Property tax cap, power bill passes

Business and political leaders are hailing the progress made in the recently concluded state legislative session that culminated in the passage of a 2 percent property tax cap, a new power plant siting law and a same-sex marriage bill.

Still, many say more work needs to be done this year and in early 2012 to make the business reform measures truly effective.

The Westchester County Association and The Business Council of Westchester, as well as groups from across the state, cheered the passage of the property tax cap.

“(This) is great news for all New Yorkers. It sends a signal to business leaders that the state is prepared to control the cost of government and begin to rebuild our private sector economy,” said Heather Briccetti, acting-president and CEO of The Business Council of New York State Inc. “The property tax cap has long been a priority of The Business Council. We believe it will contain the growth of local government spending and ultimately make New York more affordable for homeowners and businesses.”

The Business Council noted that property owners in New York state paid $48 billion in property taxes in 2010, up 5 percent from 2009. The 2009 increase over 2008 was 6 percent. Businesses paid nearly 44 percent of the total tax levy, or $21 billion.

While heaping praise on the cap”™s passage, the Business Council said further mandate relief needs to be enacted for schools districts and local governments.

The cap would prohibit local governments and school districts from exceeding a 2-percent property tax increase on the total tax levy and would require a 60 percent vote of the electorate to override. There will be limited exceptions, including judgments or court orders arising out of tort actions that exceed 5 percent of the localities”™ levy, growth in pension costs where the system”™s average rate increases by more than 2 percentage points from the previous year and growth in tax levies due to economic development.

Mixed reviews on mandate relief

The tax cap was included in a bill nicknamed “the big ugly,” which also featured the extension of New York City”™s rent control laws, tuition hikes for the SUNY and CUNY systems, and provisions to provide some mandate relief to localities and school districts.

A separate bill approved by the state Legislature that creates a new power plant siting law was also viewed by the business community as a major legislative victory.

According to the governor”™s office, the mandate relief measures that passed the Assembly and Senate will save localities more than $125 million annually. In addition, the governor will pursue recommendations reviewed by the Mandate Relief Redesign Team for regulatory reforms that are projected to save local governments and schools more than $40 million annually.

The mandate relief package does the following:

• Establishes a combined Legislative and Executive Mandate Relief Council to refer unfunded mandates to the Legislature and agencies for modification or repeal;
• Empowers local governments to petition the council for permanent relief from burdensome or costly regulations;
• Allows municipalities to benefit by “piggybacking” on federal and county contracts;
• Expands the number and type of agreements the Department of Transportation can enter into with municipalities; and
• Establishes clear authority for school districts to more efficiently manage their bus fleets.

However, many state, county and municipal officials contend those measures fall far short of what is required and charge that the property tax cap just further shifted funding burdens from the state to local governments.

New York Conference of Mayors Executive Director Peter Baynes said the Legislature enacted a cap without meaningful mandate relief. He termed the mandate relief included in the tax cap legislation as “meager and anemic.”

“It will have no material impact on the rapidly rising local costs that are the cause of New York”™s property tax crisis. As a result, communities throughout our state will be forced to either override the tax cap, decimate essential municipal services, or both,” Baynes said. “Before the tax cap goes into effect in 2012, our leaders in Albany must enact mandate relief that makes a difference.”

”˜A mere pittance”™

Locally, Westchester County Executive Robert Astorino said the tax cap without mandate relief “is nothing more than another income redistribution scheme.”

“Without mandate relief, the governor”™s property tax cap is a prescription for failure,” Astorino said. “The cap limits the amount of revenue available to local municipalities and school districts, but it does virtually nothing to reduce uncontrolled spending by the state, which must be paid for at the local level. The result is a predictable disaster. Local municipalities and schools won”™t have the money to pay for the programs they want because so much of their available revenue will be consumed by state mandates.”

He charged that nine state mandates consume 75 cents of every property tax dollar collected. “The unchecked automatic increases of just two of those mandates next year ”“ Medicaid and pensions ”“would put the county budget over the 2 percent cap,” he said.

According to figures supplied by Westchester County, mandates account for $416 million of a $548-million property tax levy in 2011. Medicaid accounts for $211 million or 38 percent of the property tax levy, followed by public assistance at $51.9 million and pension costs at $51 million. Rounding out the other mandates are: pre-school education ($42.6 million); early intervention ($17.5 million); indigent defense ($17 million); probation ($15.2 million); child welfare ($7.4 million) and youth detention ($2.9 million).

Medicaid costs, which are capped at 3 percent per year, would rise by $6.3 million, or equal half the cap. County officials said conservative estimates indicate county pension costs will rise from $51 million to $56 million next year if Westchester joins the state”™s amortization program. The county”™s pension costs would rise to $83 million in 2012 if the county does not opt in.

Either way, the county would be over the $11-million property tax cap increase with just those two mandates, county officials maintained.

“The 2 percent cap will have a large impact on the operations of local governments,” said Scarsdale Village Manager Al Gatta. “It will mean that either outside revenues will have to increase or local governments will have to override the 2 percent (cap) or local governments will have to lower their budgets each year and reduce services.”

He characterized the mandate relief recently enacted as “a mere pittance and not very substantive at all.”

Gatta said it is difficult to determine what impacts the 2 percent property tax cap will have on Scarsdale”™s 2012-2013 budget. He noted that the economy is soft and it is unclear if the village”™s other revenue sources ”“ sales tax, mortgage taxes or investment income ”“ will go up or down.

Districts could bond pension contributions

The Assembly and Senate passed a bill that would allow school districts the option to bond, for up to a 15-year term, contributions to the New York State Teacher”™s Retirement System.

The legislation has drawn criticism from some circles, including a group called New Yorkers for Growth, which charged that the bond payments on the teacher”™s retirement funds would be exempt from the state”™s property tax cap and therefore taxpayers would be forced to pay the full cost of the pension obligations, plus interest.

Liz Feld, a former mayor of Larchmont and a spokesperson for New Yorkers for Growth, said the group is asking Gov. Cuomo to veto the bill. “This legislation should be called the ”˜Taxpayer Bondage Bill”™ because that is exactly what it does ”“ it prevents any real property tax relief and keeps taxpayers on the hook longer and at greater cost,” she said.

At press time, reports indicated Cuomo was leaning toward vetoing the bill (A6309A, S4067A) introduced by two Brooklyn lawmakers ”“ Assemblyman Peter Abate Jr. and Senator Martin Golden.