On the eve of what could be the biggest state budget showdown ever in New York, Gov. Cuomo has taken a big step toward delivering on the single most important promise he made to taxpayers in his successful 2010 campaign.
On Friday, Cuomo sent the state Legislature a bill capping the annual growth in local property-tax levies at 2 percent a year or the inflation rate, whichever is less. The bill was promptly introduced by the Senate majority leader, Dean Skelos (R-LI), and seems likely to pass in that house as soon as today.
Like former Gov. David Paterson’s 4 percent cap proposal, Cuomo’s cap was inspired by the successful Proposition 2Â½ tax limit enacted 30 years ago in Massachusetts. However, Cuomo’s bill not only calls for a tighter cap than Paterson’s — but also, as far as school taxes are concerned, does much more to empower taxpayers.
Under current law, annual school district budgets (outside New York City, Buffalo, Rochester, Syracuse and Yonkers) are subject to voter approval each May. While this is the only form of direct democracy regularly enjoyed by any group of New Yorkers, it has come to be seen as an increasingly meaningless exercise since a late-’90s state law created a more broadly defined “contingency budget” that automatically goes into effect after voters repeatedly reject a school-board budget proposal.
Residents of more than a few districts around the state have been frustrated to learn that saying no to a school budget they deem excessive can lead to an even higher tax hike, because the law’s contingency-budget standard is broad enough to protect a fairly high level of continuing spending from taxpayer control.
Cuomo’s proposal would bring New York’s annual school-budget charade to an end — by shifting the focus from spending to taxes.
Instead of voting on a school budget, district residents will be asked to turn thumbs up or down on a proposed school-district property-tax levy for the coming year. If the proposal calls for an increase above the cap, it will need approval by more than 60 percent of the voters to pass. If below the cap, the tax proposition will still require voter approval.
If a tax proposition is rejected in its first go-round, the school board has one shot at resubmitting it to the voters, with or without a reduction from the original level.
Here’s where the Cuomo bill is ingenious: If voters reject the proposed tax levy a second time, there can be no further votes and the tax levy will revert to the prior year’s level.
For the first time, New Yorkers in most school districts outside New York City would have the ability not only to cap growth in property taxes but also to freeze the levy from one year to the next. Meanwhile, both the budget vote and the contingency budget provisions will be scrapped. It all would take effect in 2012 (sooner would be impractical).
As for property taxes imposed by other local jurisdictions, elected governing bodies — county legislatures, city councils, town boards and the like — will retain the final say on property taxes under Cuomo’s bill. A tax levy above the cap will require approval from a two-thirds vote majority of the governing body — which at least sets a slightly higher bar than exists under law now.
This may be seen as a retreat from the campaign promise — but it may also be seen as a strategically wise one. By focusing on school districts, Cuomo is narrowing the political battleground and focusing on the largest and fastest-rising component of property-tax bills throughout suburban New York City and upstate New York.
Cuomo’s legislation is true to his promise in another vitally important way: Exceptions to the cap are narrowly limited to voter-approved school capital-construction costs, large court-ordered judgments in personal-injury lawsuits and (for counties only) the local share of state-mandated welfare payments–which, in practice, are relatively small, don’t rise much and are protected by the “care of the needy” provision of the state Constitution.
Faced with likely cuts in school aid next year, and prospects for little growth in the next few years, school districts will complain that they can’t possibly live under the cap without making devastating cuts. They’ll argue — with a lot of justification — that they need relief from state mandates that lock in large parts of their budgets, especially labor costs.
Cuomo says he is open to mandate relief, but the political calculus is the same: The cap must come first. It is an essential catalyst — an absolute prerequisite for real and lasting change.
Assuming the Senate passes the bill, the Democratic governor and the Republican upper house of the Legislature will open the budget cycle standing shoulder to shoulder — on the side of the taxpayers. A tough fight lies ahead, but this is a very good start.