A special commission on Monday recommended that New Yorkers’ property taxes be capped at 4 percent a year, among other reforms.
If the Commission on Property Tax Relief’s recommendations are accepted by Gov. David Paterson and the Legislature, local school taxes could be capped at either 4 percent or 120 percent of inflation, whichever is less. That would be about half of the annual, average growth in most recent years.
A school district could exceed the cap if 55 percent of voters agree. But if the district received more than a 5-percent increase in state aid, 60 percent of voters would have to agree to override the cap.
The Working Families Party, influential with the Democratic party that controls the Assembly and governor’s office, called a tax cap “merely a gimmick.”
“It neither cuts taxes for those who already can’t afford them, nor promises state aid to make tax increases unnecessary,” said Dan Cantor of the Working Families Party. “We need to repeal the Pataki-era tax cuts for the wealthiest New Yorkers.”
The powerful New York State United Teachers union and the state School Boards Association oppose a tax cap.
Kenneth Adams of the state Business Council said the commission’s cap “offers a real chance to make New York’s economy competitive again.”
Even New York City schools, with little property tax income, would benefit from the commission’s recommendation to eliminate two dozen mandated programs and costs created by the Legislature, but not paid for by the state.
The commission headed by Nassau County Executive Tom Suozzi also calls for changes to the state’s STAR tax subsidy designed to lower school taxes. He said STAR, which now costs the state $5 billion a year, has done little or nothing to slow local school spending.
“It’s clear a property tax cap is essential,” Suozzi said. “You can’t afford every great program. You have to have some fiscal discipline. The cap forces hard choices and discipline.”
Assembly Speaker Sheldon Silver said he was reviewing the report and noted that the Assembly’s Democratic majority has long called for meaningful tax relief.
“Any action that we take must guarantee that schoolchildren across the state will have the resources necessary to get a quality education,” Silver said.
Suozzi said poor school districts that can’t raise enough in local taxes would be able to turn to the state for more aid.
“You have to bring some sanity back into this process because it’s low- and moderate-income people who are suffering the most,” Suozzi told reporters.
The report, called preliminary, goes to Paterson today. A final report that will take on additional areas including the state’s high cost of special education and the unique fiscal problems of the state’s four biggest city districts and poor rural districts. The final report is due in December, but Suozzi said many of the proposals released Monday should be taken up by the Legislature this year.
“It’s a comprehensive examination of the issue,” said Elizabeth Lynam of the independent Citizens Budget Commission. She said the proposal would improve use of STAR subsidy for the neediest taxpayers and redistribution of state funding that could make sure the districts most in need get enough state aid.
“They not only proposed a cap which is exactly what the doctor ordered, but they actually improve the cap,” said E.J. McMahon of the Empire Center for New York State Policy, part of the fiscally conservative Manhattan Institute.
He noted the proposal allows a district to “bank” up to 1.5 percent of budget growth below 4 percent for use in tougher years. McMahon says that would eliminate automatic 4 percent increases. He also said the proposal calls for disclosure of teachers’ labor contracts.
“This is a very solid proposal,” he said. “We’ve been getting blue ribbon reports seemingly once a decade for the 30 or 40 years on school finances. This is the first one that really views things from the perspective of people paying the bills.”
Suozzi said testimony included the story of a man paying 15 percent of $44,000-a-year income on property taxes. He also said a man in his 80s had to take a part-time job to pay the taxes on his family’s home, but had to quit to care for his ailing wife and may now lose the home.
The cap may require more state aid beyond historic increases in the last two years and for coming years, despite projections of more than $20 billion in deficits over the next three years.
“We are saying very clearly that regardless of what happens at any other level, you cannot continue to let these school districts solve their problems by raising their property taxes above the capped amount,” he said.
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