Flush from his budget victory that closes a $10-billion deficit, institutes key governmental operations reforms and consolidations, and caps education and Medicaid spending increases, Gov. Andrew Cuomo is now setting his sights on property tax and mandate relief reform.
While the business community here and across the state is cheering on the governor, political observers expect local government and organized labor interests to battle over some reform measures being discussed in Albany. In fact, the Cuomo administration and state labor unions are negotiating how to cut state workforce costs by $450 million. If an agreement is not worked out, 9,800 workers could lose their jobs.
On March 31, Cuomo announced the state Legislature had passed the first on-time budget since 2006. The $132.5-billion budget, which the governor described as “historic” and “transformational,” reduces spending this fiscal year by more than 2 percent or $3.6 billion, eliminates 3,700 prison beds, creates Regional Economic Development Councils to foster business growth, and cuts next year”™s deficit from a projected $15 billion to $2 billion, all without any new taxes or new borrowing.
State and local business advocacy organizations were in unison in their praise for Cuomo, noting that the 2011-2012 state budget is the first in memory that actually reduces overall state spending. However, as days passed business groups began expressing disappointment that a promised 2 percent property tax cap was not part of the final budget, nor were a number of other key mandate relief reform measures they believe must be approved in order to get the state”™s fiscal house in order.
The state Senate has approved the 2 percent property tax cap bill introduced by Cuomo in January, but the Assembly has yet to take a vote on the measure.
Cuomo”™s plan, if enacted, would set the cap at the rate of inflation or 2 percent, whichever is less. The bill would prohibit any property tax levy above the cap unless endorsed by both the local governing board and a 60 percent majority of the voters during an election, and provide only limited exceptions such as extraordinary legal or capital expenditures.
Pension costs a big concern
As part of his push to reform Albany, Cuomo created a Mandate Relief Redesign Team, chaired his senior adviser Larry Schwartz. The team issued its first report on March 1 that indicated it will review mandate relief recommendations from its members that included prohibiting new unfunded mandates, requiring independent cost analysis of mandates and enforcing limits on unfunded mandates.
The team also discussed the need to reduce rapidly escalating pension costs. One recommendation calls for the creation of a Pension Tier 6, a new tier that would help municipalities and school districts address rapidly escalating pension costs by requiring eligible workers to pay higher benefit contributions.
William Mooney, president of the Westchester County Association, said the organization was pleased the governor and state legislative leaders came to an agreement on the budget on time. He said the budget is very encouraging for the state but he would like to see passage of the 2 percent property tax cap and mandate relief measures.
“We were not pleased on the mandate issues ”“ something has to be done about the pension funds,” said Mooney, who is a member of the Mandate Relief Redesign Team. “Pension funds are not sustainable over a prolonged period of time ”¦ If we don”™t do something about the pension funds from the mandate relief position, I think we will continue to have some serious problems.”
Mooney said the association is advocating for pension reform, increasing public employee health care contributions to offset rising health care costs and the repeal of the Triborough Amendment, which is a state law that allows unionized municipal workers to continue to work under the terms of an expired contract while a new agreement is being negotiated.
Marsha Gordon, president and CEO of The Business Council of Westchester, said the organization also was pleased with the state budget but believes the property tax cap should be enacted.
On mandate relief reform, Gordon said the preliminary report issued by the governor”™s Mandate Relief Redesign Team “did include some policy proposals and did have a new pension tier for public employees, but the Triborough Amendment was not addressed and most of the proposals were really in the abstract and did not get into specifics as it was hoped for.”
Impacts on schools, property taxes
Chuck Lesnick, president of the Westchester Municipal Officials Association, said, “We cannot have a property tax cap without mandate relief first.”
Lesnick, who is also president of the Yonkers City Council, later added, that “especially in the wake of the devastating budget cuts from the state” municipal officials are of the opinion that the budget simply shifted the funding responsibilities for education from the state to the municipalities. Without mandate relief, Lesnick said, “The actual effect of the state budget is to increase property taxes.”
He said the state budget cuts to education will drastically impact local school districts. In fact, Yonkers Mayor Phil Amicone and Superintendent of Yonkers Public Schools Bernard Pierorazio said the budget will cut more than $21 million in education funding to the city”™s school system this year and $40 million over the next two years. The city is facing a projected nearly $88-million budget gap for the Yonkers Public Schools. They warned that without further funding aid the city will have to lay off 700 teachers and staff, eliminate pre-kindergarten, cancel all athletic programs, reduce kindergarten to half-day and end free school transportation.
“The governor and the Legislature have taken the monkey off their backs and put it on ours,” Amicone said. “They are laying off comparatively few workers and they are not choosing which programs should be cut. Instead, they have punted on most of the tough choices, leaving local leaders with no choice but to cut hundreds of jobs, slash services and raise property taxes.”
Heather Briccetti, acting-president and CEO of The Business Council of New York State, said the organization strongly supports the 2 percent property tax cap. She added that to ensure solvency of local governments mandate relief has to follow.
However, she believes state legislators should enact the property tax cap before imposing mandate relief measures. “If they try and do it as one package it is going to be very difficult to get it done,” she said.
Briccetti later added, “We believe strongly that mandate relief has to happen, but I think the only way that you can accomplish mandate relief is by having the cap in place.”
She asserted that if legislators were to marry the property tax cap with some controversial mandate relief proposal, such as the repeal of the Triborough Amendment, for example, “nothing will happen.”
