Dan's Papers - July 4, 2008

A very salient issue these days in the Hamptons, and perhaps all over New York State, is the increase in taxes for homeowners - even as the value of their homes and properties decline.

In tough times, homeowners have a tendency to scrutinize their home assessments. One expert recently explained that if all assessed real estate values in an area are down 20%, unless the town budget is reduced 20%, taxes will remain the same. That hasn't stopped homeowners across the state from taking their tax bills to town halls to challenge their assessments. New York State has had the distinction of having one of the highest property tax rates in the nation, and now both Governor Paterson and the State Commission on Property Tax Relief are in agreement to support a property tax cap so that the taxes that many believe have hit a crisis level don't destroy the very way of life they were suppose to insure.

To those who wonder how their assessments are still going up as the overall real estate market is not, the answer is simple: there are caps to how much a home assessment can go up per year. And whereas home values have gone up a historical 10 times in the last 30 years, in most cases, assessments were limited to about 6% a year.

One resident said that when the value of her home was going up around $120,000 a year and her equity in the home was growing more than her salary, she was not as focused on tax increases. Now, she said her home value - and salary - have stabilized. Although she isn't growing equity in the home, her fuel costs (plus other overhead items, such as insurances) are going up, so she's feeling the squeeze.

Second homeowners complain that they are paying school taxes to two towns: the one where they live, and the one were their second home is.

The situation in East Hampton, where the town's government and spending has grown beyond its resources, has been capturing local headlines. The truth is, both Republicans and Democrats have turned a blind eye to the fact that increased services cost more. But there is a constant tax base - that is, the taxable population has stayed about the same while the actual population is growing. This means a greater burden to the taxable individuals. Throw in that the cost of healthcare is perhaps the hardest uncontrollable item to forecast in town budgets, and town officials are in a very difficult position.

Supervisor McGintee and the Town of East Hampton are getting an expensive education on these issues. Board members are quick to shout "fire," but where are their solutions, other than to distance themselves from decisions they had voted on before completing diligent research?

In recent months the Supervisor's office has visited the issue of reassessment for the whole town, citing too many homes and properties still undervalued on the books. McGintee has reportedly said that some sort of tax increase will be needed to shore up the town's fiscal situation. Opponents are saying, "Don't blame me, I voted for Wilkinson," but what jobs, departments and services did Wilkinson promise to eliminate? The real problem lies in the fact that as the town provides more services, it costs more. Better education costs more. Maintaining top-rate fire and police departments costs more. Fixing roads and highways costs more.

One resident had Mayor Bloomberg's approach in reverse. Let's put a toll up on Route 27 entering Southampton. If you don't live on Long Island, it's $20. We can say we want to keep our air clean like he did - not that we want the money for our towns.

In a visit to Town Hall I was informed that actual real estate tax payments are not being made by mortgage lenders, because they are not being paid by homeowners who don't have the money and opt instead to pay a late penalty. Lynn Ryan in McGintee's office said this situation is problematic.

So, even if your home's value is going down, your tax bill may rise. You can request a reassessment, and you can vote against every school tax increase, but no matter who gets elected, things are going to cost more, and unless services are scaled back, taxes are going to go up.