Courtesy of the Governor’s Office
Gov. Andrew Cuomo speaks during his 2014 State of the State address Wednesday, Jan. 8.
Towns throughout Essex County have been deciding whether or not to implement a Veterans Tax Exemption law signed by Governor Cuomo on December 18, 2013. The legislation allows Boards of Education of school districts to offer the Alternative Veteran’s Exemption (Real Property Tax Law § 458-a).
Although all school districts undoubtably support their veterans and some school districts have adopted the law, the majority have complained that not enough information was available on the impact it might have on their districts, thus not implementing it by the March 1st deadline.
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 all 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 veteran’s 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 must have held a second public hearing.
If implemented, the Veteran’s 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 Veteran’s 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% of assessed value for veterans who served during a period of war, up to $12,000 of assessed value
Additional 10% for veterans who served in a combat zone, up to $8,000 of assessed value
Additional benefits for disabled veterans (equal to one-half of their service connected disability rating).
The NYS division of veterans affairs estimates approximately 5,000 veterans currently live in Essex county. However, 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. 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 Elizabethtown-Lewis Central school board decided not to adopt the Veteran’s Exemption at this time. The Board discussed the matter at their February 11th meeting; they received a report from superintendent Scott OSborne and had subsequent discussion.
“The Board feels more information is necessary to make this decision, as the Veteran’s exemption represents a tax shift from one group of taxpayers to all others. Preliminary figures indicate that if the Board adopted the law at this time, the school community would see a tax rate (per thousand) increase of $0.17. I’d anticipate the Board will have an advisory vote as part of the May 21st annual school budget vote, to gauge the community’s perception on this issue. According to the Essex County Office of Real Property Tax, Elizabethtown-Lewis Central School has an exempt value just over $2.8 million. If the Veteran’s Exemption was adopted, we would potentially be shifting upwards of $38,000 to non-veteran tax payers. Ms. Lewis points out that this exemption is not reimbursed by the State of New York. There’s no income limit on veterans who receive the exemption, therefore, providing the tax benefit to veterans increases the property taxes for others in the community (including those residents that may be unemployed, those on fixed incomes and individuals with disabilities.) For those districts choosing to provide the exemption, the tax levy will not change, but the tax rate will increase for non-veteran property owners,” said Osborne.
In Elizabehttown - Lewis’s case, the 0.17 cents per thousand amounts to $17 for a home assessed for $100,000.
On the other hand, Willsboro Central School District approved the Alternative Veterans exemption at the February 25th meeting with a Approximate cost of $0.08/$1000.
“The Board recognizes and appreciates the men and women who have served our Nation through their commitment of military service and felt the exemption was an avenue to acknowledge their service and sacrifices to our Country,” said superintendent Stephen Broadwell.
At the February 19th Board Meeting, the Ausable Valley Board unanimously approved the Alternative Veterans Exemption at the base level. The base level will be:
Wartime Veterans: 15% to a maximum of $6,000 Combat Zone Veterans: Additional 10% to a maximum of $4,000
Disabled Veterans: Additional 50% of disability rating to a maximum of $20,000
The estimated impact is 0.10 (cents) per thousand of assessment. For example purposes only – a $100,000 home less $30,000 standard star exemption would equate to about $7 total increase per year.
“After a lengthy discussion which included community input regarding the Veterans Tax exemption, the AVCS Board felt that honoring our veterans with this exemption for their service and sacrifice to our country was the right thing to do at this time,” said Board President Scott R. Bombard.
Westport and Keene school districts also voted not to implement the law by the March 1 deadline.
The amount of money NYS will save because of this exemption effecting the STAR program is unknown at this time.
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.