid into the fund. This gives the fund a sum of $3.4 billion from which the FY ’07 expenditure for retiree health benefits is subtracted. That cost, according to the mayor’s four-year forecasting, is $1.4 billion (excluding supplemental welfare benefits), leaving the fund with $2 billion as we head into FY ’08. The mayor’s forecasting puts the FY ’08 cost for retiree health costs (excluding supplemental benefits) at $1.5 billion, which can easily be covered by the $2 billion already deposited into the fund.
Accordingly, the city should pay the retiree health benefits for FY ’08 from this fund and reallocate one half of the $1.5 billion that is in the FY ’08 miscellaneous budget for retiree health benefits. This will allow for an increase in the property tax rebate to $1200 per homeowner. This one-time increase in the rebate will be the real savings to the homeowner when combined with the mayor’s proposed tax cut.
While the other tax-cutting proposals made by the mayor will be helpful to New Yorkers, I implore him to step up to the plate again in regard to the property tax, work with the Council, and give homeowners the real relief we promised them.
Vincent Gentile is a Democrat representing the Council’s 43rd district, encompassing Bay Ridge as well as parts of Dyker Heights, Bensonhurst and Borough Park in Brooklyn.
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