Property tax reform is a huge headache, and it’s not getting any easier

If property tax reform weren’t complicated enough, consider that in just the last six weeks: Washington’s tax overhaul limited deductions on property taxes, state Senate leader John Flanagan pushed to apply the state’s 2 percent property tax cap to the city, and Gov. Andrew Cuomo proposed raising real estate taxes near new transit projects in order to fund transportation investment.

All this while the city and state face a lawsuit that seeks to eliminate the patchwork of abatements, caps and other add-ons that almost everyone agrees have created a complex tax system full of inequities.

“So let’s make a complicated system more complicated,” Real Estate Board of New York president John Banks said Wednesday morning during a panel discussion on property tax reform at New York University.

Banks was responding specifically to a question about Cuomo’s value-capture plan, but the sentiment could apply to the various special-interest policies and proposals that make tax reform such a hot-button issue.

“It’s just another add-on game to avoid dealing with the problems with the tax [system],”Carol Kellermann, president of the Citizens Budget Commission think tank, said of the proposed 2 percent tax cap.

Banks and Kellerman were joined on stage to discuss recent developments regarding property tax reform by Vicki Been – former commissioner of the city’s Department of Housing Preservation and a current NYU professor – and Martha Stark, the former city Department of Finance commissioner and head of the Tax Equity Now NY group that’s suing the city and state to overhaul the property tax system. The lawsuit claims the city’s property tax system creates inequities, including ones that negatively impact minorities.

During a press conference Tuesday, Mayor Bill de Blasio reiterated that a revenue-neutral plan for tax reform will be a priority for his second term.

“You’re going hear some very specific actions soon,” he told Crain’s. (Meanwhile, city and state lawyers are trying to get Tax Equity Now’s lawsuit thrown out of court.)

But the issue has only gotten more complicated since Stark’s group filed its lawsuit in April.

Been said it’s still not clear how the federal budget will affect New York City, and pointed out the city soon has to conduct a mandated study of potential impediments to affordable housing – just another wrench in the works.

Banks said he was cautious about supporting the proposed 2 percent cap on city property taxes, because it could limit lawmakers’ ability to respond to changing budget needs. And he said REBNY is not opposed to the concept of Cuomo’s value-capture plan, but that the initial proposal was too broad and needs to be “really tightened up.”