Paterson to propose school property tax cap

PHOTOGRAPHER: Bob Conner

Gov. David Paterson said Tuesday he will introduce a program bill this week calling for a cap on local school property taxes throughout most of the state, including all of the Capital Region.

Property tax cap bill

To read the bill proposed by Gov. David Paterson to cap increase in school district property taxes, click here.

Appearing at a news conference with Tom Suozzi, chairman of the state Commission on Property Tax Relief, the governor said he accepts the commission’s report and hopes that its key recommendation, a 4 percent annual cap on school tax levy increases, can be enacted this legislative session, which is scheduled to end June 23.

However, unions and education interest groups raised various objections to the plan, and legislative leaders did not endorse it, making its prospects for enactment far from certain.

“We have to enact a property tax cap now,” Paterson said, citing figures showing that by one measure, nine of the top 10 highest-taxed counties in the country, including Schenectady, are in upstate New York. People and businesses are being driven out of state by the property tax burden, Paterson said. “Now I’m asking the Legislature to act.”

The commission also proposed reforming the STAR program to include a “circuit-breaker,” providing an income tax credit for low- and moderate-income people paying high property taxes. But Suozzi and Paterson both said it would be a mistake to pass a circuit-breaker without a cap because that would not help businesses and would just shift a growing tax burden. Like Paterson, Suozzi, the Nassau County executive, is a Democrat.

The commission also called for extensive mandate relief measures to control costs, including revision of the Taylor Law governing public employment labor relations, so that teachers would no longer get automatic pay increases when contracts have expired. Asked if he supports that and other measures, Paterson did not give a direct answer. Nor did Assembly Minority Leader James Tedisco, R-Schenectady, although he said he would likely support the tax-cap program bill that the governor will introduce.

Paterson and Suozzi said school taxes were targeted because they are the biggest problem, making up 62 percent of the property taxes paid outside New York City. However, according to figures provided by Frank Mauro from the union-funded Fiscal Policy Institute, in poorer upstate counties, where Medicaid costs are high relative to the tax base, other local property taxes are high, too. Thus in Montgomery County, school taxes make up only 50 percent of the property tax burden. In Fulton County it’s 52 percent, 56 percent in Schoharie County, 57 percent in Schenectady County, 67 percent in Albany County and 74 percent in Saratoga County.

Mauro also said all these numbers are too high because they do not take into account the STAR program, which lowers the taxes paid by property owners and transfers the costs to the state.

Schenectady Board of Education President Jeff Janiszewski said the failure to include other property taxes in the tax-cap proposal was one of his objections to it. More importantly, he said Paterson was taking the wrong approach by proposing the tax cap first without the mandate relief measures and the circuit-breaker. Further, he noted that the commission itself has not yet gotten around to making recommendations on special education costs, a key factor in driving up taxes. The commission’s final report is due in December.

New York State United Teachers, the main teachers union, said in a statement: “An arbitrary cap that fails to take into consideration rising costs beyond the control of school districts is a blunt instrument that would damage education and efforts to create equity for all children. We know full well that poorer districts would never be able to muster the votes to spend more than a cap, only widening the achievement gap for children of color and for children who live in poverty.”

Suozzi, however, said poor districts stand to benefit most because their residents and businesses cannot afford continued steep increases in property taxes.

AFL-CIO President Denis Hughes said in a statement that “taxpayer dollars were utterly wasted on a report that attacks the wages, protections and conditions of employment of working men and women.”

Business and fiscally conservative groups were supportive of the tax cap. “Our state’s taxes are among the highest in the nation,” said the Unshackle Upstate coalition. “As a direct result, businesses and people have left or chosen not to locate in upstate, which has crippled our economy.”

Sen. Hugh Farley, R-Niskayuna, questioned whether revising the STAR program as proposed would benefit poorer counties such as Montgomery and Fulton, where many senior citizens do not pay school taxes now. Suozzi said the idea is to have the program target needy homeowners rather than school districts.

Mauro said the state needs a more equitable overall tax and fiscal system, including more local aid to schools and needy localities, paid for by closing corporate loopholes and “restoring some of the personal income tax’s lost progressivity” by increasing taxes on the wealthy. There is a wide gap in spending per pupil between rich and poor districts, he said. Paterson said the state has begun to address that gap, but Mauro, while acknowledging recent progress, said there is still a long way to go and that the state’s school system remains unequal compared to others in the United States.

Both Assembly Speaker Sheldon Silver, D-Manhattan, and Senate Majority Leader Joseph Bruno, R-Brunswick, issued statements responding to the commission report, without taking a position on its recommendations. Tedisco issued a more supportive statement.

Attorney General Andrew Cuomo, asked about the issue, said he would support a tax-cap bill, but wants other measures taken at the same time, including the government consolidations proposed by another state commission that reported recently, chaired by former Lt. Gov. Stan Lundine.