New York Tax: Detractors weigh in on school property tax cap

By Cara Matthews and Meaghan M. McDermott, 30 May 2010 - ALBANY — With New York consistently topping lists of the highest-taxed states in the nation, legislators are looking at a tax cap to help corral school property taxes, which represent about 60 percent of tax levies collected across the state.

They're looking to the east, toward Massachusetts, and are favoring the path that state embarked on 30 years ago when voters approved capping annual property-tax increases at 2.5 percent.

With New York's voters earlier this month approving 92 percent of school district budgets, school taxes are primed to rise an average of slightly more than 3 percent for the 2010-11 school year. In Monroe County, that increase averages about 2.4 percent, despite schools losing an estimated $62 million in state aid next year as Gov. David Paterson attempts to close a $9.2 billion budget gap.

New Yorkers pay property tax bills that are 79 percent higher than the national average, a 2008 state report found.

Nine counties and New York City exceeded the average for school property taxes as a percentage of the total tax levy collected. Monroe County was slightly under the average, at 58 percent.

"I think that if there's overwhelming support for a property tax cap, there's also a great deal of resistance to it," said E.J. McMahon, executive director of the conservative Empire Center for New York State Policy.

The pressure from property taxpayers who believe they are stretched to the limit "is never going to go away until they finally do something," he said of state lawmakers.

The consensus among homeowners, advocates and policymakers is something has to be done, but there is disagreement on what the best and fairest way would be to provide relief. Republican lawmakers, the Empire Center and other right-leaning groups, along with Paterson, a Democrat, say the way to control property-tax growth is through a cap.

Organized labor and school advocacy groups oppose a cap, saying it would lead to a loss of educational programs and jobs if the state pulled back on funding, as is currently being proposed, and local spending could only increase by a fixed amount.

They said districts could be forced to make cuts to accommodate the rapid growth in the cost of health insurance, special education, pensions and fuel.

"We're talking about the disintegration of educational services as we know them," said Ron Deutsch, executive director of New Yorkers for Fiscal Fairness.

Caps are "more of a gimmick than a fix to a situation," said Deutsch, whose group favors a circuit-breaker system, in which property taxes are limited based on income.

Jody Siegle, executive director of the Monroe County School Boards Association, said a tax cap would be "a disaster for public education" if lawmakers don't also do away with unfunded mandates, such as pension contributions, restrictive labor laws and unfunded special education and assessment test requirements.

"Property taxes have been pushed up year after year because of increasing mandates, and a more meaningful and effective change to make would be to address the prescriptive mandates that don't improve education and keep adding to the operating costs of school districts," said Siegle.

Such a cap would have been catastrophic for the Greece Central School District this year, said Superintendent Steve Achramovitch. The $195 million budget proposal that voters in his district shot down earlier this month came with a 7.6 percent increase in the tax levy, despite keeping spending level with this year.

The district is laying off staff, increasing class sizes, cutting some sports teams and won't offer busing for prekindergarten students or summer school. The district's Board of Education is expected to pass a contingency budget in June that reduces spending to $193.3 million yet still increases taxes by 4 percent.

Much of the increase is driven by Paterson's plan to strip Greece of more than $8.8 million in state aid.

"We have increasing costs that are not driven by district decisions," said Achramovitch. "And if you're going to have a property tax cap, we're going to have to have a relief mechanism as well."

Frank Mauro, head of the labor-backed Fiscal Policy Institute, said a cap would perpetuate current funding inequities among school districts.

Current proposals to limit property-tax growth are modeled on Massachusetts' tax cap, which applies to all municipal and school property taxes. New Jersey Gov. Chris Christie recently called for his state to tighten its cap and adopt a law similar to Massachusetts'.

Under Massachusetts' proposition 2-1/2, voters can override the cap or reduce the community's taxing authority, according to the Massachusetts Municipal Association. Municipalities can't tax more than 2.5 percent of the cash value of all taxable property.

The cap excludes property-tax revenue that a community raises for specific projects and new growth.

The cap wouldn't apply to the Big Five city school districts — New York City, Rochester, Yonkers, Buffalo and Syracuse.