Property taxes in New York State is where the bulloney from the tax cut mavens of administrations past have tended to hit the fan. Because of the immutable laws of death, taxes, and no free lunches, income tax cuts had to be made up somewhere. When the feds and state show largesse to the well-heeled, we locals get socked with ever-rising burdens.
Just as people were about to catch on to the anti-tax shell game, then-Governor Pataki threw a distracting trinket called the STAR Property Tax Relief program on the table. It was flawed, it was cumbersome, and it worked.
Nobody (but a few hardy fringies such as yours truly) bothered to call for readjusting state income tax brackets to reality for many years. Thus does New York — a “blue” state, no less — continue to live with a Steve Forbes-esque flat tax 0f 6.85% on incomes above $20,000 a year.
Hoi Polloi continued to scream about the property tax, so then-Governor Spitzer did what any public servant of courage would do. He appointed a commission. To look at property taxes. In isolation. And here we are.
June 3rd (not today, the original target date) is the day the report from Tom Suozzi’s Property Tax Commission will be unvieled. There are three major recommendations expected:
First, the report will recommend capping school property tax increases to about 3 or 4 percent each year. That’s lower than the roughly 7 percent annual tax increases that districts have enacted in recent years, but higher than a 2.5 percent cap adopted by Massachusetts in 1980.
Secondly, the commission plans to recommend a series of reforms to lower costs to school districts, which have complained that their spending increases are tied to unfunded state mandates.
Lastly, the Suozzi commission will recommend a “circuit breaker” tax cap for homeowners. The proposal would tie the amount homeowners pay in property taxes to a fixed percentage of income. The rest of the taxes would be rebated by the state, essentially retooling the current STAR property tax rebate program.
The circuit breaker is a nice idea that’s cumbersome to explain, but in essence you’d get the tax credit based on your income and the size of your property tax bill. You can read the summary of the bill currently under consideration HERE.
If dealing with unfunded mandates means restoring more revenue sharing, good also.
But the cap idea? Bad.
With New York’s Commission on Property Tax Relief planning to recommend that the state impose a rigid cap on property taxes for education based on Massachusetts’ Proposition 2 ½, a new report from the Washington, D.C.-based Center on Budget and Policy Priorities describes the problems the law has created in Massachusetts.
“Across Massachusetts, a number of communities have been forced to lay off teachers, police officers, firefighters, and other public employees; close fire stations; shut libraries, senior centers, and recreation centers or sharply reduce their hours; and scale back public school programs. One town even turned off its street lights to save money,” said Iris Lav, the Center’s deputy director and co-author of the report.
As New York’s Fiscal Policy Institute summarizes it:
* A tax cap won’t make government services cost less.
* Claims that caps will produce large savings through “efficiencies” are overblown.
* Tax caps can be particularly harmful if adopted during a weak economy.
* State aid can’t be relied upon to fill the gap.
* Changes in school enrollment can have a big impact.
* Without effectively targeted state aid, low-income communities will fall even further behind.
* Wealthier communities will override a tax cap more frequently than poorer ones.
* Middle-income communities might end up bearing the brunt of a cap.
Anyhow, here’s a little ditty for you as you ponder these things: