Removing County Guarantee is a step toward better budgeting

On Oct. 29, I voted, with a majority of the Legislature, to end the County Guarantee, which required the county to pack back the school districts’ portion of property tax refunds, and I want to explain that vote.

If I thought that an end to the County Guarantee really would harm education or cause higher taxes, I’d have voted against ending it. However, removing the guarantee will do none of these things.

When taxpayers settle tax grievances early, there is no effect on budgets because the assessment change is made before the tax roll is finalized. Budgets and total taxes remain the same. People who successfully protest get lower taxes, while everyone else’s taxes go up to compensate. The tax rate, (but not overall taxes,) goes up, and no refund is necessary. When a settlement happens after the final roll is set, a refund must be paid.

The problem with tax refunds is that the taxes have already been spent. That money, regardless of who spent it, is reimbursed by the county. The schools now have part of their budgets paid by the county. This sounds great for our schools. But it doesn't save on taxes. The County Guarantee merely shifts the tax burden from one group to another.

If the county settles all demands to lower assessments before the tax roll is finalized, the county would save a great deal of money by never making refunds. Reforms are being implemented to accomplish this. However, tax rates automatically adjust to compensate for assessment reductions. No refunds equals no County Guarantee.

Demands that the county fix the assessment system instead of ending the Guarantee are mistaken. Perfect assessments automatically also ends the County Guarantee, dollar for dollar. Correcting assessments or ending the Guarantee affect school taxes the same way. Not my opinion — just arithmetic.

The County Guarantee is unfair. Commercial properties account for 80 percent of the refunds. When the county pays the refund for a school district with a great deal of commercial property, residential districts are disadvantaged. Similarly, rich districts spend more than poor districts. But the county consists of both, meaning that poor districts are subsidizing rich ones.

School taxpayers are also county taxpayers. A refund gets paid by taxpayers one way or another. The question is merely who pays. It makes much more sense to tax and refund where the money is spent. That is why we have local districts. Districts, and not the county, have the knowledge and the power to implement efficiencies, and residents in each school district vote on budgets. The County Guarantee distorts that system, imposes inappropriate costs on countywide taxpayers, obscures where money is collected and spent, and prevents taxpayers from making true informed choices.

Unless we make drastic changes, the County could go broke. The $100 million a year, we borrow for refunds is for school operations. Borrowing to avoid current costs is not saving. It merely postpones the pain to the future. Borrowing for the Guarantee already constitutes most of the County’s long-term indebtedness. This is madness.

Nassau, under its new Executive, Ed Mangano, is taking significant steps to cut expenses, and has already accomplished more in 10 months than the previous administration did in its eight years. But, county budgetary problems cannot be solved without dealing with the property tax refund issue. There are only so many paper clip purchases to cut. To eliminate our deficit, we must go where the money problem is.

Removal of the Guarantee is a giant step toward balancing the budget and honest budgeting by all government. It eliminates the hidden subsidy of the schools by the county, and a hidden tax on county taxpayers. And, it squarely places the responsibility and accountability for raising and collecting taxes where the money is being spent. Yes, the county absolutely must reform the assessment system as soon and as thoroughly as possible. However, let’s not make believe that doing so will continue a county subsidy for the schools.

We have a big problem, and we need to fix it honestly, intelligently and quickly.