A big court win for NY’s tax cap

by E.J. McMahon |  | NY Torch

Tax-Cap-150x150In a resounding win for Governor Andrew Cuomo and for property owners across New York, a state Supreme Court justice in Albany has dismissed a teachers’ union lawsuit that sought to invalidate New York State’s property tax cap on constitutional grounds.

A legal challenge from New York State United Teachers (NYSUT) was all but inevitable once Cuomo’s tax cap was passed by the Legislature in 2011. The union has a strong self-interest in overturning the law, whose main effect is to limit the amount of money available available for increases in teacher compensation, which comprises the lion’s share of school budgets. 

As noted in this space when the suit was filed last year, NYSUT’s case was weak to start with, boiling down to yet another constitutional challenge to New York’s school finance system — in this case, the long-standing requirement for voter approval of school budgets and taxes outside major cities.

Justice Patrick J. McGrath, a Rensselaer County Democrat elected to the state bench in 2008, clearly was not persuaded by the union’s arguments; indeed, his 16-page opinion could be summed up as “harrumph.” Practically the only bright spot for NYSUT was McGrath’s threshold finding that the individual plaintiffs, including both teachers and parents of public school students, had standing to sue.  Beyond that, he rejected each and every one of the grounds raised by the union while agreeing with key arguments made by lawyers for the defendants–Cuomo, state Comptroller Thomas DiNapoli and Education Commissioner John King.

For example, while NYSUT claimed the cap erodes “local control” of school spending, McGrath pointed out that the term “encompasses both favorable and unfavorable consideration of a school districts’ budget, while the plaintiffs (NYSUT) appear to equate local control with budget approval.”  He continued:

The vote itself connotes local control. Stated differently, local control is still served if a “cap” exceeding budget os disapproved by a district’s voters. [emphasis added]

McGrath also rejected the union claim that the ballot notice required under the tax cap law deterred school boards and taxpayers from seeking to override the cap:

Understanding what is required to approve a proposed cap-exceeding budget might influence the way a voter votes, but only  in an unpredictable way; some may be inspired to make sure the budget passes, and vote in favor; others may be inclined to vote against simply because the budget seems excessive.

NYSUT’s challenge to the 60 percent threshold for voter approval of budgets exceeding the tax cap also failed to win the day. Agreeing with the defendants, McGrath noted that a line of U.S. Supreme Court precedents had said that a supermajority requirement would not violate the constitution’s equal protection doctrine as long as it was not designed to discriminate against amy particular class of voters. 

The union reportedly says it’s “very likely” to continue its legal challenge. McGrath provided one possible opening for keeping the case alive by giving NYSUT permission to amend its original complaint to reflect this year’s enactment of Cuomo misnamed “tax freeze” program, which temporarily gives tax credits to homeowners living in school districts that stay under the cap. The union claims that the tax credit — which is temporary, and available only to residents of districts who have already explicitly voted to accept tax levies below the cap — “exacerbates” the impact of the cap. Which is, to put it kindly, even more of a stretch than the arguments that McGrath just rejected.

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- E.J. McMahon is the Research Director at the Empire Center for Public Policy.