The Hidden School Tax Increase

The recently mailed 2021/2022 Town of Islip property tax bill shows another decrease in the amount of the New York State Basic Star exemption. The exemption, that went into effect in 1997, reduces a property's taxable value used to calculate school taxes. The impact of the decrease is that school taxes have increased not only by the amount authorized in May’s budget vote but by also the increase in a homeowner's taxable amount due to the lower exemption. To illustrate this using a homeowner with a 2021/2022 school taxable amount of $40,000 that is net of the exemption, the exemption was reduced from $5,530 in 2020/2021 to $5,000 in 2021/2022 and resulted in an additional $105 of school taxes over and above the $146 increase from the budget vote. Said another way, the actual increase in West Islip school taxes in this instance was 3.3% from the prior year versus the school budget presentation increase of 2.01%. Those without the exemption would see their actual school taxes increase by 1.9%, the rate shown on the tax bill and comparable to the budget presentation of 2.01%, but would be assessed on a school taxable amount of $45,000.

There is no impact to the West Islip School District from receiving higher taxes as the increase is offset by a decrease in State reimbursements. The District learned of the reduction in its Star reimbursement in December 2020 and disclosed that in its budget information that was mailed to the community the week prior to the May vote. The District's total Star reimbursement for 2021 was $7.4MM or 7.0% less than the $7.9MM received in 2020. The exemption amount, which is determined by the State and not the District or the Town, has been declining for a number of years and was as high as $7,080 in the 2012/2013 tax year. The State appears to be involved in a shell game as it praised its tax cap implementation in 2012 claiming that it would provide homeowners with tax relief while over the course of time has been increasing school taxes by reducing the Basic Star exemption. Based on the school’s current tax rate of $19.714 per $100, the impact of a $5,000 exemption is $986 in lower taxes to West Islip homeowners and should the State be in the process of phasing out the exemption, homeowners would ultimately see an increase in their property taxes of that amount over and above the annual budget increases.