AMHERST, N.Y. — In 1983, the United States was in the midst of the Cold War, Philips introduced the compact disc, and “Return of the Jedi” became a box office hit.
It was also the year that New York state set the minimum interest rate that counties must charge on delinquent property taxes at 12 percent, based on the federal prime rate at the time. State Sen. Sean Ryan (D-Buffalo) noted that while the rate hasn't exceeded 12 percent since October 1984, the law hasn't changed.
“Interest on delinquent taxes was just created to encourage people to pay their taxes,” Ryan said. “It's not punitive, so we're fixing something that made sense in the '80s but hasn't made sense since then.”
Ryan's proposed bill would cap the federal prime, adjusted every five years, and local governments cannot exceed 16%.
Some counties, including Erie County, currently have an 18% tax.
“When homes are foreclosed, no one pays taxes, the city has to take care of zombie homes, and it changes the value of the whole neighborhood,” Ryan says. “So the best thing we want to do to fix New York's housing problem is to make sure people can stay in their homes.”
The state senator said it took time for local governments with budgetary concerns to buy in. Amherst City Supervisor Brian Kulpa, a Democrat, believes the loss of revenue can be offset by cuts in operating costs.
“We've seen a significant increase in emergency personnel, code enforcement officers, city highway work hours, etc. to deal with these properties,” Krupa said.
Supervisors believe the new rules will benefit communities across the board: Small businesses, seniors on fixed incomes paying off mortgages, and families who inherited wealth are the ones most likely to fall behind on their payments.
“We don't want to displace places that have been here for generations, where someone wanted to start a business and own their own building,” Krupa said.
The bill still needs the governor's signature to become law. The new law doesn't apply to interest that has already accrued on past due payments, so homeowners would still be on the hook for those costs.