The New York State Senate today passed historic property tax relief legislation that enacts a cap on the growth of local property taxes

by Casey Seiler

While that sounds like a terrible gastrointestinal problem, it actually went quite smoothly — the final vote was 57-5. It’s currently being debating in the Assembly.

Here’s the Senate Majority’s news release, which makes precious little mention of its rent control provisions:

The final The New York State Senate today passed historic property tax relief legislation that enacts a cap on the growth of local property taxes.

The bill (S.5856), sponsored by Senate Majority Leader Dean G. Skelos, will cap school and local government taxes to less than two percent or the Consumer Price Index (CPI), whichever is lower. Mandate relief is also included, with $127 million in savings to local governments, in addition to the creation of a Mandate Relief Council to identify and repeal unsound, unduly burdensome laws and regulations.

“Getting a property tax cap in place is critically important for every family that struggles to pay their taxes and for every business that wonders if it can afford to stay in New York,” Senator Skelos said. “Enactment of this bill into law will be a victory for homeowners who want to put a stop to skyrocketing property taxes. Senate Republicans have been fighting for years to get a tax cap enacted into law and this year, working with the Governor, we were able to get it done.”

This tax levy cap would shift the focus from total spending to the actual property taxes levied to support school district and local government expenses. The bill includes the following provisions:

• · This bill limits tax levy growth to the lesser of two percent or the annual increase in the CPI, other than the “Big 5” school districts of Buffalo, Rochester, Syracuse, Yonkers and New York City. Those are funded through city budgets.
• · The exceptions for a tax levy above two percent or CPI are funds needed to support voter-approved capital expenditures, pensions, torts over five percent of the prior year’s levy, and an override of the cap.
• · This bill also allows the growth in the levy due to physical and quantitative change.
• · A school district would be required to submit a tax levy proposition for approval by voters at the district’s annual meeting on the 3rd Tuesday in May. If the proposed tax levy is within the district’s tax levy limit, then a majority vote would be required for approval. If the proposed tax levy seeks to override the cap and exceeds the district’s tax levy cap, the threshold required for approval would be 60 percent of the vote.
• · A school district that does not levy an amount up to the cap in any one year would be allowed to carry over unused tax levy capacity into future years. However, this carryover levy capacity cannot be used to increase its tax levy by more than an additional 1.5 percent above the cap in any single year.
• · In the event a district’s actual tax levy exceeds its authorized levy due to clerical or technical errors, the erroneous excess levy must be placed in reserve to offset the levy for the next school year.

The bill also provides for the same cap to apply to taxes levied by municipal governments. Local governments that do not levy an amount up to the cap in one year can rollover that amount up to 1.5 percent in the following year. Local boards can exceed the cap with a 60 percent vote of the governing body. Exceptions include the pension and tort judgments in excess of five percent from the prior year’s levy. When enacted, the law would take effect for the 2012-13 fiscal year.

In addition, the mandate relief component would provide real cost savings in the form of $127 million in savings to local budgets. This includes:

• · $70 million for all local governments and school districts through piggy-backing and centralized contracts;
• · $34.6 million in savings for school districts;
• · $13 million for transportation/housing/contracting/procurement/administration for all localities;
• · $7.9 million in social services savings for counties; and
• · $1.5 million in criminal justice savings.

The establishes a Mandate Relief Council which will:

• · Determine if a statute or regulation is unsound, unduly burdensome, or costly;
• · Establish procedures for repealing unfunded mandates in both statute and regulation;
• · Provide a mechanism for direct appeals from the State Administrative Procedures Act petition;
• · Require the state Comptroller to issue a detailed report on the cost and effect of unfunded mandates;
• · Require that all bills that require a local government or a school or special district to take any action contain a fiscal note; and
• · Be comprised of 11 members nominated by the Governor and Legislature: two nominations for each of the legislative leaders, and seven nominations for the Governor, including the Secretary to the Governor (who would serve as chair), the Governor’s Counsel, Secretary of State, Director of the Division of Budget, and three additional members from the Governor’s executive chamber staff.

The bill will be sent to the Assembly.

Union’s last-minute push against tax cap (video added)

Gov. Andrew Cuomo’s 2 percent property tax cap is caught up in the standoff between the Assembly and Senate over rent control but some of the state’s major union leaders — NYSUT’s Dick Iannuzzi, AFL-CIO’s Denis Hughes, CSEA’s Danny Donohue and PEF’s Ken Brynien — just made a last minute plea against the cap, arguing once again that the governor should look at higher income taxes on the rich as a way to fund schools and municipal services.

“It’s a regressive tax,” Hughes said of property taxes, noting that a cap will do nothing to actually reduce those levies.

CSEA’s Danny Donohue, who two years ago famously suggested that then-Gov. David Paterson needed a psychiatrist or was on drugs, was again on his game comparing the tax cap to something that was concocted in a theme park.

“I understand that Disneyland is south of here but I think that Doc, Sleepy, Grumpy and Dopey may be running around the halls up here,” he said.

Update: Here’s video of the leaders’ appearance, courtesy Kyle Hughes of NYSNYS (click to play):

There IS a Better Way; New Yorkers Need Real Property Tax Relief Now, Why the Cuomo Tax Cap Won’t Help and What Will

by Bill Samuels

As a businessman I am keenly aware of the importance of keeping spending in line with revenue, so I understand that New York State’s deepening budget crisis requires swift and decisive action from Albany. But as a New Yorker, I want solutions that do not unfairly place the burden of Albany’s mess on local communities and families.

One of the most immediate and pressing challenges Governor Cuomo faces is curbing New York’s skyrocketing local property taxes, which have grown so unmanageable it is forcing families from their homes and businesses to shutter or relocate out of state.

Governor Cuomo, anticipating statewide budget shortfalls, wants to put a 2% property tax cap into effect to curb spending at the local level and keep property taxes stable.

A tax cap provides a great political sound bite and appeals to all taxpayers, but the truth is that those who need genuine tax relief are guaranteed no break at all under a tax cap.

There must be a better way.

We all want to help fund our local schools and government to make our communities the best possible place to live and work. Unfortunately, the problem of unsustainably high and oppressive property taxes is not a local one. It is largely a consequence of the enormous amount of mandated spending that is imposed on local communities in New York at the state level.

Local communities cannot run in deficit, which means that any cuts that have to be made to their budgets must be taken from non-mandated spending – such as schools, community centers, road maintenance, fire safety, and the police.

Richard Iannuzzi, President of the New York State United Teachers, publicly announced that his organization had determined that a 2% tax cap would result in an estimated $815 million deficit in the school system.

So if a tax cap won’t provide real property tax relief or help solve our budget problems, what will?

One idea I support, which is backed by a large and growing coalition of organizations including Property Tax Reform groups, affordable housing advocates, fiscal watchdogs like New Yorkers for Fiscal Fairness, and the BALCONY , the Business and Labor Coalition of New York is to provide real and immediate personal property tax relief by making property taxes proportional to household income. The concept is known as a property tax circuit breaker.

The property tax circuit breaker is designed to interrupt ballooning property taxes before they overload our communities by changing the way household property taxes are calculated and collected.

The most important function of the circuit breaker is to prevent rising property taxes from overloading any individual household by setting a maximum percentage of total household income that is subject to property taxes. Like the STAR program, a circuit breaker would be targeted to those whose taxes exceed a fair proportion of their income. This would provide immediate property tax relief to working families allowing them to stay in their homes or avoid moving out of state.

A property tax circuit breaker ensures that whatever a household owes in property tax, that amount is manageable and directly proportional to a household’s income.

A property tax circuit breaker is not about handing out charity or punishing wealth, it is simply a matter of sound fiscal policy. The idea enjoys support from a number of leaders from around New York’s business community.

According to Bruce Ventimiglia, President and CEO of Saratoga Capital Management and Business Co-Chair of the Business and Labor Coalition of New York, “Many businesses in New York that rely upon our State’s services, such as higher education, which provides a quality work force, stand ready to share the responsibility for keeping our State solvent.”

The meaning of ‘fair share’ in the case of the property tax circuit breaker is clear: every taxpayer’s burden should be proportional to their capacity to pay. This would not only eliminate the unfair burden on the working and middle class but provide a roadmap to significant sustainable income tax reform in the future.

The simplest solution to a problem is not always the most effective, and no decision can be made without sacrifice, but in the case of property tax relief, the answer is simple, effective, and just plain common sense.

Overburdened taxpayers with limited incomes need personal property tax relief now. And woe to the politician who supports this rhetorically popular but ill-conceived tax cap when their constituents open their next tax bill and find no relief.

Bill Samuels is Chairman of the Carlyle Capital Group LLC and a member of BALCONY, The Business and Labor Coalition of New York.

Property Tax Ploy

Late Friday, Gov. Andrew Cuomo of New York sent a radical bill to cap property taxes to the State Senate. It would devastate school districts in the state. The bill, which exempts New York City, was passed by the Senate on Monday.

But Democrats in the Assembly are rightly startled by a provision that would require a 60 percent majority vote for local property tax increases that exceed 2 percent. That would give people who oppose school spending more voting power than people who support it. It would also leave struggling school districts with no increase if voters rejected an increase twice within a given year.

The bill would also do away with the traditional school budget vote and require districts to simply ask voters to support a tax increase. That would make new school financing virtually impossible in many of the poorest communities. Unlike New Jersey’s tax cap, this one does not have exemptions for health care, pensions, debt service or increased enrollment. Mr. Cuomo has said he wants to change state law to lift these onerous and costly requirements for local districts. That should come first.

The governor’s motives for bringing out this bill now are unclear. Does he want political points for introducing a tough bill that can never go anywhere? If so, that is one of the oldest ploys in Albany and certainly at odds with Mr. Cuomo’s promise of a new New York.

Does he want to force Democrats in the Assembly to approve the bill after he and the Senate have given their approval. The Assembly speaker, Sheldon Silver, who can stall or block anything if he wants, should not be talking about compromise, as he has been. But, rather, he should block any Senate bill along these lines.

The entire charade fails to focus on the real hazards tucked in the 74-page bill. A property tax cap, by any standard, is a blunt instrument. It mainly squeezes poorer districts where schools lose teachers or advanced programs because voters reject a tax increase. Wealthier districts more often vote for property-tax increases to pay for better schools or other services, thus widening the gap between schools in poorer or richer areas.

Mr. Cuomo’s tax cap effort is a bad bill that promotes a bad idea. People do need property-tax relief but not another state law that makes matters worse.

New York City mayor: Don’t cap state property tax

by Joan Gralla

New York City Mayor Michael Bloomberg on Friday said he opposed the governor’s plan to cap property taxes because it was “undemocratic” and could require the city to pay for the extra costs that result.

Outside New York City, property taxes are the main way that counties, cities and towns raise money. If they can raise property taxes only 4 percent or less each year, the state likely will have to pay more of their budgets, and probably will siphon more of New York City’s tax dollars.

Bloomberg, an independent seeking a third term, on his weekly WOR radio show faulted some other cities for overpaying their workers, saying: “It’s going to become an obligation of the state, which means it’s going to become an obligation of the city.”

Every year New York City, whose economy powers the state, sends the state billions of dollars more in tax revenue than it gets back in aid.

Democratic Governor David Paterson says the property tax cap is needed to cut some of the nation’s highest rates which choke economic growth.

Also, banks’ wariness of real estate loans could lengthen the recession by imperiling job-creating construction projects.

A spokesman for the governor was not available for comment.

Bloomberg cited a range of problems with a plan to improve Manhattan’s Pennsylvania Station by moving its entrance a block west to the James A. Farley Post Office.

Not only were multiple levels of federal and state approvals needed but the design was too complicated.

“You’d have to go through so many twists and turns underground; nobody would want to use it because it would take so long to get down to the track,” Bloomberg said.

Any improvements for the overcrowded transit hub might be limited to just opening up space at Cablevision’s (CVC.N) Madison Square Garden, which sits on top of the station, he said.

Spokesmen for two developers that planned a massive complex around the new Pennsylvania Station, Vornado Realty Trust (VNO.N) and the Related Companies, were not available.

‘Circuit breaker’ plan for tax relief

by Bill Cowan

When looking back a few years, I found that my total property taxes have increased 6.5 percent in each of the past three years. My combined property taxes are now more than 20 percent higher than they were at the end of 2005.

I agree that we must fund local government and schools. But the core problem isn’t local – it is our regressive state income tax. Over the last 30 years, personal state income taxes on the wealthiest New Yorkers have been lowered steadily, until today the top rate is only 6.85 percent on all incomes over $40,000. The result: an estimated $8 billion annual loss in tax revenue. That loss has, in turn, forced local governments and school districts to assume a larger and larger share of public service costs. To pay for those services, local governments and schools have had to raise local property taxes to their present unconscionably high levels.

The Commission on Tax Relief proposes to cap local tax increases at 4 percent. Such a cap will neither reduce local taxes, nor address the real problem.

The state should adopt the Working Families Party proposal: a “circuit breaker” that would cap property taxes above a specified percentage of household income. Thus, a family with an adjusted gross household income of $25,000 to $100,000 might have a maximum property tax of 6 percent, or $1,500 to $6,000 a year. Any property taxes beyond that would be rebated as a credit against the family’s state income tax. Families with incomes from $100,000 to $150,000 might have a circuit breaker set at 7 percent, and so on.

Plan to freeze tax payments chills officials

Local representatives say taxpayers to suffer if revenues drop from state-owned land.

by Casey Seiler

More than a dozen representatives from town and county governments throughout the Adirondacks and Catskills gathered in Albany on Friday to speak out against Gov. David Paterson’s proposal to freeze the tax rate the state pays to communities where state-owned land makes up a major part of the tax base.

NYSUT praises Assembly for offering ‘real relief’ to New York families

ALBANY, N.Y. August 19, 2008 – New York State United Teachers today praised the Assembly for protecting public education and for helping senior citizens and working families by passing ‘circuit breaker’ legislation that would actually reduce property tax bills for those New Yorkers who need relief the most.

Circuit Breaker, Millionaire’s Tax – No Cap – Pass Assembly

As expected, the Democrat-controlled Assembly approved its answer to Gov. David Paterson’s property tax cap bill, which was a combination circuit breaker and millionaire’s tax.

The vote was 118-24, which means about half of the Assembly Republicans joined the Democrats in voting “yes.”

The millionaire’s tax in this case has two tiers – one for people earning $1 million and another for super-millionaires, those who earn $5 million or more…

Paterson Assailed Over Bill to Cap Property Tax Increases

By Jeremy W. Peters

ALBANY — He is not campaigning for office — at least not yet — but that has not immunized Gov. David A. Paterson against the political attack ad.

Starting on Tuesday, the left-leaning Working Families Party and the education advocacy group Alliance for Quality Education began broadcasting commercials in the state’s biggest television markets that assail the governor for his support of a cap in property tax increases.

(Watch the Commercial: Commercial [QuickTime] or Commercial [MPEG])