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A Brief History of the Tax Cap

February 21, 2013
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Unfortunately, not one mention of mandate relief.  NYS is forcing municipalities and schools to do more with less, while the State refuses to eliminate or even fund many state mandates handed down over the years.

Courtesy of Capital Tonight:

Cap Fight

The effort to control the highest property taxes in the nation was a goal that had stymied multiple gubernatorial administrations in New York.

A serious run at capping property taxes at 4 percent or 120 percent of the rate of inflation was made by Gov. David Paterson in his final few months in office.

The lame-duck governor at the time was pushing the Legislature to adopt the final pieces of his 2010-11 budget, which would ultimately end up being one of the latest in state history.

In the end, the budget passed in August, but a special, post-budget or post-Election Day special session never materialized even as Paterson urged powerful Assembly Speaker Sheldon Silver to hold one.

Silver’s conference had been largely opposed to tax caps or at least stalled on passing them, even as Paterson and the Senate, under Democratic or Republican rule, was open to passing a cap.

A few months later, Gov. Andrew Cuomo held his first State of the State address and gave both Silver and Senate Republican Majority Leader Dean Skelos the chance to speak before his speech.

Silver hushed the room quickly by saying this:

“As you know, like most states, we have a budget gap to close. Difficult choices must be made, but unquestionably, we must work together to reduce state spending. Just as clearly, we must strive to make our state a more affordable place in which to live, to work, to raise a family, and to own and operate a business. That means working together to cap property taxes.”

In May, there was a deal on capping property taxes at 2 percent with some exceptions for pension increases and tax base growth, with a 60 percent override feature that would allow governing boards or voters to blow through the cap.

And Silver was able to claim a large part of the credit when he agreed to tie the tax cap’s 2014 expiration date to the sunset provision in rent control for New York City. Silver, who had denied there was ever any attempt to bundle the two issues together, told reporters after a news conference in May 2011 that the two inextricably linked. In other words, New York City lawmakers uneasy with a cap on property taxes are forced to accept it in order to keep rent control.

But a deal wasn’t done quite yet.

The cap and rent control was ultimately part of a mega deal to legalize same-sex marriage in New York. As Senate Republicans allowed a vote on the marriage law, the cap was a key victory they could bring back to their largely upstate and suburban constituents.

So why all this throat clearing on the recent history of the cap?

It is highly unlikely that in 2014 lawmakers and Cuomo will approve any measure that allows the property tax cap to vanish.

It is in part why the New York State United Teachers union launched a lawsuit yesterday to overturn the tax cap, which they claim perpetuates the wealth gap between rich and poor school districts and that the 60 percent override component is violates the “one person, one vote” principle.

The Cuomo administration yesterday was quick to point out that most local taxing districts have been able to stay within the cap. But many school districts have been forced to dip into their fund balances in order to make ends meet. Layoffs, consolidations and program cuts have become the norm for many school districts as revenue dries up, not just because of the tax cap, but also because of the ongoing lack of tax revenue writ large and state spending cuts.

Cuomo was also quick to point out that he’s increased education spending in this year’s budget by 4 percent, a significant amount he said, given the ongoing fiscal hardships. But NYSUT counters that claim by noting school aid has had a net reduction over the last several budget years and the aid increase doesn’t make up for it.

If anything, yesterday’s lawsuit brought back Cuomo from 2011 — a fiscal realist who decried the state of the state’s education system, which he says spends too much money with too little to show for it.

“The answer can’t always be more money, more money, more money,” Cuomo said, dusting off a talking point from the gubernatorial campaign.

What Cuomo did with the property tax cap was seize on the ultimate suburban issue and one that early on guaranteed him some good will in Westchester, Rockland, Nassau and Suffolk. Yes, property taxes are a concern for upstate residents, where taxes as a percentage of home value are especially of whack.

But it is in the New York City suburbs — the corridor of middle class voters with families who send their kids to relatively good schools, but pay some of the highest taxes in the nation to live there — that the issue of limiting tax increases is especially potent.

They are also swing voters who are mostly enrolled Democrats but have tossed out once invulnerable Democratic county executives in favor of Republicans. Cuomo’s tax cap was aimed straight at those Democrats who backed Rob Astorino and Ed Mangano.

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