Senate passes tax cap bill

All 32 Republicans and 13 of 30 Senate Democrats voted to pass tax cap legislation on Monday night, limiting the growth of school property taxes to 2 percent, or the Consumer Price Index (CPI), whichever is lower. The bill provides for the same cap to apply to taxes levied by municipal governments. After passing the tax cap legislation, senators also took up measures related to providing mandate relief to school districts and local governments.

By a vote of 45 to 17, the Senate approved the controversial legislation introduced by Senate Majority Leader Dean Skelos, (R-RVC) at the request of Gov. Andrew Cuomo, for whom it was a major campaign issue. The move came on the evening before Cuomo unveiled his budget that contained a proposed $1.5 billion reduction in aid to local school districts, a 7 percent cut.

“With this bill we are keeping our commitment to provide real property tax relief to homeowners across the state who are sick and tired of paying the highest property taxes in the nation,” said Skelos. “I applaud Governor Cuomo for making the cap a priority. The Senate is ready to put it into law, now we need the Assembly to join us in passing this measure so we can stop the dramatic growth in property taxes and provide the relief that taxpayers desperately need.”

Supported by business organizations across the state, the bill, which would take effect in the 2012-13 school year, only exempts debt payments on capital projects and large legal settlements from the tax cap. It also includes the following provisions:

School districts could carry over unused tax levy funds from the prior year, but they could use the carryover to increase the tax levy only an additional 1.5 percent.

If a district’s tax levy exceeds its authorized levy because of an error, the erroneous excess levy would have to be placed in reserve for the next school year.

A school district would have to submit its tax levy proposition for voters on the 3rd Tuesday in May. If the proposed levy is within the district’s tax levy limit, a majority would be required for approval. But if the proposed tax levy exceeds the limit, then the vote required for approval would have to be 60 percent.

Without excluding state mandated salary increases, health care and pension benefit costs from the bill, schools districts have warned they would have to lay off teachers and eliminate programs, while local municipalities have forecast steep cuts in services.

School superintendent Dr. William Johnson said, “It’s going to force the Rockville Centre school district to essentially dismantle many of the programs that we have that very effectively serve this community and provide our students with the college and career-ready curriculum that the state and federal governments have said we should. In this case the cost drivers are not under our control. I’ve said it many times… you don’t solve a problem with a problem. This does not solve the problem of the taxpayer who cannot pay his tax bill. There are better ways to do this that are tied to people’s ability to pay.”

“State mandates have tied the hands of local officials for many years, particularly regarding public sector salaries and benefits,” said Mayor Mary Bossart at a recent meeting of the New York State Conference of Mayors’ Task Force on Mandate and Property Tax Relief. “These costs are the largest single component of village budgets.

“Only a property tax cap with mandate relief and necessary exclusions can provide relief to our taxpayers,” said Bossart. “Projected growth in pension and health insurance costs alone will exceed the 2 percent tax cap fivefold in its first two years.”

The Senate also acted on mandate relief that would require any new state mandated program imposed on municipalities or school districts, which create any additional costs, to be funded by the state. Part of the resolution urged the governor and his Mandate Relief and Medicaid Redesign teams to provide lasting and meaningful property tax relief.

“Mandate relief and a tax cap go hand in glove,” said Sen. Jack Martins (R-Mineola). "Mandate relief for our localities and schools is like an oasis in the desert of government.”

The tax cap bill now moves on to the Assembly, where it faces an uncertain future, although Speaker Sheldon Silver (D-Manhattan) who has long opposed a tax cap, has indicated a willingness to consider such a measure this year. But observers believe Silver and other Assembly Democrats are likely to rewrite the plan to exempt many more costs, such as pensions and health insurance premiums, from the reach of a tax cap.