Discuss the Property Tax Cap

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Erika RosenbergShouldn’t we at least talk about the notion of capping school property taxes?

A recent poll found 74% of New Yorkers think it’s a good idea. A commission appointed by our previous governor recommended it after several months of study and more than a dozen public meetings around the state.

And yet, the state Legislature is poised to adjourn for the year without seriously considering the idea. There were no legislative hearings on the commission’s report, and Gov. David Paterson couldn’t even get his bill to cap property taxes introduced in the Legislature.

Whether or not you think capping school property taxes is a good idea (full disclosure: I do), what does it say about our legislative process that an idea with such broad appeal addressing a problem that is clearly impacting on millions of New York residents isn’t taken seriously by our lawmakers?

Granted, the commission didn’t make public its preliminary report until June 3. That didn’t leave much time for the Legislature to act before its scheduled adjournment on June 23. And it’s obviously a complicated issue. We don’t want a seat-of-the-pants reaction.

However, that’s not an excuse for the Legislature to duck the issue entirely. There is no reason why in the coming months leaders can’t call lawmakers back into session for public hearings, committee meetings and eventually debates on the floors of both the Assembly and Senate on one or more bills written to address this pressing concern.

In fact, there’s an excellent reason for legislative leaders to do so: November elections. Every member of both houses is up for election.

The commission – the New York State Commission on Property Tax Relief (learn more at http://www.cptr.state.ny.us) — has given lawmakers plenty to think and talk about. Its 124-page preliminary report dissects the issue in a thoughtful way, looks at the experience of other states struggling with same issue, and makes more than a dozen suggestions in addition to calling for a property tax cap as its central recommendation.

As the commission reports, New York property taxes (excluding New York City) are 54 percent higher than the national average, viewed as a percentage of personal income. Even more striking, viewing property taxes as a percentage of home value, counties in Upstate New York claim 9 of the top 10 spots nationwide. In Erie, Monroe, Schenectady and other counties, we’re paying 2 to 3 percent of our home value every year in property taxes.

School taxes are driving this reality. They claim 62 cents of every property tax dollar collected outside of New York City. The next biggest chunk goes to counties: 17 cents.

We at the Center for Governmental Research examined this issue and other problems with the property tax by organizing a conference for policymakers in Albany in January 2007. We invited a representative from Americans for Tax Reform to present the case for a tax cap. She discussed her research showing that a tax cap in Massachusetts enacted in 1980 brought the state down from having the highest property taxes in the nation to the middle of the pack.

School groups are against this idea, as one would expect. And it’s no secret that they carry a lot of political weight in Albany, especially the 600,000-member New York State United Teachers union. NYSUT spent more than $2 million on lobbying (the second highest of any group) and more than $700,000 on campaign contributions in 2007, according to the New York Public Interest Research Group. 2007 was not a remarkable year – the union achieves this rank or something close to it every year. Among special interests in Albany, the teachers union is the holiest of holies.

The union and other opponents are making reasonable arguments against the tax cap, saying the results in Massachusetts wouldn’t necessarily hold true in New York and pointing out that the state does not fund schools as the same level as other states. New York pays about 43% of the overall school bill, less than the national average of 47%.

These issues aren’t getting a full hearing in Albany. Senate Majority Joseph Bruno is instead pushing an unrealistic proposal to eliminate school property taxes altogether, and Assembly Speaker Sheldon Silver is refusing to consider a cap unless it comes with guarantees that schools won’t suffer and that tax relief is targeted to low- and middle-income taxpayers.

A cynic might conclude that the power of special interests has shut down the conversation. But I’m not feeling cynical. I’m going to watch for those special sessions to be convened and for lawmakers to step up this summer and fall and take our problems seriously.

Erika Rosenberg, Senior Research Associate for CGR
Published in the Albany Times-Union June 20, 2008