“We’re all keeping up with the Syossets. One school installs FieldTurf; now we’re all installing FieldTurf.” This comment, from a participant in a Long Island forum on school property taxes, holds more truth than we care to admit. The athletic facility improvements are the most obvious—but the same principle applies to class size, science labs, technology, even our approach to special education. Confronting a lawsuit on the funding of education in NYC, various groups tied themselves up in knots attempting to develop guidelines on “necessary” school spending. Studies aside, parents apply a relative standard—my kids deserve the same as the kids in the next district.
We can spend less and still provide our young people with an excellent education. In 2004-05, schools in Monroe County’s suburbs spent 8% more per student than those in Erie County’s suburbs—34% more on special education, 27% more on central administration, 21% more on fringe benefits, and 6% more on general instruction (where most of the money is, of course). I don’t think that the evidence suggests that children in the Buffalo suburbs are getting an inferior education.
Is cutting taxes important? That depends on who you ask. Property taxes influence business location decisions on the margin. And they influence personal relocation decisions: When recruiting talent from other states, we like to highlight our affordable housing. That only works until the candidate figures out that what she doesn’t spend on her mortgage, she’ll pay in taxes.
The combined state and local tax burden per capita in the State of New York is extraordinary. The Tax Foundation reports that New York is now in second place, just behind New Jersey. As state taxes per capita fall in the middle of the pack, that must mean that our local taxes are unusually high (they are).
A cap on school property taxes will be a major point of discussion at the special session of the Legislature starting Tuesday. That the cap is supported Upstate and Downstate is testimony to the breadth of the problem. Using Census data, the Tax Foundation reports that 14 of the 17 most highly taxed counties in the nation were in Upstate New York in 2005. Topping the list for the nation is neighboring Wayne County with Monroe County in third place. This uses one measure of tax burden—property tax as a share of property value, which is partly a reflection of a lackluster real estate market (which is also related to the tax burden). We don’t have the third lowest prices in the nation, however. Monroe County’s median property value is ranked 238 of 783 counties.
Downstate’s problem is, in some respects, even worse. While Downstate counties may boast higher property values, taxes are also higher—much higher. Ranked by share of median income spent on property taxes, New York counties capture 5 of the top 11 spots. Long Island taxes are particularly troublesome. Nassau County was third in the nation and Suffolk County was 8th in 2005. No wonder Nassau County’s Tom Suozzi was named to chair a commission that recommended capping school property tax growth. Median property taxes in Nassau County were over twice those in Monroe in 2006. Median incomes in Nassau County were only 57% higher.
This problem is more complex than the tax cap can fix. But it is a good first step.
Kent Gardner, Ph.D. President & Chief Economist
Published in the Democrat & Chronicle August 18, 2008