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The cap and its critics

Gov. Andrew Cuomo wasted no time in reaching a conclusion about New York’s property tax cap. Last September, only months after local governments and school districts had their first go-round with the cap, the governor issued a laudatory report.
"It is clear," he said at the time, "that the property tax cap has been a tremendous success, saving hard-earned money for New York families while ensuring that local governments learn to do more with less."
His report asserted that in the cap’s first year, it held average property tax growth to 2 percent-40 percent less than the previous 10-year average.
Why, then, do so many people seem to take a dim view of the property tax cap? Here are a couple possible explanations:
First, some people failed to understand initially that the law contained a number of exclusions and allowances that result in tax levy limits considerably higher than the statutory base cap of 2 percent. The Empire Center for New York State Policy issued a report this week detailing how this affects school district limits. For the budgets that voters will consider in a few weeks, the average tax levy increase limit is 4.6 percent, up from 3 percent last year.
In Monroe County, the average school property tax levy increase cap will be 4.7 percent; elsewhere in the region, it’s as high as 5.2 percent.
Second, many people thought the property tax cap should be tied to mandate reform. The governor and lawmakers acknowledged the important link between the two but left mandate reform for another day. That day has yet to come.
So there’s reason to be disappointed with the property tax cap. But let’s resist the temptation to write it off as a mistake or failure.
E.J. McMahon, who authored the Empire Center report, says that aside from the pension exclusion, the tax cap law is "well structured to balance tax restraint with flexibility for local voters in the long run." And there is no question the law has increased the pressure to limit local government and school spending.

Just as clearly, the cap is only a first step, and more needs to be done.

5/3/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.


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