Monday, February 14, 2011

The Tax Cap is one of the most debated topics as of late here in NYS. Some believe it’s the devil incarnate others believe it’s a necessary good start. Let’s dissect both sides to the controversial tax cap keeping in mind the following facts:

NYS’s local taxes are the highest in America – 79% above the national average; school property taxes comprise, on average, 63 percent of homeowners' property taxes; Property tax levies are rising at more than twice the rate of inflation and salary growth; and countless businesses, our family, friends and neighbors have become ex-New Yorkers.
As citizens our main goal should be getting our legislators into rehab for their spending problem.  
There’s 3 viewpoints out there:  
“New York State residents receive some of the highest property tax bills in the country, and our residents are demanding property tax relief now,” said Senator John A. DeFrancisco (R-C-I, Syracuse), the Chairman of the Senate Finance Committee. He went on to say that. “The property tax cap is necessary as are other policies that get to the root of the problem, which is overspending by the state of New York.”
So, viewpoint 1 finds that a tax cap is necessary if we seriously expect our elected officials to begin dealing with the state’s fiscal issues, brought on by declining revenues and ever-increasing spending. NY businesses have united under the Committee to Save New York in support of the property tax cap finding it a necessity to advance NY’s competitiveness.

Viewpoint 2: Our legislators love passing laws without giving locals the money to pay for them. Special Education for example is more than $24,000 per student (which is far more expensive here than in any other state) but we have 257 additional requirements on the books which cost our local districts more money. Needless to say it’s understandable that the NYS School Boards Association is against the tax cap because they know if they try to recoup the needed money in their public voted on school budgets, the budgets will fail. So, in the end they will have to either cut programs or cut teachers…. Or will they?

FACT: New York has driven away many private sector jobs through their anti business policies and favorable union policies. The unaffordable pensions are a main culprit. Many are touting how a tax cap will hurt our school districts. The truth is, it will force school districts to deal with their escalating problem of union salaries, medical costs, and pensions as well as the inflated salaries of their Superintendents. I have a problem viewing this as a negative.

EXAMPLE of Tax Cap in use: Massachusetts has worked well for some 30 years because the government was forced to live within their means using a tax cap. Massachusetts was known as Taxachusetts when its voters in 1980 approved a proposition to limit tax levies to 2.5 percent growth each year. Since the limit took effect, per capita residential and commercial real estate taxes have gone up 23 percent there when adjusted for inflation. In New York, they have gone up 53 percent, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. Further The Massachusetts cap also appears to have sparked fire agencies and school districts to merge, and assorted local governments to consolidate or share services.

There’s also a viewpoint 3: A circuit breaker which isn’t a tax relief but a higher taxes for some people to provide a bigger refund for others. I’ll refer to this as redistribution of wealth. The Omnibus Consortium is a statewide group that is urging a circuit breaker. The members of this Consortium are advocates for property tax reform, fiscal responsibility and affordable housing. In short the circuit breaker is not property tax reform, it’s relief for certain individuals and tax increase for others. Governor Cuomo weighed in on the Senate Democrats’ proposal of a circuit breaker. The governor says he favors a straight tax cap that helps everyone, regardless of their income level.

In the end NYS’s rate of spending is unsustainable. Albany has acted in the manner of the proverbial ‘drunken sailor’ and to keep NY afloat and encourage businesses back here at this point in time, sadly a tax decrease isn’t realistically feasible. Albany must learn the tough love lessons of living within its means as you and I have.

I don’t pretend to know the correct viable solution, I only did some research. Regardless of which viewpoint you side with, the fact remains that if a cap is agreed to it must be in combination with true mandate reform.  A reduction of state mandates will be an across the board savings for all of us, including school districts.

Truth is not subjective and Facts do not lie– we cannot afford to do nothing- we must confront our problem. We’d all love a tax decrease but the odds are not in our favor. Therefore if we must go with the tax cap we must demand it accompanies meaningful reform, if that is, New York is serious about getting our state back on track.