Property Taxes: State-by-State Highlights

Traditional property tax bills may not continue to be the certainty that everyone assumes. Nationwide, there are increasing efforts to seek alternatives to a tax bite that, whether you support it or abhor it, draws a lot of crossfire.

Property taxes comprise an average of 33 percent of state and local tax collections, according to the Tax Foundation for fiscal year 2011. At 63 percent, New Hampshire leads the country. North Dakota and Delaware are the lowest, at 16 percent.

Here's a snapshot of nationwide efforts to change or modify property taxes.

  • New York: The 2014-2015 budget includes $1.5 billion in property tax relief that hinges on the state's large number of local governments cutting costs by sharing services. New Yorkers will see tax relief in the first year if local governments stay within a property tax cap. The tax cap will be extended a second year in those local jurisdictions that stay within the cap and plan to save 1 percent of their tax levy per year for three years. The plan is intended to give counties the incentive to meet and develop a process and submit a countywide plan for approval. Over three years, the program will bring more than $1.5 billion in tax relief.
  • Connecticut: In May, a bill that would have forced nonprofit colleges and hospitals to negotiate their property taxes with their local governments morphed into a compromise requiring colleges and universities to pay taxes on new buildings for student housing. That didn't pass either, so the next compromise would have tax-exempt institutions paying property taxes only on properties purchased after July 1. It passed the House but never got called for a vote in the Senate.
  • Texas: Large commercial property owners have used a "quirk" in the property tax assessment law to reduce their appraisals by comparing themselves to inferior properties, according to Pew's Stateline. Owners have won hundreds of lawsuits, but the state legislature declined to eliminate the appeals process. Instead, they now permit binding arbitration.
  • Pennsylvania: In May, a state senator was pushing a bill that would eliminate property taxes levied by school districts and raise state income and sales taxes instead. According to the Stateline article, Sen. David Argall's bill won the support of more than half of the state's senators.
  • California: Senate Bill 1021 would allow school districts to levy parcel taxes (a type of property tax limitation that gained favor in the wake of Proposition 13) on each land parcel based on square footage and use (commercial, residential, industrial). It passed the state Senate in May and is scheduled for a hearing by the Committee on Revenue and Taxation.

These states are hardly the only ones that have made tax changes, offer programs or are considering other avenues.

According to a June 12 NPR "The Exchange" program, New Hampshire offers tax relief to low- and moderate-income owners, West Virginia is considering a tax exemption for recreational facilities that draw tourism dollars, and Providence, R.I., pushed to expand payments in lieu of taxes (known as PILOTs) for nonprofits. Elsewhere, some lawmakers talk of taxing big nonprofits, such as universities and hospitals. In New Hampshire, Dartmouth-Hitchcock Medical Center makes sizable payments to Lebanon, where it is based, according to program participant Daphne Kenyon, a fellow at the Lincoln Institute of Land Policy.

Later this year, the Lincoln Institute will expand its current database of property tax information in each state to include a summary of each state's tax law and how it's unique.

 

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