Westchester County”™s leading business groups strongly back a cap on school property taxes proposed this month by New York state”™s governor and a state tax relief commission. But the proposal, called a first step in relieving New York property owners of the highest tax burden in the nation, has failed to gain steam among Albany lawmakers closing out their legislative session and has aroused powerful opposition in the state teachers union and a broad coalition claiming to represent 1 million New Yorkers.
Looking to muster grassroots support for his proposal to cap annual hikes in school property-tax levies at 4 percent, or 120 percent of the Consumer Price Index, whichever is less, Gov. David Paterson recently appeared in Dobbs Ferry at the home of Bill and Adrienne Flynn. The Flynns, an IBM sales manager and a homemaker, respectively, have two sons in the Dobbs Ferry public school system and pay about 10 percent of their household income in property taxes. Joining Paterson at the governor”™s portable lectern in the Flynns”™ driveway at 40 Ogden Ave. was Nassau County Executive Thomas R. Suozzi, chairman of the state Commission on Property Tax Relief appointed in January by former Gov. Eliot Spitzer.
Paterson”™s tax-cap proposal was the chief recommendation in the commission”™s recently released preliminary report. With the 4 percent cap in place, according to its proponents, the average homeowner in the Dobbs Ferry school district would have paid a total of $8,657 in property taxes in the 2007-2008 year, a savings of $2,235 from the average total of $10,892 without the cap.
“People like the Flynns just can”™t take this anymore,” Suozzi said. With local taxes in the state 79 percent above the national average, “It”™s not just a local problem. It”™s a systemic, statewide problem.”
Paterson noted that 28 percent of college graduates in New York leave the state. “People are voting with their feet,” he said, and worried that middle-class couples like the Flynns would join that exodus to states with lighter tax burdens. Labor unions opposing the cap should realize “that businesses are leaving the state because they don”™t have any way to conduct their business because even the taxes on them are too high,” Paterson said.
The governor”™s host, Bill Flynn, said he liked “the idea of a cap because it instills discipline in the system.” But he warned that unfunded state education mandates put pressure on a spending cap for a local school district.
Flynn said Paterson assured him the cap would not degrade the quality of education. Opponents last week argued the spending restrictions would do just that, pointing to the example of educational decline in other cap-imposing states such as Massachusetts ”“ the same state that Suozzi said ranks first in the nation in student test scores while dropping to 33rd among states in property tax levels since imposing a school tax cap.
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The governor”™s proposal, unlike the commission”™s recommendation, gives school district residents the right to vote every year on a school budget even if the levy increase is less than 4 percent. As recommended by the commission, it requires at least 55 percent of voters to approve any tax levy over the cap, and a 60 percent voting majority if the over-cap school district receives a state aid increase of 5 percent or more. Any unused portion of the levy cap may be “banked” by a district and used in future years at a rate not exceeding 1.5 percent of the prior year”™s levy.
Those local allowances, however, failed to win grassroots support for the governor”™s proposal last week at a tax-relief forum in Putnam Valley sponsored by Assemblywoman Sandy Galef, D-Ossining. Galef, sponsor of an Assembly bill that would set a state-funded “circuit breaker” on individual property tax payments based on household income, led the session with Suozzi.
The Suozzi-led commission supports Galef”™s circuit-breaker proposal as a replacement for the STAR rebate program for school taxpayers, which both Paterson and the commission said has been ineffective in controlling property tax growth. The commission recommended redirecting at least $2 billion from STAR to a circuit-breaker program once the school tax cap is in place.
“I didn”™t hear a lot of support” for the governor”™s proposal, Galef said. Among speakers at the forum, which included school board members, educators and homeowners, “I”™d say the majority had all kinds of concerns.”
“I generally support their goal,” Galef said of the governor”™s and commission”™s tax-relief proposal. But to persuade the state Assembly and Senate to vote for a cap, “We”™ve got to get some grassroots support out there,” she said. “It”™s going to be difficult.”
Galef suggested the spending cap could be tried and evaluated as a five-year pilot program. “But I do think when you have a cap, you have to do mandate reform” at the state level, as the commission also recommends.
Another member of Westchester”™s legislative delegation in Albany, Assemblyman Adam Bradley, D-White Plains, last week called the governor”™s hastily issued proposal “a knee-jerk political Band-Aid” applied to “a very complicated issue” that requires “thoughtful public-policy discussion and candor.” By setting a cap on school property taxes without making exemptions “for things that are totally above and beyond the control of a school district,” such as rising fuel costs, “all we”™re really doing is hurting children,” he said.
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“We”™re avoiding the real discussion, which is, what”™s the best way to pay for the things that we care about in New York state? Until we have that discussion, this is just politics,” Bradley said.
The assemblyman”™s views were shared by a coalition of parent-teacher, educators, school administrators, public employee and fiscal and educational citizen watchdog groups that last week joined in opposing the governor”™s “artificial” cap on school district spending while acknowledging the need for property tax relief.
Coalition members said the proposed cap would harm education programs and perpetuate the fiscal inequities and student achievement gap between low-income districts and affluent districts, where voters could more easily override the cap to invest in quality education.
Officials at Westchester County”™s largest business membership groups, The Business Council of Westchester and the Westchester County Association, supported the governor”™s and state commission”™s tax cap proposal.
“The Business Council really feels that the commission did a very good job and this is a very good start at containing” property taxes, said Business Council President and CEO Marsha Gordon. Businesses outside New York City pay $9 billion annually in property taxes, about 40 percent of the total tax levy, she said.
With the spending cap, “We”™re taking an important step toward growing the economy and growing jobs and making New York a more business-friendly state,” she said.
Paul J. Vitale, Business Council vice president for government and community relations, said the 4 percent cap provides tax relief to businesses that is not available through the STAR rebate program, which applies only to residential properties. “It recognizes that it (the state”™s property-tax trend) is unsustainable and that businesses share in the relief,” he said.
Westchester County Association President William M. Mooney Jr. called the tax cap “an important first step to help alleviate Westchester”™s property tax burden, which ranks among the nation”™s three highest.” A WCA commission last year warned that burden threatens the county”™s ability to attract and retain businesses and poses an economic threat that needs to be immediately addressed.
The WCA Property Tax Reform Alliance last week backed the school tax cap as a “blunt instrument” for reform. The alliance also endorsed the state commission”™s recommendations for mandate reform and relief and a STAR circuit breaker once the cap is adopted.
“We”™re backing Suozzi”™s thing because it”™s real, it can get passed,” Mooney said of the proposed cap. “This is the first time in a long time we have something that people are beginning to agree on.”
To further reduce government spending and curb property taxes, the WCA backed these recent recommendations of another Spitzer creation, the state Commission on Local Government Efficiency and Competitiveness:
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- Require employee contributions for health insurance.
- Establish a new fifth tier for public employee pension benefits.
- Give BOCES an expanded role to consolidate back-office functions for school districts.
- Regional collective bargaining for school districts.
- Centralize assessing and tax collection at the county level.
- Hold all elections in November or on one date in May to improve transparency of special districts
Mooney said the state legislature should remain in session this summer to find solutions to what he called “one of the biggest crises this state has ever had in a long time.”
“People are upset. People are angry,”™”™ said Mooney, who heard that anger and worry at last week”™s Putnam Valley forum.
“I think it”™s a defining moment for us as a society in New York. “At some point, we”™ve got to help our neighbor.”
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The Westchester County Association will host a town forum at 6:30 p.m. Tuesday at 800 Westchester Ave. in Rye Brook to hear the public”™s views on property tax reform measures. The forum will be in the building auditorium.
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