TAX NEWS - 2010

Meaningful property tax reform

For years, state officials have flat-out failed in their attempts to deliver meaningful property tax reform, and the prospects are particularly dim this year.

Considering the state is now facing a $9 billion deficit, New Yorkers should be skeptical of any plans to help beleaguered homeowners saddled with high property taxes.

The state is first going to have to dig itself out of its considerable financial hole, but that doesn't mean property tax relief should be ignored indefinitely.

It simply must be addressed.

State lawmakers are armed with all sorts of reports and ideas about how to reduce property taxes. A commission established by former Gov. Eliot Spitzer provided a reasonable road map to bring about such reform.

For starters, it recommended the state cap the growth of property taxes at 4 percent a year, or 120 percent of the annual increase in the consumer price index, whichever is lower.

It also touted another provocative idea — having the state implement a "circuit breaker" that would at least provide some homeowners a rebate if their property tax bill is more than a certain percentage of their income.

A circuit breaker, while not the perfect solution, would get to a vexing problem by tweaking the tax structure based on a person's ability to pay. This would be particularly helpful to seniors on fixed incomes.

A recent study by the Journal's Albany bureau showed that school taxes are taking the biggest bite out of property owners, and this, too, has to be addressed. In fact, two-thirds of all property taxes in Dutchess County go to fund public schools, one of the highest percentages among New York counties.

"No other form of property taxes — county, city, town, village or fire district — comes close to affecting the wallets of local businesses and homeowners as schools," the report noted.

The state tax-relief commission didn't just outline ways to pay for schools — it also sharply suggested the state consolidate school districts that have fewer than 1,000 students. And it noted that the cost of special education programs has been rising greatly, and education officials must find a way to overhaul how those services are delivered.

What's more, the state and school districts have to keep taxpayers clearly in mind when negotiating teacher and other union contracts.

About three-quarters of a school district's budget goes toward salaries and benefits, and neither the state nor the districts have been aggressive enough in keeping spending down. In fact, before the economic downturn, many districts raised property taxes by twice the rate of inflation annually, despite getting substantial sums of state aid.

New thinking is in order. And both the state and school districts are responsible for bringing about those changes.