GOVERNOR PATERSON LAUNCHES STATEWIDE TOUR TO DISCUSS PROPERTY TAX CAP LEGISLATION

Governor Visits Long Island Families to Discuss how Legislation would Ease Tax Burden

Governor’s Bill would Cap School Property Tax Increases and Preserve All School District Votes

A day after formally receiving the preliminary report of the New York State Commission on Property Tax Relief, Governor David A. Paterson traveled to Long Island today to discuss legislation he has submitted that would impose a four percent annual cap on increases in school property taxes, which will slow the runaway increases that New Yorkers are experiencing throughout the state. The cap – which is the Commission’s principal recommendation – would not apply to the “Big Five” cities (New York City, Rochester, Buffalo, Syracuse and Yonkers), because residents of those cities do not currently vote on school budgets.

The visit to Nassau County was the Governor’s first stop on a statewide tour in which he will detail the savings a property tax cap could yield for New York’s families. The state’s rising tax burden has impacted its ability to retain young families, seniors and businesses – especially in the face of a national economic downturn. The Governor has made controlling taxes a chief priority of his administration.

“New York is the highest taxed state in the nation and we can no longer afford to ignore the reality that property taxes are driving people and businesses out of our state,” said Governor Paterson. “This trend is disrupting our quality of life because it is straining family budgets, separating grandchildren from grandparents, and discouraging the entrepreneurship that creates innovation and jobs. On Long Island, as in other parts of the state, the story is no different: New Yorkers are calling on their elected officials to come together to comprehensively address this issue.”

The Governor and Nassau County Executive Thomas Suozzi, the Commission’s chairman, met with two families – Patrick and Michele Martin and Keith and Lena Ritchie – at the Martins’ home in Williston Park. Patrick and Michele Martin have two children and have lived in their home for four years. In that time, the Martin’s school property taxes have risen 29 percent, from $3,525 to $4,547. The Governor also met with Keith and Lena Ritchie, of Bethpage, who have three children and have seen their school property taxes rise from $3,200 to $6,680 over the past decade, an average of 11 percent each year.

Nassau County is the second highest taxed county in the nation with the average homeowner paying more than $7,700 in property taxes each year. Since 2001, school property tax levies have increased by more than 50 percent – more than twice the rate of inflation Had a school property tax cap been enacted five years ago, the Martins would have saved approximately $1,200 over that period or six percent of their tax bill. Countywide, homeowners could have seen up to seventeen percent in savings in their school taxes last year, or as much as $3700 in savings over the five years.

“Long Island is an appropriate backdrop to talk about soaring property taxes and their devastating impact on homeowners and businesses across our state. I thank the Governor for making this his first stop and for being a champion in the fight against property taxes,” said County Executive Suozzi, chairman of the New York State Commission on Property Tax Relief. “As Chair of the Commission, I am gratified that some have called our report ‘the most pro-taxpayer report that Albany has seen in some time,’ and I look forward to working closely with the Governor as we fight to cap property taxes, help low and middle income homeowners, and reduce expenses for school districts, even as we remain committed to maintaining and enhancing educational quality across our state.”

Governor Paterson’s Proposed Legislation

The bill the Governor has submitted generally mirrors the property tax cap proposal recommended by the Commission. In particular, the bill:

• establishes a “cap” on school property tax levy increases of 4% or 120% of CPI, whichever is less;
• requires at least 55% of voters to approve any tax levy over the cap, and increases that “supermajority” requirement to 60% if the school district is receiving an increase in State education funding of 5% or more;
• provides that if the proposal is rejected by the voters, the levy increase reverts back to the cap of 4% or 120% of CPI, whichever is less;
• authorizes voters to place an “underride” proposal on the ballot if they wish to adopt a tax levy increase of less than the cap (or no increase at all);
• provides an incentive for school districts to propose increases of less than the cap, by providing for the “banking” of unused levy growth amounts; and
• preserves the right of all school district residents to vote every year – even if the board proposes a levy increase of less than 4%.

The Governor’s proposed legislation differs from the Commission’s recommendations in one significant way – by preserving the right school district residents to vote on proposed levy increases of less than the 4 percent cap. Under the Commission’s proposal, school boards are authorized to adopt levy increases up to the cap without seeking voter approval. The Governor’s proposed legislation preserves the existing right of residents to vote in these circumstances, thereby assuring that all levy increases are subject to voter approval.

The Commission presented its findings to Governor Paterson on Tuesday after four months of study, including public hearings, meetings, and community roundtables that took the panel all across the state.

The Commission’s Preliminary Report highlights a number of key facts:

• New York State's local taxes are the highest in America - 79% above the national average.
• Outside of New York City, 62% of property taxes are school property taxes.
• In terms of tax rate, nine of the top ten counties highest taxed counties in the nation are in Upstate New York. They are Wayne, Niagara, Monroe, Erie, Chautauqua, Onondaga, Cayuga, Chemung and Schenectady Counties.
• In terms of amount of taxes per household, Nassau, Westchester and Rockland Counties are in the nation’s top ten.
• Property tax levies are rising at more than twice the rate of inflation and salary growth.

North Hempstead Town Supervisor Jon Kaiman said: “I believe that the effort to rein in school taxes is an important one and Governor Paterson is showing strong leadership by placing the focus where most of our local tax dollars are going. I believe that this legislation, however, must be followed by mechanisms that reduce the costs of local government. Shared services, relief from state mandates, and the reduction of costly perks are some ideas whose time has come. Support from the state is critical to this effort.”

Richard M. Bivone, President of the Nassau County Council of Chambers of Commerce, said: “The small businessmen and women of Nassau County desperately need meaningful tax relief. We appreciate Governor Paterson's leadership and commitment to addressing this longstanding problem that hits Long Island particularly hard. We also appreciate his view that the Commission's report represents the beginning of a process for dialogue and negotiation with the Legislature. We hope that such an inclusive and constructive approach, that engages all our elected officials, will yield the results that are so badly needed on Long Island.”

Commission’s Principal Recommendation

The principal recommendation of the Commission’s Preliminary Report is a school property tax cap to address the unsustainable growth in property taxes. The Commission recommends a cap on the growth of school property tax levies at 4% or 120% of the Consumer Price Index (CPI), whichever is less. The proposed cap is set at a level that allows for reasonable growth of school expenses, while encouraging new construction and protecting capital expenditures separately already approved by voters.

The property tax cap would put voters in control of their school taxes. Voters could choose to levy more than the cap by “overriding” the cap at the ballot box. A vote by at least 55% of the voters would be required to override the cap. If a school district has received a 5% or greater increase in state aid, 60% of the voters would be required to override the cap.

Alternatively, if voters want a smaller increase in the tax levy (or no increase at all), they could enact an “underride” of the cap. As an incentive to save tax capacity for future years, in school districts where the maximum levy growth permitted under the cap is not used in a given year, the unused portion would be “banked” and may be used in any future year to increase the levy by up to 1½ percent.

Other Recommendations

The Commission’s report also recommends that a STAR (School Tax Relief Program) “circuit breaker” be enacted, but only after a cap is put into place. The STAR circuit breaker would provide targeted relief to individual taxpayers based on income and ability to pay. An income tax credit would be provided for a percentage of property taxes paid when the taxes exceed a percentage of the owners’ income. The Commission believes that it would be unwise for the state to adopt a circuit breaker without addressing the core problem - the overall growth of property taxes - with a property tax cap.

Also included in the report are several recommendations to address the root causes of high property taxes. The Commission recommends providing school districts and local governments with relief from costly state mandates that, in turn, increase the property tax burden. Also proposed are several measures to reduce local costs that, again, are passed onto property owners.

Background on the Commission

The Commission on Property Tax Relief was established by Executive Order No. 22 in January 2008 to investigate and make recommendations regarding:

• Root causes of the high property tax burden, including unfunded mandates and local expenditures;
• Impacts of increased state aid and existing property tax relief programs;
• Effectiveness of property tax caps in other states and, potentially, in New York; and
• The most effective means to impose a limit on school property tax growth without adversely impacting the ability of school districts to provide a quality education to all students.

The Commission is charged with submitting its Final Report on December 1, 2008. Following the release of its Preliminary Report, the Commission will be inviting subsequent comments from the public and interested parties, in addition to conducting further research into the root causes of the property tax burden and other related areas.