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Tax-cap turnabout

A couple of years ago, when New York’s property tax cap had been through only one school-budget cycle, many people were ready to give the cap a thumbs-down. In an RBJ Daily Report Snap Poll conducted at the time, nearly 60 percent of respondents disagreed with Gov. Andrew Cuomo’s assessment that the law was a “tremendous success.”

That was then. These days, the cap is widely supported. In a recent Siena College Research Institute poll, 73 percent of New Yorkers said the cap has accomplished what was intended. And in this week’s RBJ Daily Report Snap Poll, 71 percent of readers said the cap has been a success.

Why the turnabout in opinion? One likely reason is that initially a number of people did not really understand the law—especially some of its rather complicated features. For example, while the law caps the annual hike in total local property taxes at the lesser of 2 percent or the rate of inflation, certain exceptions are allowed. As a result, in the first year or two many school districts had increases that exceeded 2 percent.

Another reason might be disappointment that the property tax cap did not lead to mandate reform, despite assurances from the governor and lawmakers that they understood the importance of easing the requirements placed on school districts.

Now, as schools head into their fourth cycle with the cap, the evidence clearly indicates that the law has been a real restraint on spending. A new study by the Empire Center shows that property tax levies over the last four years have increased an average of 2.2 percent annually, compared with a 30-year average rate of 6 percent a year. That has produced savings of $490 million for property owners in the Finger Lakes region—and $7.6 billion statewide.

Under current law, the cap will expire next year; some argue it ought to unless mandate reform is enacted. But lifting the cap would make mandate reform more unlikely, not less.

Instead, the cap should be made permanent—and voters should demand that the governor and legislators honor the other part of the bargain.

6/5/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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