Once you open the cap on a soda bottle ”“ let”™s say a Pepsi, for instance, our corporate neighbor who”™s decided to stay here ”“ you can never close it. Not completely. The seal is broken, air gets in and the contents eventually lose their fizzle.
This can be said, figuratively, for other caps as well. Take, say, a property tax cap, which in New York state and in Westchester particularly has been a topic of much debate of late.
Gov. Andrew Cuomo proposed a 2 percent “hard” cap on property taxes, much to the delight of business people and Realtors here.
Not so among school districts and municipalities, not surprisingly. The bill passed in the state Senate, but had stalled in the Assembly. Democrats had sought a kinder, gentler tax cap.
Last Tuesday, May 24, Assembly Democrats announced their version of a cap, purported to be “hard” and reportedly met favorably by the governor. There was still some quibbling over rent regulations, but even Senate Majority Leader Dean Skelos was quoted as saying, “We”™re celebrating the fact that there will be (a) property tax cap in New York state.”
The proposal must be approved by the Legislature.
Business groups ”“ including the Westchester County Association and The Business Council of Westchester ”“ immediately issued statements applauding the agreement.
We”™re not ready to extol the bill just yet. We”™ve been down that political road before. Just when we think we”™re heading in the right direction up pops a detour, forcing us to take another route ”“ and soon we”™re going in the opposite direction.
As of this writing May 25, the plan left room for some questions.
Our biggest concern was the clear exemption for pension costs. Whether it”™s viewed as a “softening” of Cuomo”™s hard cap or just unscrewing the cap a bit, the Dems”™ plan would allow for exceptions in cases where state mandates are concerned. In other words, new spending would be permitted to help offset costs of skyrocketing government pensions.
Even when a little air gets in, the contents lose their potency.
Consider New Jersey. After implementing a 2 percent tax cap, the state allowed spending “exceptions” for school districts, mostly to fund pension and health care costs. The result? Sure, the school districts met the tax cap but taxpayers got saddled with larger tax bills.
Will that happen here? To get a clearer picture, we asked Brian Sampson, executive director of Unshackle Upstate in Rochester, a bipartisan coalition whose goal is to reform Albany and improve the business climate.
What”™s the deal with the pension exemption?
“What they”™re saying is that if a municipal government or school district last year had to pay $100 in pension costs and that”™s going to go up to $104, that first $2 remained under the cap and the second $2 is outside of the cap so they can raise money specifically to cover that portion of it.
“What basically happens, based on our calculations, is your 2 percent cap with that one caveat will effectively become like a 2.9 or 3 percent cap the first year, another 2.9 or 3 percent the second year and then after that it should smooth out to a 2.5 percent cap where the bulk of the pension stays under the cap but any slight discrepancies because of market fluctuations, additional people into the system, will (make it) go up a little bit.”
Sampson and his group have been clear in their support of a tax cap: “It”™s a hard cap, no exemptions or no cap at all.”
But he”™s pleased with the latest agreement.
“When we sat down and looked at this, it”™s effectively about a 92 percent cap when it”™s fully in effect. That”™s a good thing for New Yorkers.”
He noted it”™s a five way deal at this point ”“ both houses, the governor and the two legislative leaders ”“ and some details need to be squared away.
“But the details are based on rent regulations not on the property tax cap. This will be, at the end of the day, we think, probably the strictest property tax cap in the country.”
That”™s good to hear from Sampson, who is no “big fan of government. I”™m a big skeptic of them.”
We remain skeptical ourselves.
And we”™re resolute in our view that the state must relieve municipalities and school districts of financially lethal unfunded obligations.
But we will not get meaningful mandate relief in New York state without a hard cap.
The governor must stand his ground. His property tax bill includes override provisions. Nothing else is needed. We urge the state to pass a hard cap as proposed before the legislative session ends June 20.
The people are tired of feel-good legislation that does not act to turn around the state. It”™s outrageous and insulting.
We need serious reform. We need tax relief. We need strong leadership.
And, we need it now.
