Former Governor Spitzer's 2008 State of the State address included a rousing call for limits on school property taxes in New York.  He said he would create a special commission to study the root causes of high property taxes and to recommend "a proposal for a fair and effective cap--to hold the line on sky-high school district property taxes once and for all."  According to a Siena Research Institute poll, released on Jan. 21, a property tax cap is supported by 72 percent of New Yorkers. 

Members of the Commission on Property Tax Relief, which is due to report May 15, include Basil Paterson--a former state senator and secretary of state who is the father of the state's new governor, former Lt. Gov. David Paterson, who replaced Spitzer on March 17.  While Paterson did not immediately disclose his plans for the commission in any detail, his inaugural address cited "the crush of property taxes" among several "issues we will continue to focus [on] and address."

Resources

The Empire Center submitted a white paper to the commission in support of a cap.  For a copy of the white paper, click here.

To download a two-page summary of the case for a tax cap, click here.

Background

This is not the first time the concept of a property tax cap has been seriously floated in New York. 

Assembly Speaker Sheldon Silver proposed a cap on all local property taxes in 1995, as announced in this press release issued by the speaker's office on March 14 of that year.  Known as the Real Property Tax Limitation Act, the bill (A.6171 of 1995-96) passed the Assembly but was never taken up by the Senate.  

Governor Pataki subsequently proposed a cap on school tax levies as part of his original STAR 9School Tax Relief) program in 1997. In the face of strong opposition from the state's largest teachers' union, Pataki agreed to remove the cap provision from the final STAR bill before it was enacted.

The need for a property tax cap, the best model for such a cap, and the flaws with other approaches to "property tax relief" in New York have been extensively discussed by E.J. McMahon, director of the Empire Center and senior fellow for tax and budgetary studies at the Manhattan Institute, in a series of articles, memos, presentations and legislative testimony over the past few years. As New Yorkers await further details on the governor's proposal, here are links to background on the issue:

• Eliot's Excellent Idea
  Op-Ed Article in New York Post
• No News is Bad News: New York Counties Still Among Most Heavily Taxed
  Empire Center Web Commentary
  
• Spitzer's Intriguing Tax Cap Hint
  Empire Center Web Commentary
  
• Property Tax Rebates: No Lasting Relief
  Op-Ed Article in Rochester Democrat & Chronicle
  
• Testimony by E.J. McMahon
  Before the Assembly Committee on Real Property Taxation
• The "$6 Billion Tax Cut" That Gov. Spitzer Isn't (Quite) Proposing
  NYFiscalWatch Memo
• The STAR Delusion
  Op-Ed Article in New York Post
• Property Tax Plan Has Hefty Hidden Bite
  Op-Ed Article in Syracuse Post Standard
• More STAR in New York's Future?
  NYFiscalWatch Memo
  

Excerpts from Governor Spitzer's State of the State address:

We need to start getting real about our property tax crisis. I’ve visited with families from Niagara Falls to Central Islip, Mamaroneck to Binghamton. Wherever I go, I hear the same thing: property taxes are too high. We cannot grow if property taxes continue to force young people out of the State and our seniors out of their homes. Together, we have tried to address this crisis."

[snip]

But after ensuring more than $5 billion in STAR property tax relief each year and spending more than a billion dollars on the State takeover of Medicaid costs, property taxes just keep going up.

Experience has taught us that we need stronger medicine. A rebate check may temporarily ease the pain, but it doesn’t cure the disease. In the end, it’s a losing game for the taxpayer if the State gives you a rebate check on Monday and then on Tuesday your local government taxes it away.

So here’s what I propose – a bipartisan commission, invested with Moreland Act powers, that will return with three sets of recommendations. First, a package of reforms that gets at the root causes of what is driving taxes so high. This should include a look at unfunded mandates on both school districts and municipalities. Because school district property taxes account for about two-thirds of all property taxes, the commission must also identify ways to maintain our commitment to the highest quality education at a more affordable cost. Second, proposals on how to make our tax relief system fairer to the middle class taxpayer. And third, a proposal for a fair and effective cap – to hold the line on sky-high school district property taxes once and for all.

I have asked Nassau County Executive Tom Suozzi to lead this commission. Tom, you have championed this cause for many years, now let us work together to solve it.

Our goal should be proposals that enable responsible districts to stay within the cap and promote the most effective investments in educational quality, constrain districts that would go beyond responsible spending, and ensure that state tax relief is directed to the taxpayers who need it most.

A tax cap is a blunt instrument, but it forces hard choices and discipline when nothing else works. When combined with real reform of unfunded mandates and a blueprint for providing a high quality education at a more affordable cost, a cap will allow us to invest wisely in our schools while achieving the goal of controlling property taxes. Let’s finally get real about property taxes. That is what our taxpayers demand, and that is what we must deliver. [emphasis added]