FOR IMMEDIATE RELEASE:
May 16, 2011
"A WORKABLE TAX CAP FOR NEW YORK STATE"
One of the biggest issues facing the New York State Legislature as it moves toward the end of the 2011 Regular Session in June is Governor Andrew Cuomo's proposed "2% Real Property Tax Cap." The need for property tax reform has been well-established. No one seems to dispute the fact the New Yorkers pay among the highest property taxes in the nation. In the last decade, property taxes have increased by 73%, twice the rate of inflation, and 1 ½ times the rate of growth in personal income. It is an unsustainable situation, which is forcing families to leave the State, discouraging business investment and job creation, and eroding support for public education.
Properly structured, a property tax cap is a useful tool in managing our schools and local governments. In the state of Massachusetts, Proposition 2 ½ was enacted in 1981. Formerly known as "Taxachusetts", the State had the highest property taxes in the nation. Three decades later, Massachusetts property tax burden is now in the middle of the pack, while maintaining a quality public education system.
Governor Cuomo's proposal would apply not just to school districts, but all local governments. It would limit increases in the property tax levy to 2%, or the rate of inflation, whichever is less. Nearly all government expenditures would be subject to the cap. School districts could override the cap with a 60% vote; other local governments could override the cap with a 2/3rds vote of its local legislative body. The State Senate passed the Governor's bill by a 42-15 vote. Since that time, I have been participating in many meetings and hearings about this proposal. Here are my ideas for improving the Governor's Plan:
* Modify to the Governor's 2% cap procedures. Under the Governor's bill, the cap may be overridden with a 60% vote. However, there is still a second vote if the school budget is defeated the first time. My plan would limit the number of school votes to one, but permit the voters to override the cap with a simple majority. This is more democratic. There is no other election in New York where you get two bites at the apple. There should be one vote: up or down and the majority should rule. Massachusetts has only one vote and a simply majority requirement.
* Enact real mandate relief. First, there should be a moratorium on all new unfunded mandates on schools and local governments. Any mandate from the State must be accompanied by the State funds to pay for it. Second, cap school and local costs for both pension costs and health insurance. These are the two most costly existing mandates. Simply stated, any increases after 2011 in these costs would have to be borne by the State, similar to the current cap on the local share of Medicaid costs. This would provide the State with the incentive to reform state mandates, as Governor Cuomo did with Medicaid this year.
* Enact a "Maintenance of Effort" requirement for State Aid to Education. The State's commitment to education shall be at least equal to the increase in the growth of state personal income. For next year, that would be about 4% or about an $800 million increase in state aid.
* Place a 3 year sunset provision on the entire plan. The 2% cap, mandate relief, and maintenance of effort would be in effect for 2012, 2013, and 2014. This would provide for the opportunity for an evaluation of the effectiveness of the plan and the opportunity to make changes if necessary.
This plan would cap local property taxes, help school and local governments control their future costs, and insure that the State is paying its fair share of State education expenses.
Source: Assemblyman Fred Thiele press release dated May 16, 2011