New York State Executive Chamber | Governor Eliot Spitzer
Press Releases | Speeches | Executive Orders | Proclamations
Property Taxes
The New York State Association of Counties
The Desmond Hotel
Albany, NY
January 30, 2007
[As prepared for delivery]
Thank you, Lucille, for those kind words, and for your outstanding leadership of this organization. I also want to thank Albany County Executive Mike Breslin, who has always been such a great leader and friend, and Steve Acquario, who has been such a strong and effective voice for New York’s counties.
I also want to thank all of you for inviting me to your annual Winter Meeting. It was always a great pleasure to speak before you as your Attorney General, but it’s an even greater pleasure to speak before you as your new Governor.
Let me begin by recognizing my colleagues and partners in government: all of the county executives, legislators, supervisors and all the other county officials who are here today. Each of you deserve to be recognized individually for all you are doing to strengthen our economy; to improve education, health care and human services; to administer criminal justice; and for everything else you do, every day, for the people of this state.
You are on the front lines of government. This means you have also been the first to suffer from our state government’s inability to make the hard choices necessary to get spending under control. But I believe that is about to change.
Tomorrow, I will propose my first Executive Budget. In recent days, I have been speaking with New Yorkers about what this budget will accomplish to restore prosperity and opportunity to our state.
On Friday, I presented the details of our plan to reduce the cost of health care and to restructure our health care system to put the needs of patients first. Yesterday, I presented our plan to raise educational achievement through a major investment in our schools, paired with reform and accountability for results.
Today, I want to discuss how we will fulfill our promise to help relieve New York’s property tax burden.
Ladies and gentlemen, our state government faces serious fiscal challenges. While we will end this fiscal year with a surplus, the effect of government actions taken in prior years — combined with the natural growth of government programs — means our state faces a large and growing structural budget deficit. In fact, by the year 2010, if left unaddressed, our state budget gap will grow to over $5 billion dollars.
But despite the fiscal challenges we face, I come here today to report to you that the days when New York balanced its budget on the backs of its counties, cities, towns and villages are over.
The Executive Budget I will propose tomorrow will fulfill a promise I made during the campaign: We will not increase taxes. In fact, we will provide significant and immediate tax relief. My Executive Budget will include a three-year, $6 billion Property Tax Cut Plan that targets relief toward middle-class taxpayers who need it most.
And as we implement a short-term strategy to reduce property taxes by providing immediate relief, we will also implement a long-term strategy to address the underlying cause of property taxes by relieving the burdensome mandates the state currently places on local governments. Each of these measures, as I will describe in a moment, will reduce the cost of local government and allow local officials to reduce property taxes.
Let me now turn to the specific details of our property tax relief plan.
Soaring property taxes are devastating our state’s families and our economy as well. In the past five years, real property taxes have increased 42 percent — fully three and a half times faster than wages have increased.
As a result, all across our state, high property taxes are forcing families to leave their homes and encouraging young people to leave for more affordable states. High property taxes have driven New York’s overall state and local tax burden to the highest in the nation, which is a major reason for our state’s uncompetitive position in the global economy.
My Executive Budget will address this crisis by providing $1.5 billion dollars in property tax relief this year. The amount we provide will grow to $2 billion dollars in fiscal year 2008 and $2.5 billion dollars in fiscal year 2009.
Our plan will target property tax relief to the people and families who need it most: middle class New Yorkers, who bear the brunt of soaring property taxes and have the least ability to pay them.
The greatest flaw of the state’s current tax relief program, the STAR program, is that it provides the same tax break to the millionaire and the middle-class homeowner. We will fix this flaw by creating a new Middle Class STAR program that provides significant property tax relief for all but the wealthiest New Yorkers.
Additional benefits will be provided to taxpayers on a sliding scale based on income, with benefits declining as income exceeds $60,000 for Upstate homeowners and $80,000 for homeowners in the Downstate region, to account for the higher cost of living in that area. New York City residents will receive increased Personal Income Tax relief. In total, 95 percent of all homeowners across the state will receive additional tax relief under our program.
And the tax relief homeowners receive will be significant. For example, in Suffolk County, homeowners receive an average savings of $954 dollars under the current STAR program. Under our plan, the average middle class STAR savings in Suffolk County will be $1,717 dollars. In Onondaga County, residents currently receive an average STAR savings of $697 dollars. Under our plan, the average middle class STAR savings will be $1,255 dollars. The average savings in Erie County will rise from $526 dollars to $947 dollars. And the average savings in Albany County will rise from $621 dollars to $1,118 dollars.
These savings will allow families and seniors to stay in their homes. They will encourage our young people to stay in New York. And they will accomplish a great deal toward lowering our state’s overall tax burden, which is currently such a major impediment to growth in an increasingly competitive global economy.
[Pause]
Now that I have presented our short-term strategy to provide immediate relief, let me discuss our strategy to reduce property taxes over the long term.
In recent decades, state spending increased dramatically. However, due to fluctuating economic fortunes, state revenues did not increase proportionally in some years. As a result, during these times, the state often shifted many sizable costs to counties and municipalities. While these “unfunded mandates” allowed the State to balance its budget, they swelled the budgets of local governments, driving property taxes to unprecedented levels.
In the Spitzer Administration, we will draw the line on this practice once and for all.
We will take responsibility for our own structural deficit and make the hard choices necessary to reduce costs. And we will begin to relieve the unfunded mandates that were imposed in the past. As a result, municipal governments will be able to reduce property taxes in the years to come.
Let me describe how we will relieve these unfunded mandates.
First and foremost, we will recognize that the Medicaid cap has been a critical tool for relieving costs and lowering property taxes. The Executive Budget I propose tomorrow — and all subsequent Executive Budgets in the Spitzer Administration — will keep the Medicaid cap and Family Health Plus takeover firmly in place, saving New York’s counties a total of $1.2 billion dollars in the 07-08 fiscal year. And we will continue to make progress toward our goal of taking over all county Medicaid costs in the future.
Second, we will finally put our most distressed cities on the road to recovery. No county in our state can thrive in the long term if it has dying cities within its borders. Similarly, the economic futures of New York’s towns, villages and cities are inextricably linked. If we take steps now to put our cities on the right path, our counties, towns and villages will see greater revenues, as private investment and economic growth return to our cities, as well as lower costs, especially in areas such as human services and criminal justice.
But the solution cannot simply be to dump more state money into our cities. Many of these cities need money so badly that if we simply write them a blank check, it will disappear without achieving any measurable improvement.
That’s why my plan for distressed cities demands rigorous fiscal reform and accountability in return for increased aid. This year’s Executive Budget contains a provision that will restructure the Aid and Incentives to Municipalities program to provide an additional $500 million dollars to distressed municipalities over a four-year period, $200 million in year 4 alone. Starting this year, AIM increases ranging from 3 to 9 percent will be provided to municipalities each year based on their level of fiscal distress.
But in return, we will require municipalities receiving the largest funding increases to develop multi-year fiscal performance plans approved by the state. These municipalities will also be required to target additional funding for specific measures that will improve their fiscal health, such as essential economic development initiatives, cost-saving technology investments and property tax relief.
Third, we will take action on one of the very symbols of Albany gridlock, the Wicks Law. We will end the severe cost burden the Wicks Law currently imposes on relatively small municipal construction projects by raising the Wicks Law’s threshold from $50,000 dollars to $2 million dollars in New York City and $1 million dollars outside New York City. In addition to increasing the threshold, we will implement the necessary protections for subcontractors to ensure that the construction marketplace operates fairly.
Fourth, we will heed what has long been a key policy recommendation of NYSAC and provide detailed multi-year reporting on the fiscal impact of Executive Budget recommendations on local governments. In the past, the opaqueness of the state budget has often made it difficult for county and municipal officials to construct their own budgets. Because we recognize the harmful effects this has had, we will provide far more comprehensive local reporting in this year’s Executive Budget and in all future budgets.
Fifth, we will encourage New York’s many local governments to save taxpayer money by sharing services or consolidating. This year’s Executive Budget will modify the existing Shared Municipal Services Incentive program to assign priority to grant applications from distressed municipalities, as well as to proposals that generate school district cost savings. I will also appoint a Commission on Local Government Efficiency to report back with a specific plan of action for how we can work together to face the reality that 4,200 taxing jurisdictions are simply too many, too expensive and too burdensome.
And sixth, we will end the practice of forcing counties to house former state inmates who violate their parole. Starting this year, the state will take responsibility for its own parole violators. This action will relieve pressure on local jails while providing administrative law judges greater latitude in tailoring sentences to violations.
[Pause]
Our commitment to reducing unfunded State mandates will be measured not in words, but in dollars.
In fact, the sum of the new actions in this year’s Executive Budget represents a positive impact of $1.5 billion dollars on local governments in fiscal year 07-08 alone. Including continuation of the Medicaid cap and Family Health Plus takeover, the positive local impact of the budget in fiscal year 07-08 grows to $2.7 billion dollars. And by 2011, the actions in this year’s budget are estimated to have a positive impact of $5.1 billion dollars on local governments.
Taken together, these savings will allow county and municipal governments to invest in the future and reduce property taxes for their residents.
I want to close briefly with a final observation. To fund the programs I have described, my Executive Budget will include $2.8 billion dollars of budget savings, driven mainly by Medicaid reforms, government efficiencies, and revenue loophole closings.
The fact is, our ability to invest in our state’s future — to continue to provide property tax relief, to give our schools the funding they need, to provide all our children access to health insurance, and to fund the other initiatives I will propose tomorrow — will depend on our ability to realize these savings.
None of these savings will be arbitrary. All will be in furtherance of broader strategies to improve the livelihoods of the people of our state. Still, it is inevitable that those few people who have benefited from the status quo will do all they can to resist these reforms.
I hope we can convince these people to be part of the solution. But if not, I will need you to stand with me and fight for change — to stand with me fight for what is right and what is good for all New Yorkers.
Ladies and gentlemen, I believe tomorrow’s Executive Budget represents a turning point for New York. Rather than a health care system that serves the needs of institutions, we will build a health care system that serves the needs of patients. Rather than schools that lack for both resources and achievement, we will have a fully funded education system that is accountable for student learning.
And rather than shifting cost burdens to counties and municipalities — and allowing property taxes to continue spiraling out of control — we will provide significant and immediate property tax relief, and finally take responsibility for unfunded mandates.
Of course, the task of making New York the Empire State again will not be complete with one budget. But with your help, we can make this a turning point for New York: the point when we stop avoiding hard choices and start restoring hope, opportunity and prosperity to the people of our state.
Thank you.