Gov. David Paterson and Nassau County Executive Thomas Suozzi made a colorful and effective tag team Tuesday morning in airing the work of Suozzi’s New York State Commission on Property Tax Relief and making the case for its controversial and bold central recommendation: that the state should implement a property tax cap. The commission is proposing, and Paterson agrees, that annual growth in any school district’s property tax levy be capped at 4 percent, or 120 percent of the Consumer Price Index (CPI), whichever is less. Any new construction that results in an increase to the tax levy may be added to increase the capped amount, and any levy not used in one year may, according to the report, “be ‘banked,’ to be used in future years at a rate not exceeding 1 percent of the prior year’s levy.
“School districts that do not exceed the cap would no longer be required to submit their budgets for an annual vote,” recommends the commission. “If a school district wishes to exceed the cap, a positive vote by at least 55 percent of the voters would be required to override the cap. If a school district has received a 5 percent or greater increase in state aid, 60 percent of the voters would be required to override the cap. This 5 percent number is not intended to suggest that 5 percent growth in state aid is sufficient for high need districts.” The proposal is loosely patterned on “Proposition 2,” a tax cap that since it was implemented in 1980 has brought Massachusetts from being third in the nation in property taxes to 33rd, and reduced the per capita residential property tax levy by1.6 percent, after adjusting for inflation
Despite a slight verbal tendency toward malapropisms and spoonerisms and, under the circumstances, an unfortunate penchant for omitting the word “cap” in many sentences containing the critical phrase “property tax cap,” Gov. Paterson did a yeoman’s job in lighting a fire under the proposal and serving as a down-to-earth, almost comic foil to Suozzi’s stern, no-nonsense taskmaster. After bemoaning the fact that, due to skyrocketing property taxes and their crushing effect, upstate burgs are losing their youth to places like “Rena, Nevado,” Paterson forged ahead in challenging the fractious state Senate and Assembly to consider and hopefully approve the recommendation, posthaste.
“We will have the bill to the legislature this week; we’d like to pass the bill this session,” said Paterson, responding to speculation that any action is sure to die in what little time is left before the legislative session adjourns for the summer. “We’re very aware that June the 3rd is 20 days before the scheduled end of the session. … Well, we can pass this bill before the end of the session … because everyone has been aware of this problem and has been probably burdened with this information for the last three years.”
Still, there’s an obvious stylistic difference between this governor and the last. This one thinks more can be gained with a spoonful of sugar than a kick in the groin. “If we don’t, that’s not going to be a source of acrimony,” he said. “But I am willing to address this problem in the next few months, and am willing to call the legislature back if necessary to do so. And the reason is, because our residents … are crying out from all corners of this state for support and for assistance.”
While differences of opinion among legislators are a reasonable part of the process, added Paterson, “I am not going to tolerate inaction. We have got to address these problems and address them now. We can’t just go home and pretend it doesn’t exist or try to refinance it as we’ve done in the past.”
STAR circuit-breaker, etc.
It was left to Suozzi to explain the other, less controversial recommendations of the report, including the implementation of a “circuit-breaker” in the STAR program to alleviate the effects of high property taxes on fixed- and lower-income property owners, and on making changes in state law regarding mandates.
“We purposely did not describe the details of a circuit-breaker program,” said Suozzi. “There are a lot of bills that are out there now that have different proposals in the legislature. What we’ve said very clearly is that based on our analysis, much of what we’ve heard from academics, much of what we’ve heard from policy institutes, much of what we’ve heard from the governor himself over the course of the past month, is that the STAR program has not worked because of a couple of different reasons. Number one, we haven’t seen any decrease in our property taxes. We haven’t seen real property tax relief; we’ve actually seen increases in our property taxes over the past years since the STAR program was started.
“Secondly, the STAR program is targeted towards individual school districts, not targeted towards individual taxpayers,” said Suozzi. “So what happens, and I know this from my own personal experience of being an elected official on Long Island, is that the STAR relief will be given to a particular school district, and the people in the school district will get the same benefit. But two people in the same school district – one person may have the income that makes them able to pay their property taxes, and the other person may not have the income. They can’t afford to pay their property taxes, yet they get the same STAR benefit, regardless of their ability to pay.”
Even on relatively upscale Long Island, he said, some people on limited or fixed incomes might make only $30,000 to $60,000 a year, “yet their property taxes are $8,000 and $9,000 a year; they’re paying well over 10 or 15 percent, in some cases 20 percent of their income in property taxes. So the idea of a circuit-breaker is to target to people based on their ability to pay, based on their incomes as opposed to targeting it towards a school district as a whole.”
The commission recommended that, only after implementing the property tax cap, the state redirect “at least $2 billion from the ineffective STAR program to a more effective circuit-breaker.”
“The property tax cap is either to take immediate action to stop the high fever or stop the bleeding, whatever you want to call it,” said Suozzi. “The circuit-breaker treats other symptoms related to the problem. But if you really want to treat the cause of the disease in the first place, you need to do the mandate reform as well.”
The commission report recommended that the state get behind school districts’ efforts to “rein in the costs of salaries, pensions and health care, as well as general operating and capital expenses by changing state law,” and offered three categories of proposed solutions:
• “No new legislative mandates without a complete accounting of the fiscal impact on local governments, which must include full documentation, local government input and proposed revenue sources to fund the new mandates.
• “No new regulatory mandates from the state Education Department without a complete accounting of the fiscal impacts on local governments, which must include full documentation, local government input, and proposed revenue sources to fund the new mandates.
• “Mandate accountability through an annual report from the Office of the State Comptroller, which should include the cumulative cost to localities of complying with all new regulatory and legislative mandates.
• “Amend the Triborough provision of the Taylor Law to exclude teacher step and lane increments from continuation until new contracts are negotiated.
• “Centralize and streamline school district reporting.
• “Create a commission task force on other state mandates to research other reforms between now and the commission’s final report (December 1, 2008).”
Criticism from all sides
On the one side, teacher’s unions and hard-pressed school districts are expected to fight the proposal tooth and nail. The New York State United Teachers (NYSUT ) union, while acknowledging the need for property tax relief, responded that a property tax cap would “harm public education” and “is the wrong approach to alleviating the unfair burden placed on some homeowners.”
“We are committed to finding a fair way of relieving the property tax burden,” said NYSUT’s president, Richard C. Iannuzzi. “But an arbitrary cap that fails to take into consideration rising costs beyond the control of school districts is a blunt instrument that would damage education and efforts to create equity for all children. We know full well that poorer districts would never be able to muster the votes to spend more than a cap, only widening the achievement gap for children of color and for children who live in poverty.” And, while acknowledging that cost-savings proposals should always be seriously considered, NYSUT executive vice president Alan Lubin chimed in that “some of the commission’s other recommendations are an attempt to resuscitate every bad idea ever floated – and already rejected – in Albany.”
From another perspective, early criticism has circulated stating that the commission did not go far enough. “The realities laid out in the report point ineluctably toward full state funding of a basic quality education – a policy that I have long advocated – as the one equitable solution to this crisis,” stated Assemblyman Kevin Cahill on Tuesday. “However, the commission has fallen short by opting to advance a soft local levy cap. If enacted on its own, this proposal will lock us into this regressive system, limiting future increases to a cost-of-living index. The report has missed a great opportunity to call for the reversal and gradual elimination of school property taxes in favor of a progressive education income surcharge as proposed in my legislation (A.4746), which is also co-sponsored by 19 Assembly members, both Democrat and Republican, from all over New York.”
The New York State Property Tax Reform Coalition took umbrage with the commission’s demurral on swift action to enact the Galef-Little Middle Income Circuit Breaker bill, which, it stated in a press release, “is urgently needed by tens of thousands of moderate income homeowners who are paying as much as 30 percent and more of their income in property tax on their homes. They receive little meaningful help from STAR and are arguably at greatest risk of being forced from their homes. As the commission points out, the STAR formula is flawed by its failure to consider the relationship between one's income and one’s tax bill, which is why the commission itself recommends a circuit-breaker to replace a portion of STAR, and makes reference to the Galef-Little bill.”
Midlife convert
Paterson is trying to set the property tax cap above and apart from other education issues, such as eliminating and reducing mandates, dealing with pensions, regulating expenditures and addressing quality-of-education issues that bedevil a divided legislature. “What we’re trying to do as much as implement a property tax (cap) is to force a discussion where we find some workable, sensible and achievable ways to change the conditions for people all around the state,” said Paterson. “And in discussing some of these issues, I see a paralysis coming over us. Because we’ve sat here for a number of years watching this situation get out of hand, and in my opinion, have not addressed it. And what was it that was keeping us from addressing it? Probably fear. Fear, because there are some well-heeled points of view on these issues, maybe even hardened points of view on all sides. We’re going to have to do better than that. We’re going to have to work together, we’re going to have to debate these issues, we’re going to have to give in areas we never thought we would give. I don’t think I ever believed I would support a property tax cap three or four years ago. What got me there wasn’t as much a change in ideology, as much as my better understanding the plight of people who lived further away from me than I thought.
“I don’t think I really started to understand the property tax cap issue until I became the minority leader of the Senate and traveled around the state more,” continued Paterson. “And I would recommend my colleagues to go to places like Utica … Rome … Messina, … Buffalo, Tonawanda. You talk to people there, and it’s so frustrating to them … it’s mind-boggling how difficult this problem is. The governor (Eliot Spitzer) at the time did talk about a property tax cap. We all thought that a STAR program that would help those in most need would suffice; we were wrong.”
The downstate strategy
Suozzi, who challenged Spitzer for the Democratic Party nomination in 2006 and harbors presidential aspirations, was given the job of chairing the Commission on Property Tax Relief by Spitzer himself, in what at the time was considered one of the few politically astute moves in an otherwise disastrous tenure. The Nassau exec indeed cut a passionate, well-informed figure with a pet – and largely bipartisan – issue to sink his teeth into.
“It is exactly those school districts where there is low wealth and high need and low property tax bases that we are seeing very clearly there needs to be solutions to the problems that exist,” said Suozzi, addressing the presumed opposition to the proposed measure.
“The governor, the legislature, have demonstrated a real understanding of that issue with the investment that they’ve made in education over the past couple of years. And we’d all like to see more investment in education, consistent with the four-year plan. But there are very real fiscal crises that exist in our state, as well as our country, related to the economy. That’s something the governor and the legislature are going to have to deal with. But regardless of what happens, the answer cannot be to keep raising those people’s property taxes. It is unfair, it is unsustainable, and it is regressive.”
A lot of assembly members are from New York City, where property taxes are not a problem, a situation that Suozzi tackled as well. “New York City elected officials should also care, because the number-one issue in New York City for many years has been educational quality,” said Suozzi. “Voters outside of New York City never even get to the educational quality issue, because they’re blinded by their rage related to school taxes. If we can redirect voter anger outside of the city from property taxes and instead have their attention focused again – where I think people normally and naturally would be – towards educational quality, then it’ll benefit New York City residents, as well as residents outside of the city who are concerned about educational quality. In addition, any mandate relief that happens outside of the city, will happen in the city as well because the same laws apply to both areas.”
Paterson also had the chance to expound on this theme: “New York City had a unique set of circumstances 30 years ago, and people upstate, who probably didn’t understand the problem as well as those of us in New York City, pitched in and helped us out,” said Paterson. “Now it’s time to recognize – those of us who hail from New York City – that there are regions of our state that are struggling for survival. We have studied this problem ad nauseam. And yet, our neighbors to the north continue to see their neighborhoods twisted and wasted, our children are growing up and moving out of state at the first chance of any opportunity, and our adult population has not experienced any assistance from government other than STAR in the last decade. We’d like to change that.”
Paterson, even while advocating for the tax cap, held that the state would not let its children falter educationally. “We are putting a proposal out that we are very sure is going to decrease the property tax situation in this state,” he said. “If it causes the ancillary problems, we’re still here. We’re a government that cares about the constituency, and we will come back and address those issues. But for right now, this is our plan. If somebody has a better plan, we’d like them to bring it out. We have increased state aid to education in record numbers in each of the last two years. I’m not going to allow children who are looking for an education to not receive it because of a lack of funding. If that actually became the case, as I said, we would address it.”
Carrot first, stick later
Paterson also resisted any attempts to paint his role as that of a strong-arm practitioner like his predecessor. “I would think that if (holding the line on property taxes) is a high enough priority, it should be shared not only by me, but by other members of the legislature. And horse-trading, and hoodwinking, and cajoling and threatening – that’s not going to be as helpful as it would be if duly elected officials by the people of this state come to grips with the magnitude of this problem.
“Trying to put them on the spot … trying to coerce them by dropping legislation on them at the last minute, has been tried before,” said Paterson. “How did all that work out? What I’m saying is, if the legislature takes a while in debating this bill, who can blame them? But I will remind them – and so should all of us – that we’ve known about this problem for years, that this proposal is in the legislature right now. What we need to do is act. I’ll take the legislature coming to their own conclusion and presenting it to me, I’ll take one-house bills, I’ll take press conferences. But what I want to see is an acting legislature. As long as I see that, we’ll get somewhere.
“And the date that we set doesn’t necessarily have to be before or after the election; we’re not having a political conversation here,” said the governor in response to a TV newshound’s challenge. “This is not a game. We’ve got so many people leaving this state, there won’t be any people around to watch Channel 10. … No, I’m not throwing in the towel. What I’m giving up is a political discussion. You don’t know what my leverage is, Fred, you’ve only seen the first act. You haven’t seen the grand finale.”