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Volume 8 - Opinions of Counsel SBEA No. 6

Opinions of Counsel index

Taxes (refund) (allocation in approved assessing units) - Real Property Tax Law, § 726, 1903:

There is no authority for an approved assessing unit to allocate to either the homestead or the non- homestead class the portion of the tax levy needed to pay for court-ordered tax refunds to the property in that class.

We have received an inquiry concerning the levy of taxes in an approved assessing unit which has opted to allocate tax levies between the homestead and nonhomestead classes on the basis of a homestead base proportion. The question is whether the assessing unit may separately allocate to each class that portion of the tax levy needed to finance tax refunds resulting from court ordered assessment reductions for property within the class. In other words, if the tax levy is increased by reason of court ordered tax refunds for property within the nonhomestead class, may the increase in the levy be allocated solely to the nonhomestead class?

Section 726 of the Real Property Tax Law (RPTL) governs the refund of taxes following successful certiorari proceedings. With respect to financing refunds, subdivision four provides:

4. Provision for the payment of all amounts charged . . . pursuant to. . .subdivision one of this section, shall be included in the next annual budget or estimate . . .; provided, however, that in the event the aggregate amount charged. . . for any fiscal year exceeds twenty-five thousand dollars or if such amount exceeds one per centum of the full valuation thereof, such amount may be financed, in whole or in part, in the same manner as a final judgment against such city, town, village, school district or special district. [Financing of final judgments against localities is governed by the Local Finance Law, §§10.00(a), 11.33]

Assessing units (except Nassau County and New York City) which have completed or are in the process of completing revaluations for the purpose of conforming their assessment practices to the standard of assessment (RPTL, §305(2)), have the authority under Article 19 of the RPTL to prevent or reduce tax shifts which could result from the revaluation. One of the options authorized by Article 19 is to levy taxes on the basis of a “homestead base proportion” (§1903). Essentially, this permits tax levies to be allocated between the homestead and nonhomestead classes in the same proportion that taxes were allocated between the classes in the year immediately preceding the revaluation (§1903(1), (2)(a), (3), (4); see, 7 Op.Counsel SBEA No. 101). In addition, an assessing unit may utilize a statutory formula to adjust the homestead base proportion so as to permit the occurrence of some or all of the interclass tax shift otherwise resulting from the revaluation (§1903(1), (2)(b), (3), (4)). However, there is no authority in Article 19 for any other local adjustments to the class tax shares.

Despite the lack of statutory authority, of course, it could be argued that the Legislature intended to protect property owners in each class from the financial burden of court ordered assessment reductions for property in the other class. However, we are not aware of any expression of such an intent. Indeed, the sponsor’s memorandum filed with the bill which included Article 19 (L.1981, c.1057; (S.7000-A)) makes clear that the sole purpose for authorizing the levy of taxes on the basis of a homestead base proportion is to protect the homestead class from the tax shifts which could result from a revaluation:

The mechanism employed to ease the impact of revaluations on the homestead class outside of New York City and Nassau County, where they may occur, is neutral in incidence and does not attempt to make the property tax either more progressive or regressive then [sic] it is; [it] makes available only that degree of special treatment to the homestead class that is necessary to avoid a shift of burden to that class and no more; and enables the assessing unit to assure its taxpayers that a burden shift will indeed be handled in a specific way as to the entire tax burden, since all general taxing jurisdictions using its roll must follow.

Those jurisdictions which have completed full values [sic] revaluation programs would be authorized to adopt a different level of assessment and to overcome any burden shifts to the homestead class which may have occurred as a result of such revaluation program. (Emphasis added).

Accordingly, in our opinion there is no authority for an approved assessing unit which levies taxes on the basis of a homestead base proportion to allocate separately to each class that portion of the tax levy needed to finance refunds arising from court ordered assessment reductions for property within each class.

June 1, 1983
Revised July, 1984 to incorporate amendment of §1903(2)(b)(i) by chapter 426 of the Laws of 1984.

Updated: