S T A T E   O F   N E W   Y O R K
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    S. 306                                                    A. 371

                       2009-2010 Regular Sessions

                      S E N A T E - A S S E M B L Y

                               (PREFILED)

                             January 7, 2009
                               ___________

IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
  ed, and when printed to be committed to the Committee on Education

IN  ASSEMBLY  --  Introduced  by  M.  of A. ENGLEBRIGHT -- read once and
  referred to the Committee on Ways and Means

AN ACT directing the New York State department  of  education,  the  New
  York  State  department of taxation and finance and the state board of
  real property services to study the fiscal impact  of  granting  local
  school  districts  authority  to implement an income tax surcharge and
  providing for the repeal of certain provisions upon expiration thereof

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Declaration of findings and legislative intent. The legis-
lature hereby finds that the real property tax  is  an  inequitable  and
regressive form of taxation wherein low- and middle-income taxpayers pay
a  disproportionate percentage of their income in property taxes.  Under
such a system, ability to pay is not a factor  in  calculating  property
tax  liability.  Rather,  the  present system relies on an often-archaic
system of property tax assessment that bears no  relation  to  household
income.  Further,  such system of taxation has priced many people out of
the housing market or forced them to sell their homes. In addition, such
a taxing mechanism has a particularly negative impact on senior citizens
and those living on a fixed income.
  The legislature hereby finds that the  collection  of  local  property
taxes  constitutes the majority of education funding in school districts
throughout the state utilizing such a system.  Presently,  approximately
fifty-seven percent of school funding is derived from localities. As the
state  continues  to  reduce  its share of the education-funding burden,
school districts have been forced to increase their tax  rates,  thereby
further increasing the unfair burden of such tax system.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD02078-01-9

S. 306                              2                             A. 371

  The  legislature  further finds that gross inequities exist throughout
the state in terms of school districts' abilities to raise money  local-
ly.    Under  the present system, wealthy and "property rich" districts,
specifically those areas with commercial  property  and  other  entities
with  high assessments, have a tremendous advantage over underprivileged
and "property poor" districts. In some districts, state aid  constitutes
less  than  ten  percent of the school budget. This occurs because these
localities have the ability  to  raise  property  taxes  without  unduly
burdening the community.
  The legislature also finds that continued reliance on the property tax
has  contributed  to legal challenges to the state education system as a
whole.
  The legislature finds that a tax scaled to income would  be  a  fairer
and  more  progressive  form  of taxation under which residents would be
taxed based on their ability to pay.
  Therefore, the legislature declares that the property tax, as a  means
to  fund  education,  contains  gross  inequities and that a potentially
fairer system, in income-tax surcharge, is worthy of study.
  S 2. The New York State department of education and the state board of
real property services are hereby authorized and directed to assist  the
New York State department of taxation and finance in preparing a compre-
hensive  study  documenting  the  fiscal implications of authorizing the
reduction of real property taxes  levied  for  the  purpose  of  funding
education  costs  through  granting local school districts the option to
implement an income tax surcharge.
  Such study shall consider the fiscal impacts on a  broad  spectrum  of
incomes,  as  well  as  calculate  the  effects  of any state income tax
reductions on tax receipts under such a surcharge. Such study shall also
consider what level of surcharge would have to be imposed to bring about
a dramatic reduction in the property tax. This study shall also document
the effects of such a change on school districts,  taking  into  account
their  relative wealth in terms of residents' income, property tax base,
level of state education funding and other relevant factors.   In  addi-
tion,  such study shall be so designed as to enable individual taxpayers
to determine the effects of any change on their income tax and  property
tax  liabilities.  The  results  of such study shall be submitted to the
legislature no later than one year following the effective date of  this
act.
  S 3. This act shall take effect immediately and shall remain in effect
until  the  ninetieth  day  after  submission of the report specified in
section two of this  act,  when  upon  such  date  it  shall  be  deemed
repealed.