Homeowners could see their tax bills effectively remain flat over the next two years through a proposed tax rebate program, which strengthens the state mandated tax cap on local lawmakers by making exceeding it more than just a political cost.
Gov. Andrew Cuomo announced details of a $2 billion tax relief proposal two days before his State of the State address on Wednesday, Jan. 8. The proposals, developed through work of the state Tax Reform and Fairness Commission and the state Tax Relief Commission, aim to reduce taxes and spur economic development, with homeowners benefiting directly from some initiatives. Freezing property taxes for two years is touted to provide almost $1 billion in relief, with the projected cumulative average of $350 per homeowner.
“The main tax burden in New York State is not the income tax; it is the property tax,” Cuomo said during his address. “We raise about $40 billion per year from the income tax and we raise $50 billion from the property tax. And that is the tax you will hear New Yorkers complaining about from one end of the state to the other.”
To help homeowners, the Pataki-McCall Commission recommended freezing property taxes for two years, but tied it to local governments, including school districts, adhering to the tax cap. Local town and village boards have been able to simply override the tax cap through a 3-2 majority, even as schools have had to face a supermajority of voter approval for any budget over the imposed limit.
The governor’s proposed two-year property tax freeze hinges on two conditions, with a rebate being offered to offset any increase in taxes that falls within the guidelines.
During the first year, the state will only provide tax rebate for homeowners living in a jurisdiction staying within the tax cap. For the second year, the tax cap must not be exceeded, and local leaders must agree to implement a shared services or administrative consolidation plan. Both years, local leaders and school districts would need to meet requirements, or the rebate would be lost.
Albany County Executive Dan McCoy said Cuomo is “putting the pressure on” local governments to stay within the cap. McCoy said the tax cap has made county officials “look at things differently” and “think outside of the box.”
This was the first year the county passed a budget within the tax cap, while local towns have been adhering to the requirement.
Guilderland Town Supervisor Ken Runion said the town has “never had any inability to meet the tax cap,” but the relief proposal could spur other municipalities skirting the imposed limit.
“This may be a method to get those municipalities that are not able to meet the tax cap a greater incentive to do so,” Runion said. “The impact is going to be more with the school district, because we have always been below the tax cap in the entire time I have been town supervisor.”
Bethlehem Town Supervisor John Clarkson also believes the town will not have a problem staying within the tax cap.
“We have always been within the cap,” Clarkson said.
Colonie Town Supervisor Paula Mahan said staying within the cap has been a challenge, but the town has not exceeded it since implementation.
“We will endeavor to abide by the tax cap for the next two years and explore opportunities for the consolidation of services,” Mahan said. “As we move forward, it will be important to recognize the need for mandate relief for all local governments.”
Runion also said further state mandate relief is needed to help local leaders adhere to the cap.
“Part of the problem with meeting the tax cap is the mandates,” Runion said. “Those are the things that are really driving local budgets, and I don’t know whether they have done a really close analysis of those costs and what is being passed down to us.”
McCoy said there are 43 unfunded mandates the county faces, which he hopes to see capped at the state level.
Clarkson agreed he would like to see more progress made on mandate relief, but said it’s more of an issue for counties and schools. He also would like to see more help from the state in regards to the second-year rebate requirement of consolidation.
“I would like to see more assistance from the state on technical issues related to consolidation of services,” Clarkson said. “Each change we make is very complicated legally … and it would be nice to have more state assistance and support of things of that nature.”
Cuomo though said the state has been “very aggressive” in trying to reduce the burden on local governments.
“We have assumed more local costs than the state government has ever done in modern political history,” Cuomo said. “We assumed a $1.2 billion cost of the Medicaid growth. We are funding $700 million in aid to localities, the Tier VI pension reforms makes a major difference for local governments.”
Cuomo told local leaders “it is time to stop making excuses” and start making progress, which is why the tax rebate is tied to staying within the tax cap, along with pursuing shared services and consolidation.
Cuomo also blamed the “proliferation of local government that is exceedingly expensive and costly” for burdening taxpayers, but Runion scoffed at the implication.
Runion said he took “proliferation of local government” to mean new facets being added on yearly basis.
“New government, I don’t know of a new government being formed in Albany County in over 100 years,” Runion said. “What we have now is what we had years and years ago. We have added a lot of services and those services are what the public has requested due to increasing populations.”
As far as how many government bodies are established, Runion said it was difficult for him to address “because it is a structure that has been in existence for hundreds of years.”
McCoy said consolidating government can be a touchy issue for residents, and local leaders need to better educate and explain to people why certain options are being pursued.
“I think the fear of losing one’s identity in a village, town or city … affects a lot of people,” McCoy said. “If they don’t want to do (consolidation) then taxes may go up. … At the end of the day it is about them.”