October 12, 2012

Right step, but concerns ahead


---- — The initial report on the state’s property-tax-levy cap shows that it appears to be succeeding, as the average property-tax growth ra, te has been held to about 2 percent statewide.

That is 40 percent less than the previous 10-year average.

We hope that trend can continue but recognize that there are some serious concerns ahead. The cap certainly was a step in the right direction, and Gov. Andrew Cuomo and the State Legislature deserve some plaudits for implementing it last year.

“The promise of a new New York was based on a simple idea: to return our state government to the people of this state and to the taxpayers,” the governor said in his report.

“For years, out of control spending drove property taxes higher and higher, forcing families and businesses out of our state. New York had no future as the tax capital of the nation, and last year, people in all corners of the state came together to help us put in place the property-tax cap, which empowers communities to take control of their own spending and tax levies. One year later, it is clear that the 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.”

Yes, the cap is generally a good idea and does appear to have helped contain the runaway tax burden on property owners, but we can’t help but wonder what will happen once the cap honeymoon wears off.

While most municipalities in the North Country have done well with the cap and have produced budgets within its parameters, many have had to dip dangerously deep into their precious fund balances to do so.

This practice certainly cannot last, as by 2014, we dare say, most municipalities will have worn their fund balances down to next to nothing, putting budgets in serious peril.

The alternative is to approve budgets higher than the cap, which must be approved by a 60 percent majority of a legislative body or 60 percent of voters in school-district budget votes.

We are already seeing some municipalities propose budgets that exceed the cap, and it will be interesting to see how those votes wind up. If they are defeated, it almost certainly will mean layoffs and service cuts, which no one looks forward to.

One thing we haven’t seen with the cap is what mayors, supervisors, school superintendents and county administrators have been clamoring for the past two years: meaningful mandate relief.

Having a cap with no mandate relief is like telling municipalities to go play tennis with their hands tied behind their back. It doesn’t work, and it will turn this once promising legislation into another failed policy.

But the reprieve from higher tax increases the past two years has been a nice change, considering the fact that, when the governor took office, local property taxes were higher in New York than anywhere else in the country.

The median property tax paid by a homeowner in New York ($4,090) was twice the national median ($2,043), and when property taxes were calculated as a percentage of home value, 13 of the 15 highest-taxing counties in the country were in New York.

The report revealed that out of 3,077 local governments and school districts reporting a proposed levy in the past year, 84 percent were within the capped amount.

We’ll see if those figures continue to hold up as the cap matures from year to year.