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Supporters Of Tax Cap Push To Make It Permanent

The New York State capitol in Albany
Dave Lucas

There’s a push by business groups and Republicans in the State Senate, as well as Governor Andrew Cuomo, a Democrat, to make the state’s 2 percent per year property tax cap permanent. Backers have issued a report to bolster their views, and say public opinion is on their side.    

The newly elected leader of the State Senate, John Flanagan, says making the property tax cap permanent is a top priority. Flanagan replaced former Senate Leader Dean Skelos earlier in May, after Skelos was charged with six counts of corruption in a kick back and bribery scheme that prosecutors say illegally benefited the Senator and his son.

The Senate promptly approved a one house bill to extend the three year old tax cap indefinitely. Senator John Bonacic is from the Hudson Valley.

“It helps the taxpayers,” said Bonacic. “They are under assault.”      

Senator Bonacic say he would like to see more action, though, on a related proposal to cut down on state government mandates for schools and local governments , which was supposed to be part of the tax cap plan but has not been enacted.  

Many Democrats in the Senate also voted for the one house proposal.

Business leaders gathered with the public policy think tank the Empire Center to make the case to make the cap permanent.

The Empire Center’s EJ McMahon , whose group co wrote the study, with the state Business Council’s Public Policy Institute,  says taxpayers may have saved as much as $7.6 billion dollars since 2012.

“Of course it’s impossible to say exactly what taxes would have been without the cap, because you’d have to imagine an alternative reality ” McMahon said. “But it’s not unreasonable to illustrate by looking at what taxes would have been under a couple of different scenarios.”

McMahon says the report draws on data from the state education department and comptroller’s office about the average rates that school and other property taxes were rising in the years before the 2% per year tax cap took effect. He says in the thirty years preceding the tax cap, school property taxes rose at an average of 6% a year, or twice the rate of inflation, and higher than the rate of the state income tax.

McMahon says if you measure the tax rate since the 2008 recession, where school taxes increased at a lower rate, taxpayers still saved $1.3 billion since the cap took effect.  

He says the average tax increases since the law has been 2.2% per year, the lowest rate in recent state history.

“That’s a  phenomenal  change,” he said. “It’s really like a re set.”

Ken Pokalsky, with the Business Council, can’t point to any specific jobs or new economic development as a result of the tax cap. He says he knows of business who did not expand or move to the state because of the high property taxes. But says, most importantly,  it helps change the reputation of New York as a high tax state and puts it more in line with the rest of the nation, and makes it less of an “outlier.”

“The real effect of the property tax cap is it’s bringing us back to the pack, if you will, of the national norm,” Pokalsky said.

Governor Cuomo is a supporter, he proposed making the cap permanent in his State of the State speech back in January.  When the report by the Empire Center was issued, Cuomo issued a statement saying, in part, that the “tax cap has successfully broken the cycle of skyrocketing property tax increases,” and that the report “illustrates” whey the cap should become permanent.

But the measure, even though it has many Democratic supporters in the legislature, is not fully backed by the majority of Democrats in the Assembly. Many from upstate and Long Island are backers, but most of the Democrats are from New York City, where property taxes are not a pressing issue.  However, New York City members are concerned about renewing, and even reforming New York City’s rent laws, which are also temporary and expire June 15th.  The property tax cap is tied, through related legislation, to the rent laws. The law says the property tax cap can only be renewed if the rent laws are also extended. Supporters of making the cap permanent say they see room for negotiation there.

Assembly Speaker Carl Heastie, who is seeking reform of the rent laws, has been non committal so far on the tax cap, but left the door open for talks.

“That’s something that’s on their list,” Heastie said. “So we’ll see what happens when we discuss this.”

Schools, who must live under the tax cap are not fans of making it permanent. The teachers union, which is close to Assembly Democrats, says the cap has squeezed school budgets and created inequality. They have unsuccessfully fought the law in court.

And the New York State School Boards Association also dislikes the cap. The school boards’ Dave Albert says if state aid is adequate, and schools had fewer mandates to follow, then “we wouldn’t need a tax cap.”