Summary: Revenue
General Fund Tax Revenue
Property Tax
- New York State General City Law authorizes Rochester to levy taxes on the value of real property. The assessed value of the property and the tax rate determine the amount of tax to be paid by a property owner.
- Taxes are billed annually, and quarterly installments are allowed for the first $8,200 owed on each parcel. Responsibility for collecting property taxes is vested in the Department of Finance, Bureau of Treasury.
- Property taxes are allocated to various funds as necessary to balance them.
- Beginning in 1994-95, City and School property tax collections are accounted for within the City Budget. Funding for the City School District is provided within the Interfund revenue section. Prior to 1994-95 the School District received property tax collections outside of the City Budget.
- Beginning in 1998-99, the STAR program enabled a decrease in the property tax billings with an equal offset in State aid. Beginning in 2011-12, the annual increase in STAR is capped at 2 percent. In 2016-17, the credit for STAR exemptions for properties purchased after February 1, 2015 is no longer issued on the property tax bill but instead is issued by check directly from New York State in accordance with the Governor’s STAR program.
- For detailed information on the calculation of property taxes, see the Property Tax Computation and Analysis section, which follows the Revenue Summary section.
Four major factors influence the amount of revenue generated by the property tax:
1. The Tax Base – The total assessed valuation of the City is the base on which revenues are generated. The assessed valuation increases by $38,338,146 or 0.5 percent from the 2022-23 level. A description of assessment changes is included in the Property Tax Computation and Analysis section.
2. The Revenue Requirement – The amount of property tax revenue required to finance City services is determined by the cost of the services provided and the availability of revenue sources other than the property tax. Further specific changes in revenue receipts are detailed under the appropriate revenue headings that follow. Expense changes are described in the appropriate department budget section.
3. The Collection Rate – It is anticipated that 94.0% of the tax levy will be collected during 2023-24. In addition, anticipated collections for the first sixty days following the current year are accrued as 2022-23 receipts. This accrual is estimated to be 1.5% of the tax levy, bringing total collections to 95.5%. A Tax Reserve of 4.5 percent of the required property tax revenue is also levied to compensate for those taxes that will not be collected or accrued during 2023-24 and an amount for the settlement of assessment review proceedings. In accordance with Generally Accepted Accounting Principles, the tax reserve is not reflected in the budget.
4. STAR Program – In 1998-99, New York State enacted the School Tax Relief (STAR) Program, which provides two types of exemption for owner-occupied primary residences. The “Enhanced” program is for property owners 65 years of age or older, with incomes of $93,200 or less. Approximately 4,249 property owners will benefit from this program in 2023-24. All owner-occupied property owners with incomes less than $250,000 are eligible for the “Basic” STAR exemption program. Approximately 11,876 property owners will take advantage of the “Basic” program in 2023-24. Owner-occupied properties purchased since February 1, 2015 are subject to the new STAR credit program implemented with New York State’s 2016-17 fiscal year. These property owners no longer receive a credit on their property tax bill but instead are required to register with the state to receive a credit directly from NYS. All property owners whose income is greater than $250,000 may only participate in the STAR credit and not the exemption program. A provision enacted in 2017-18 requires NYS to pay interest on the STAR rebate if homeowners do not receive their checks on time. Beginning in 2020-21, NYS may deny Basic STAR exemptions and Basic STAR credits to property owners with delinquent property taxes. This program is further defined in the Property Tax Computation and Analysis portion of the Revenue Summary section.
YEAR TO YEAR HIGHLIGHTS
- Reduction in STAR credits received directly from NYS shifts to property tax collections $1,134,300
- Property tax distributed to the tax-supported Special and Enterprise Funds increases by $330,400
Delinquent & Supplemental Taxes
- Revenue from property taxes levied but not collected or accrued in previous years is classified as delinquent taxes
- When properties lose their tax exempt status through transfer of ownership, property owners receive a supplemental tax bill that includes both current and delinquent payments
- When an assessment is inadvertently left off the tax roll, property owners are later notified and billed the following year as an omitted tax
YEAR TO YEAR HIGHLIGHTS
- Delinquent collections decrease $577,500 reflecting estimated collection rate of 50.4%
- Supplemental taxes increase $100,000
- Foreclosure auction planned for November 2023
In Lieu of Tax Payments
To facilitate construction of public housing units and encourage industrial development, various sections of New York State law authorize certain property owners to make payments as a substitute for property tax. Currently, such payments are authorized under four different statutes:
1. The Private Housing Finance Law applies to projects constructed with private resources to provide housing for low and moderate income families. Payments for such projects are generally calculated at a rate of 10% of sheltered rents. Sheltered rents are determined by subtracting that portion of rent needed for utility service from total rent payments.
2. The Public Housing Law authorizes payments in lieu of taxes for property owned by public housing agencies. Payments are calculated in the same manner as those covered under the Private Housing Finance Law.
3. The Urban Development Act provides tax exemptions for properties owned by the Urban Development Corporation (UDC). When such properties are leased, payments in lieu of taxes are negotiated. For housing projects, the sheltered rent formula is generally applied, while economic development projects pay based on the percent of floor space occupied or percent of operating revenues.
4. The General Municipal Law authorizes the County of Monroe Industrial Development Agency (COMIDA) to receive tax exemptions on properties owned. In lieu of tax payments are negotiated when such properties are leased. Generally, the payments are equal to the amount that would have been paid if the property were not owned by COMIDA.
There will be one hundred forty-five COMIDA projects that make payments in lieu of taxes in 2023-24. Seventy-eight housing projects will make shelter rent payments. The Department of Finance, Bureau of Accounting, administers these accounts.
YEAR TO YEAR HIGHLIGHTS
- Revenue increases from declining COMIDA exemption schedule are partially offset by lower non-homestead tax rate resulting from the tax shift
- Three housing projects are removed from those making shelter rent payments
Interest & Penalties
- The interest rate on delinquent taxes and other charges listed on the tax bill was reduced in 2012-13 from 1.5% to 1% per month (18% to 12% per annum) for taxes levied effective July 1, 2012 and after.
- The interest rate on balances levied on or before July 1, 2011 will remain at 1.5% (18% per annum).
- Penalty fees for unpaid taxes are added to subsequent tax bills and are collected in the same manner as property taxes.
YEAR TO YEAR HIGHLIGHTS
- Collections increase with reinstatement of property foreclosure action
Sales Tax
- New York State Tax Law authorizes Monroe County to impose a tax on sales transactions in the County. A 4% tax (besides the 4% imposed by the State) is charged on most sales transactions except sales of food and home heating fuels. The local sales tax rate increased from 3% to 3.5% in September 1992 and to 4% in March 1993.
- Sales tax proceeds are collected by the State and distributed to the County every month. Under the current sales tax distribution formula the City receives 35.63% of total County collections generated from the 3% local share. The City’s initial share of the additional 1%, approximately 4.1%, began on December 1, 1993, and was suspended on November 30, 1994. During that period the City School District received approximately 3.7% of the additional percent directly from the County. The City resumed sharing the additional 1% on December 1, 1995. Beginning in December 1995 the City share of the additional 1% became 2.5%, and it increased annually for the next five years to 5%, 12%, 15.75%, 19.22%, and then subsequently dropped to 18.1%. The City share of the additional 1% decreased to approximately 17.7% in January 2011 to reflect population changes identified in the 2010 Census.
YEAR TO YEAR HIGHLIGHTS
- Sales Tax revenue is expected to increase 5.5% compared to the 2022-23 budget
utility Gross Receipts Tax
- As provided by Section 20b of the General City Law, Rochester imposes a 3% tax on the gross income of utility company transactions in the City
- Rochester Gas & Electric Corporation and Frontier Corporation pay approximately 85% of these taxes
YEAR TO YEAR HIGHLIGHTS
- Inflation in electricity and natural gas rates increases revenue
Mortgage Tax
- New York State Tax Law authorizes the Monroe County Clerk to collect a tax on mortgage transactions in the County.
- A tax is charged on the transactions and distributed pursuant to Section 261 of the Tax Law.
- The City receives 50% of the amount collected, less an allowance for administrative expenses, on mortgage transactions within the city.
YEAR TO YEAR HIGHLIGHTS
- Strong real estate market and higher property market values increases revenue
- Rising interest rates may limit increases