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What’s Up With Property Taxes
Critical Issues for the Fiscal Health of New England Cities and TownsLincoln Institute of Land Policy
Catherine Collins December 1, 2016
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Property Tax Revenues Held Up
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Growth of Local Property Tax Collections in US and New England2005-2013
Growth in US Growth in New England
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Tax Base Still Below Peak
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
1,900
1,950
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Billi
on D
olla
rs
New England Total Assessed Value
Assessed Value
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While Still Important There are Limits
• Both New York and New Jersey added new property tax limits since the recession
• Pennsylvania added levy limit in addition to earlier rate cap
• Since the recession, more localities are facing ceiling limits in Massachusetts
• Flat rates of growth or inflation based pose different problems
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Low Inflation-Good News Bad News
• Tax limits adjusted to changes in CPI can be difficult to manage– New York’s new levy growth ranged from 2% in the
first year 2013 to just 0.68% for 2017– Florida’s baseline growth for assessments ratchet
down• For relief programs, some programs suspended
any CPI growth as budget-saving measures• Growth of homestead exemptions adjusted for
inflation slowed
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Ways States Have Stressed Localities
• Expanding exemptions for veterans, first responders, and surviving spouses—generally at local option but at local cost
• Making adjustments to those incentives that are paid for by the state, reducing the relief and saving state revenues
• Changing the earmarking of revenues
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The Shrinking Base
• Eliminating Taxable Personal Property– New England’s use of Personal Property– States that are eliminating the tax
• Expanding economic development programs• Assessing Big Box Stores as Dark Stores
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Non-Profit Tax Exemption
• Treatment of non-profit organizations for chartable purposes– Mandatory, by application, by legislation
• Voluntary Payments in Lieu of Taxes• Settlement of taxpayer challenges to
exemption• Tightening the definition of non-profit
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Coping with Extreme Weather
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Policies Help or Hinder
• Aftermath of Sandy to rebuild and reassess• Addressing potential losses from rising sea
level• Protecting vulnerable areas
– Loss of preferential treatment if violating water quality requirements
– Treatment of “conservation” lands and easements
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Other Environmental Taxes
• San Francisco Bay area– approved a parcel tax to protect wetlands
• Maryland “rain tax” repealed as state mandate but continues to be imposed at local level using various policies
• Banning single use plastic bags• Missouri continued sales tax dedicated to soil
and water conservation and state parks
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The Many Colors of “Green”
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Wide Use of Green Property Tax Incentives
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Utility and Residential Solar Use Increase
15
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Renewables Raise Property Tax Issues• What happens when the facility—solar or
wind, is located on farm land that enjoys current use status?
• How are solar panels taxed when owned or leased by property owner?
• Does selling “excess” energy back to grid affect the taxation of the renewable facility?
• Does selling back to grid make user a utility?
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Forgiven But Can’t Be Forgotten
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What’s This GASB Rule 77 All About
• New reporting requirements – Different from Tax Expenditure Budgets
• New York City first to report• What does it mean• How much does it represent
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Thanks And Thanks to Jack Warner