The Real Tale of Two Cities

Local residents are once again seeing large increases in their property tax bills as Mayor de Blasio is proposing yet another increase to the property tax levy, which is the total amount the city seeks in revenue from property owners in the City of New York. Assemblywoman Nicole Malliotakis is calling on the mayor to voluntarily cap the property tax levy at 2% as nearly every other municipality in the state does until his Property Tax Commission establishes a new structure that makes the property tax system more equitable. Malliotakis says the cap is desperately needed to provide relief to homeowners, particularly those in the low- and middle-income neighborhoods in the outer boroughs who historically have been subsidizing the wealthiest, more affluent communities in our city.

Property taxes were a top issue in the mayoral race and Mayor de Blasio committed to Malliotakis and the public that he would establish a property tax commission to address the inequities. People across the five boroughs testified over a year ago and he promised that his commission would present a report of its findings and recommendations before the end of 2019, but Mayor de Blasio’s commission still has not released the report.

To make her case, Malliotakis previously pointed to her own property tax bills in comparison to those of Mayor de Blasio, in which he spent $2,000 less on his home of triple the value:

On his home at 442 11th Street in Brooklyn, which is valued at $1,781,000, Mayor de Blasio paid a property tax bill of $4,246.52. On his second home at 384 11th Street in Brooklyn, which is valued at $1,944,000, he is also paying $4,246.52.

Malliotakis has called this the “real Tale of Two Cities.” She has also held rallies, initiated petitions and drafted legislation to address this inequity, implement a cap and protect seniors living on fixed incomes who have resided in their homes for a long time. She was instrumental in getting a Staten Islander added to the commission after the borough most impacted by the inequity was the only one excluded.

“Property taxes are one of the top issues affecting affordability in our city for low-income and middle-class families. Residents are either paying for the increase directly or through their rent. Unlike nearly every other municipality in the state, our city does not have a 2% cap and the de Blasio Administration has increased the property tax levy roughly 50% since taking office in 2014, and is set to increase it again with approval from the New York City Council,” said Malliotakis. “If municipalities around the state can operate within a 2% cap, there is no reason why the City of New York can’t do it too, at least until the property tax commission moves forward and implements a structure that is equitable and fair. Mayor de Blasio needs to stop treating citizens like ATMs. The middle-class simply can’t afford it.”

Under the city’s current property tax system, how much homeowners pay is based on the assessed value of one-, two- and three-family homes — known as Class 1 properties. That rate can’t go up more than 6% every year or 20% over five years. As a result, in neighborhoods where home values slowly increase, generally in low-and middle-income neighborhoods, homeowners will generally have higher property taxes than those with homes in more desirable areas like Manhattan and Downtown Brooklyn.

Since 2015, NYC real property taxes increased by $7 billion or 31%.

  • If a real property tax cap was implemented in NYC during the same time frame, property taxes would have increased by $1.2 billion or 5.5%.
  • This would equate to a cumulative 5-year savings of $19 billion to taxpayers if the cap had been in place in NYC starting in 2015.
  • Given the allowable levy growth factor is a constant 2%, if NYC was subject to a real property tax cap moving forward from 2020 to 2024, real property taxes would increase by $3.1 billion or 10.4% over the 5-year period.

According to the Rockefeller Institute of Government, a report in early 2019 estimated the tax cap has saved property taxpayers more than $25.6 billion in savings. The following makes up the total reported savings:

  • $16.7 billion are school property tax savings; and
  • $8.9 billion are savings from county, town, city, village and fire district property taxes.

They calculated the average property tax levy increases for each jurisdiction prior to and during the Great Recession (2004-11) to project what annual hikes would look like if the cap had not been created. The savings represent the difference between this calculated amount and the actual tax levy totals during those years.

During the second half of 2019, according to the state comptroller’s Fiscal Stress Monitoring System, for fiscal year 2018, 97.6 percent of local governments are not in a fiscal stress category, which measures population and property values. This is one argument for how successful the implementation of the Real Property Tax Cap has been. Malliotakis argues that if these other municipalities can control costs and work within the cap, the City of New York can do it too.