BUFFALO, N.Y. — There is a bill awaiting the governor's signature, which is aimed at helping homeowners who fall behind on paying property taxes.
Those supporting the measure believe it could make the difference between keeping and losing a home for many who, in today's economy, are struggling to make ends meet.
If signed, it would reduce the interest rate on delinquent tax bills, which NYS Senator Sean Ryan (D-Buffalo) the sponsor of the measure believes is something long overdue.
According to Ryan, the law which mandated that municipalities charge at least 12 percent interest on delinquent taxes was passed in the 1980s.
"It made sense in the 80s because in the 80s, the interest rates were super high, the prime rate was high," Ryan said.
Noting that the rate has not been adjusted in 40 years, the new law would mandate that municipalities, as well as school districts, charge an interest rate on back taxes based on the current prime rate, which at this time stands at 8.5%.
"Taxes are meant to be operational, not punitive," said Amherst Town Supervisor Brian Kulpa, where the town board recently enacted an 11.4% increase in the property tax levy.
"This took a long time to really work with the counties and the towns throughout New York State," said Ryan, who indicated that some municipalities, which viewed the interest as a revenue stream, were reluctant when he launched the effort four years ago, when the prime rate was 3.25%.
Erie County, for example, charges 18 percent interest on back taxes.
"When there was a very large difference they were bringing in more revenues from the late fees. Now the prime rate (8.5%) and what they're mandated to charge (12%) isn't that much different. So they're not going to see any big change in revenue in the near future," Ryan said.
Moreover, according to Ryan, local taxing authorities had to be "educated" that they stood more to lose than to gain by charging 12% interest, which might result in someone falling so far behind that they would walk away from a property creating a so called "zombie home."
"You might be getting revenue coming in from the high interest rates, but then on the back end, you're getting zombie properties that the town has to spend all that interest on to maintain those properties once they get foreclosed on," he said.
Ryan expects Gov. Kathy Hochul to sign the bill after it passed both houses of the state legislature.
According to the language of the bill it would take effect immediately upon the Governor's signature and apply to residential properties, with the new rate subject to change every five years based on whatever the prime rate happens to be.
According to Ryan, there is no provision to reduce the interest rate being paid by those currently in arrears.