THE PROPERTY TAX
Over the past decade, real estate taxes consistently have accounted for almost one-fourth of the city of New York's revenues. From fiscal year 1980 to 1990, the increase in property taxes slightly outpaced growth in the operating budget, rising 105 percent while total revenues grew 97 percent. 1 This growth in property tax revenues, however, came largely at the expense of the owners of commercial and industrial property.
The number one priority of New York City property tax policy has been to protect the interests of owners of small residential property. The city has decreased the small residential owners' share of the property tax burden and increased that of commercial and industrial property owners. City policy has pronounced as anathema equal taxation among different types of property. The result has been a growing "interclass" inequity, in which commercial and industrial properties provide a disproportionate share of property tax revenues.
This inequity has been implemented through two types of decisions. First, the nominal tax rate for residential properties has been set below that for other types of property. Before fiscal year 1983, all local property was taxed at the same nominal rate, $8.95 per $100 of assessed value in 1982. A state law permitted different rates for four different types of property (small residential, other residential, utility property, and commercial and industrial property) beginning in 1983. The city established separate rates and the disparity has grown; in fiscal year 1990 the rates varied from $9.23 and $9.45 for the two classes of residential property to $9.54 for most commercial property and $12.90 for utility property.
Second, and even more significant, is a disparity in the way in which these