New York State's 6,927 "special districts" cost the average New York household $257 a year and contribute to taxpayer confusion, according to a new report from state Comptroller Thomas DiNapoli.
“As towns respond to increasing demands and property tax pressures, they need to evaluate the methods they use to deliver services. At the same time, state leaders should examine ways to help towns deliver services more efficiently,” DiNapoli said. “While special districts have given towns the flexibility they needed to provide critical services to residents, they don't always operate as efficiently and equitably for all taxpayers.”
The proliferation of special districts adds additional costs to an already over-burdened New York taxpayer, the report said.
“New York State ranks third in the nation in terms of local property tax burden – 56 percent above the national average in 2004,” the report said. “Any opportunity to alleviate some of that burden, including improving the efficiency of special districts, warrants further investigation.
“Special districts have been used liberally by towns over the last 50 years to address the increased residential needs brought on by suburban growth,” the report said. The districts are an outgrowth of the state's 932 towns, the report explained. Residents in the districts are subject to special taxes, charges and fees to finance services such as water, sewer and garbage collection.
“When taxpayers try to piece together how much they actually pay for special districts, it is often difficult for them to make sense of their tax and utility bills,” the report said. Adding to the confusion is the fact that there is no set standard for billing practices.
The problem is significant because revenue collected from residents of special districts makes up nearly 25 percent of total town revenue, the report said. Special districts in Niagara, Nassau and Warren Counties were responsible for “a majority of all real property taxes and assessment revenues.”
The Comptroller's report suggested several actions state and local lawmakers could take to further study local districts, including:
- Enacting legislation that would compel towns to investigate
consolidation if “certain prescribed thresholds
or triggers are met.” The Comptroller's report
said that such legislation would require that towns with
a certain percentage of its population living in special
districts “formally study either consolidation of
these districts or, if authorized, delivery of services
on a town outside village basis."
- Undertaking a unit cost analysis aimed at shedding light
on "possible inequities and inefficiencies in current
delivery of services.”
- Expanding the Shared Municipal Services Incentive Program (SMSI) which offers grants to local governments considering consolidation opportunities. The Comptroller recommended that SMSI be extended to include special districts.
Nearly 28 percent of respondents to The Business Council's most recent membership survey said consolidation of local governments or local government services was their top reform priority. Almost half said it was one of their top two concerns.
The Comptroller's report is available at www.osc.state.ny.us/press/releases/mar07/032707.htm.