Homeowners eligible under Gov. Andrew Cuomo’s proposed property tax freeze can expect a rebate check in the mail this September — if the state has a budget surplus.
During a joint budget hearing on taxes in Albany on Monday, Taxation and Finance Commissioner Thomas Mattox said homeowners would receive a check this year, but the rebate would flow through tax returns in subsequent years.
“School taxes for the current year have already been set, so the only way you can provide some sort of relief this year you would actually have to do a check, because it is too late in the process to use the returns,” Mattox said.
Cuomo endorsed his tax-relief commission’s plan last month for a two-year property tax freeze for homeowners along with other tax cuts in his 2014-15 budget address.
As part of the plan, local governments would have to stay under the 2 percent property tax cap. In the second year, governments would need to create a plan to merge with neighboring municipalities or consolidate services.
Assemblyman Peter Lopez, R-Schoharie, said he supports property tax relief, but putting pressure on governments and schools to curb spending could punish local communities.
“It puts a squeeze on local governments to look for ways to save dollars,” Lopez said. “I would say the loaf is half-baked. This plan doesn’t provide local governments with mandate relief.”
Mattox said his agency plans to set up a registration online for homeowners to receive their checks. He said that would be the easiest way to ensure people apply for the rebate.
He said in 2013, 2.4 million homeowners registered for the STAR program, with 85 percent of them doing so online.
“We certainly can move quickly. Our STAR registration platform was literally built in a couple of months,” Mattox said. “We would be prepared to have something up and running, again, depending on the final shape of the legislation, as early as this summer.”
Cuomo’s budget also includes reducing the corporate franchise tax rate from 7.1 percent to 6.5 percent, establishing a 20 percent property tax credit for manufacturers and eliminating the corporate income tax for upstate manufacturers. The package would also accelerate the phase-out of an energy assessment to be eliminated in 2014 and increase the estate tax threshold to $5.25 million.
To implement the tax cuts, Cuomo plans to use a projected $2.2 billion budget surplus within three years. The surplus is expected to be $500 million for the 2014-15 fiscal year.
Senate Finance Committee Chairman John DeFrancisco, R-Syracuse, said he believes the property tax freeze plan would be “an absolute nightmare.”
E.J. McMahon, head of the Empire Center for Public Policy, a fiscally conservative group, said he is not confident the surplus will happen by limiting government spending.
“The governor is going out on a limb and promising to hold down spending to produce the surplus, which will never actually happen,” McMahon said. “Based on what we know now, he is correct if he holds spending on that level. But the problem is that it’s a moving target.”
Mattox said there are a number of assumptions about the projected surplus and they appear reasonable to his agency. He said he is confident the surplus will happen.
“The governor has been pretty clear about the fact that [the $2 billion] surpluses don’t come in until 2016-17,” Mattox said. “There are a number of important assumptions underneath those projections, including remaining at a 2 percent spending cap.”
Lopez said if there were a $2 billion surplus, there would be a “wrestling match” for that money to go toward other services, such as education.
“Education alone would eat up $1.6 billion of that surplus,” Lopez said. “And that also doesn’t include roads, bridges and farms, and other people who are looking for additional support.”
The state Legislature has until April 1, the start of the 2014-15 fiscal year, to approve Cuomo’s $137.2 billion budget proposal.