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Tax Assessment & Condemnation Report

Two Rights Make War: The Expansion of the Veteran’s Exemption vs The Tax Levy

Posted in Assessments, Exemptions, School Districts

In December of 2013 the Legislature expanded Real Property Tax Law Section 458-a. This revision allows school districts, by local option after a public hearing, to offer veterans a significant property tax exemption. A veteran “qualifies” for this exemption if he or she served in active military, naval or air service during a period of war or received the armed forces expeditionary medal, navy expeditionary medal, marine corps expeditionary medal or global war on terrorism expeditionary medal, and was discharged or released under honorable conditions. The exemption applies only to the qualified veteran’s primary residence. The parents of a deceased qualified veteran may, by a further local option, also be eligible for the exemption on their primary residnce.

The RPTL 458-a exemption has been in existence since the 1980s and there are others like it - including RPTL 458. At the time of RPTL 458-a’s original enactment, however, the Legislature decided that only towns, counties and villages could offer this exemption to veterans living within their districts. School districts were intentionally omitted.

Perhaps the legislature omitted the districts because of the impact this exemption would have on them. Comparatively, this is a rather generous exemption. True, the law caps the value at a certain percentage and/or dollar value and has different levels depending on the veteran’s service and/or disability level, but even so, the benefit to the veteran is substantial. Also, this exemption is applied in addition to the STAR exemption so it is very possible that some veterans may not pay any school tax at all. However, as is typical of these types of exemptions, our schools will receive less STAR money from the state as a result.

Calculating the impact of this exemption on each district (really, on the non-exempt homeowners and businesses in that district) in terms of tax rate hikes and its interplay with the tax cap is a difficult prospect, but for a moderately-sized upstate New York district the impact might be close to $500,000 in tax dollars. The net effect to the district itself will be zero as the levy is the levy regardless of the taxable value of property within the district post-exemption. What this means is that tax rate will simply increase for non-eligible individuals. In fact, this is what happens every time a tax exemption is granted, so nobody should be surprised by this result.

Few exemptions out there seem to be more laudable than giving those who have served this country or gave their lives for our freedom. The good purpose behind this exemption is unquestionable. That said, protecting our tax base and keeping taxes low for everyone is also good. When these two “good goals” collide in the tax world, nobody really wins.

What do you think? What’s your district going to do about this? Leave your comments here.