School districts throughout Essex County have been deciding whether or not to implement a Veterans Tax Exemption law signed by Gov. Andrew Cuomo. The legislation allows school districts to offer the Alternative Veterans Exemption.
While expressing support for veterans, most school administrators have complained that not enough information was available on the impact it might have on their districts. Although some schools adopted the exemption by the March 1 deadline, most did not.
The Alternative Veterans Exemption allows school districts to provide a 15 percent reduction in assessed property value to veterans who served during wartime and another 10 percent reduction to veterans who served in combat zones and a larger break to disabled veterans. Previously, this tax break could only be offered by municipalities, but the law was changed in December.
Implementing a tax exemption causes a redistribution of taxes among taxpayers, or a tax shift. Exemptions do not affect the total amount of money a district needs to raise – the tax levy. Therefore, if a town’s assessed value decreases due to exemptions, then other taxpayers would need to pay more to make up the difference.
School districts had to hold a public hearing prior to adopting this exemption. Once the hearing took place, the veterans exemption could be adopted by resolution of the board of education or no action taken. If the board wished to increase or decrease the New York State exemption limits ($12,000, $8,000, $40,000), it needed a second public hearing.
If implemented, the Veterans Exemption would be applied first to an eligible resident’s property, followed by the STAR tax exemption. New York State reimburses school districts for the STAR exemption revenue it has lost; it will not be doing the same for the Veteran’s Exemption.
Therefore, schools will lose refunds from the state in relation to the STAR exemption.
A veteran who did not serve during a period of war may still qualify if they received an Armed Forces expeditionary medal, a Navy expeditionary medal, a Marine Corps expeditionary medal, or Global War on Terrorism expeditionary medal. School districts may also select limits that are different from the limits set for town purposes. The limits that the school district selects will apply to all the homeowners in the school district for school tax purposes.
The Alternative Veterans Exemption works by reducing the assessed value of the primary residence before the tax rate is applied but does set a maximum exemption value.
There are three levels of benefits:
— 15 percent of assessed value for veterans who served during a period of war, up to $12,000 of assessed value;
— additional 10 percent for veterans who served in a combat zone, up to $8,000 of assessed value; and
— additional benefits for disabled veterans (equal to one-half of their service connected disability rating.
The state division of veterans affairs estimates approximately 5,000 veterans currently live in Essex County. Accordingly to the Essex County Real Property office, 2,080 of those veterans currently receive veterans exemptions.
According to the Director of the Essex County Real Property Tax Services Charli B. Lewis, the law will shift taxes from one group to another.
“In the past this exemption only applied to county, town and village taxes,” he said. “However, this new exemption is not reimbursed by the state and does represent a tax shift from one group of taxpayers to another. The impact in Essex County, if every school district were to opt in at the same level as their respective towns, would show a loss of taxable value equaling $52,112,833. The shift of tax dollars would be $600,855.77 based on the 2013-2014 school budgets. If schools opted in at a lesser level or did not opt in at all the impact would be less. If schools opted in at a higher level than their town the impact would be greater.”
The Ticonderoga Central School District, with 313 veterans already receiving previous exemptions, is one of the three school districts within the county that decided to adopt the Alternative Veterans Exemption, but at the minimum exemption level for the time being, reflecting an estimated 3 cents per $1,000 of assessed value increase in Ticonderoga.
“The board of education at Ticonderoga Central received feedback both in person and in writing to support the exemption,” Ticonderoga Superintendent John McDonald said. “The board needed to find a balance to honor and thank the veterans for their service with the needs of our taxpayers. We will examine the impact this will have going forward and then decide if we want to move to a different level. We had many veterans in attendance at the meeting and they thanked the district for doing this.”
Moriah’s school board discussed the new law in length but decided against it for the time being because of the unknown ramifications on the tax shift that will occur.
The cost to their school district would have been the highest in the area at 55 cents per $1,000 of assessed value. The school district has 309 veterans currently accepting previous exemptions.
“We support our veterans 100 percent, but this was a very tough decision put on the shoulders of our schools,” Moriah Superintendent Bill Larrow said. “The time frame allotted to adopt the law was inadequate. We will, however, look into the consequences of the law for further implementation.”
With 83 veterans already receiving exemptions, Crown Point’s school board also had the Veterans Exemption on its agenda for discussion, but believed the time frame to implement the law was too short.
“A study of the impact of having the exemption as it relates to the entire tax base is needed,” Crown Point Superintendent Shari Brannock said. “Tax exemptions would be funded by the local tax base with the total amount of exemptions displaced to the rest of the taxpayers. In addition, our state funding of the STAR exemption reimbursement, available to all, would decrease based on the way the governor’s real property tax applies the exemption. It’s important that we look at all aspects of this law as we proceed to ensure we make an informed decision.”
Schroon Lake school also opted not to implement the new exemption for the current school year. The topic will be discussed at upcoming meetings for a possible future implementation. Schroon Lake has 146 veterans receiving exemptions.
The New York Department of Taxation and finance states that the STAR program is the only exemption funded by the state and the STAR program is always applied last to maximize eligible exemptions.