The buzz over a 2 percent property tax cap began early in the morning May 24 when Lt. Gov. Robert Duffy told a gathering of Realtors in Albany an announcement was forthcoming.
The press conference that followed featured state legislative leaders and Gov. Andrew Cuomo trumpeting a tentative deal reached on a property tax cap bill proposed by Assembly Speaker Sheldon Silver. However, the interaction between the state leaders revealed there is still work to be done before a bill is signed into law.
Silver”™s bill 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. The Senate passed the 2 percent property tax cap bill proposed by Cuomo earlier this year. Silver”™s bill, while similar, does have some provisions not included in the Senate version.
Among the key features of the Assembly bill are to:
- Provide a carryover provision of up to 1.5 percent from one year to the next of any amount in which the previous year”™s level was below that year”™s 2 percent limit;
- Allow local governments and school districts to adjust the tax levy higher than 2 percent if there is physical or quantity growth in the property base; and
- Include a tax base growth factor to account for any increase in the full value of taxable real property and exempt pension payments over 2 percent from the previous year as well as court orders and judgments that exceed 5 percent of the total levy from the previous year.
”˜A big step forward”™
Silver”™s proposal, which would take effect for the 2012 fiscal year for local governments and the 2012-2013 school budget cycle if enacted, also includes a sunset provision he said would coincide with rent stabilization provisions to determine if the tax cap law is working as intended.
“Hard working families are saddled with some of the highest property taxes in the nation and need real relief in order to be able to live and raise their children in New York state,” Silver said. “Just as families have to live within a budget, so too should our government. With this legislation, we are finally able to bring property taxes under control and still provide critical services.”
Silver has linked the property tax cap with extending and improving the rent control laws that expire on June 15.
Senate Majority Leader Dean Skelos said a tax cap and an extension of rent regulations would pass before the end of the session June 20. Silver and the governor have been in favor of extending and improving rent regulations.
“Enactment of a property tax cap is absolutely necessary for New York to send a positive message to families who are struggling to pay their tax bill and for businesses that want to grow and create jobs, but are being held back by high taxes,” Skelos said.
“The property tax cap is a big step forward and we must build on it by providing relief from other taxes that place an enormous burden on New Yorkers and stand as an obstacle to economic growth and job creation.”
Cuomo said that while the tax cap and rent control laws are not linked, he expects both to be approved by the end of the session. However, he stressed that an agreement had yet to be reached on rent regulations.
“This (tax cap) agreement is a big deal. This issue is probably the most powerful and pervasive issue in New York state,” Cuomo said of the state”™s high property tax burden. He added that property taxes have been forcing people and businesses to move out of New York.
Cuomo said the agreement shows that the Senate and Assembly have “stepped up to the plate” to address rising taxes. “When you put the budget together with a property tax cap in this state it is going to be a game changer ”¦ this is a new New York,” he added.
Cuomo said he is hopeful that in addition to the property tax cap and rent control measures, agreements can be reached on ethics reform and mandate relief.
Business, school officials react
Reaction to the news of the property tax cap agreement was positive from the business community.
“The new property tax cap proposal moves New York closer to an economic recovery. Now both houses of the Legislature have agreed with Gov. Andrew Cuomo that New York needs to implement a hard tax cap in order to protect taxpayers and businesses. A cap will help bring fiscal discipline to government and dramatically improve the business climate in the state. Businesses will not come, stay and grow in New York unless we get control of property taxes and this cap will do just that,” said Heather Briccetti, acting-president and CEO of The Business Council of New York State Inc.
William Mooney, president of the Westchester County Association, stated, “We applaud the governor and Assembly Democrats who have reached a deal to cap New York property taxes at 2 percent a year. This is an extremely important step and one the Westchester County Association has strongly advocated in the past five years. As we emphasized this week in Albany, a tax cap will make New York state much more business-friendly and competitive, and help advance the goals of ”˜The Blueprint for Westchester,”™ our dynamic new economic development initiative.”
The Business Council of Westchester in a prepared statement, said, “The passage of a hard property tax cap will bring much needed relief to the residents and businesses in Westchester County where property taxes are the highest in the nation. It sends a strong signal that New York is serious about creating an economic environment for businesses to grow and create jobs. At the same time, it also sets the stage for meaningful mandate relief, including long-term reforms to public employee pensions, that our local municipalities and school districts have long been clamoring for. For these reasons, we urge both chambers to enact this proposed cap, an important step in Gov. Cuomo”™s fiscal reform efforts.”
However, not everyone is pleased with the deal.
Timothy G. Kremer, executive director of the New York State School Boards Association, said, “Let”™s be clear: a 2 percent tax cap on school districts fails to address the root causes of our ever-increasing tax burden. Politicians and special interest groups can trumpet the tax cap all they want, but homeowners across New York will find their taxes continuing to rise unless their elected officials get serious about relieving local schools of millions of dollars of costs tied up in state mandates that do nothing to advance student achievement.”
Kremer said mandate relief must be enacted before a property tax cap is considered. He said mandate relief should include reforming the state pension system, capping health insurance costs, reducing the cost of teacher disciplinary procedures, curtailing special education mandates, reforming the Triborough Amendment so school districts can freeze salaries after a contract expires and allowing schools to use national purchasing cooperative contracts.
