We’re No. 2! (In Property Tax Burden)

Congratulations, Monroe County taxpayers! We pay the second-highest property taxes in the country, calculated as a percentage of home value.

Our median property taxes are $3,266, and our median home value is $119,500, meaning we pay about 2.7 percent of our home value every year as property taxes to schools, local governments and the county. We’re second only to Niagara County, which leads the nation with 2.8 percent of median home value paid as property taxes, according to calculations by the Tax Foundation.

What, you’re not excited about that?

Well, at least we’re in good company, if you want to call it that. Nine of the top 10 counties in the country in property taxes as a portion of home value are in Upstate New York. See the list below: You’ll find our neighbors Onondaga, Erie and Wayne counties, along with Schenectady, Cayuga, Chemung and Chautauqua. Look a bit further down and you’ll find Oneida County at #14, Broome County at #18, Ontario County at #24 … keep going and you fill in most of the New York map west of the Hudson River.

What the statistic captures is the dual effect of a relatively high tax burden and flat or declining home values. Measured in another way, property taxes downstate capture attention. Westchester and Nassau county taxpayers top the list in straight median property taxes, paying $7,337 and $7,025, respectively. The figures don’t look so bad when you factor in home value, because home values there are high and rising.

But you probably did not need to read all this to know that property taxes are a problem. New York voters have been complaining about them for years, and politicians have tried to appease them. The biggest effort was former Gov. George Pataki’s School Tax Relief (STAR) program, which grants exemptions reducing school taxes and makes up the difference by providing more state aid to school districts. The program was begun in 1997, and it now costs the state $4.3 billion in state aid to school districts. But guess what? Property taxes are still high.

That’s why we at the Center for Governmental Research sponsored a conference in Albany last week on possible property-tax reforms. Some of the best minds in the business discussed other ways to reduce taxes. E.J. McMahon of the Empire Center for New York State Policy proposed a 4 percent cap on school taxes that could be overridden if two-thirds of local residents voted to exceed it. His idea was modeled on a 2.5 percent cap adopted in Massachusetts in the early 1980s, which is credited with bringing that state below the national average in property tax collections, according to another conference speaker, Elizabeth Karasmeighan from Americans for Tax Reform.

A different strategy was proposed by Frank Mauro of the Fiscal Policy Institute. Mauro focused on the state’s role in encouraging higher property taxes through cuts in state aid to local governments and insufficient (in Mauro’s view) state funding for the Medicaid health insurance program for counties with high needs and weak tax bases. Mauro suggested targeting property tax relief to those who need it most through a “circuit breaker” that would benefit taxpayers with lower incomes and higher property tax burdens.

Our speakers didn’t agree on everything, but they did agree that the STAR program is not the best way to deliver property tax relief. Many analysts have concluded that STAR can actually accelerate the growth in property taxes because the exemptions temporarily mask the pain. Researchers at the Maxwell School at Syracuse University concluded that STAR actually allowed districts to raise taxes 20 percent more than they would have because they know the blow is softened by the STAR exemptions.

STAR also sends the most relief to the counties with highest home values, which works contrary to the idea that the state should be helping poorer areas more.

Yet New York’s new governor, Eliot Spitzer, plans to expand the STAR program. He’s going to change it too, targeting more of the benefits to middle-income taxpayers. But without capping school taxes, or doing something to address the root problem that school and government spending may soon outstrip taxpayer ability to pay for it, some of our speakers predicted we’d be organizing another conference in 10 years to talk about the very same problem.

Rank in nation…County…Median property taxes…Median home value…Percent

1…Niagara…$2,576…$91,600…2.8%
2…Monroe…$3,266…$119,500…2.7%
3…Onondaga…$2,747…$104,100…2.6%
4…Wayne…$2,579…$98,700…2.6%
5…Chautauqua…$1,948…$75,000…2.6%
7…Erie…$2,616…$102,600…2.5%
8…Schenectady…$3,251…$128,900…2.5%
9…Cayuga…$2,122…$87,000…2.4%
10…Chemung…$1,902…$78,600…2.4%
13…Oswego…$1,832…$76,900…2.4%
14…Oneida…$1,963…$82,700…2.4%
18…Broome…$1,944…$84,100…2.3%
19…Steuben…$1,620…$70,200…2.3%
23…Madison…$2,010…$87,900…2.3%
24…Ontario…$2,597…$114,100…2.3%
26…Cattaraugus…$1,574…$70,600…2.2%
27…Tompkins…$3,088…$138,800…2.2%

Source: Tax Foundation analysis of 2005 data