For upstate homeowners, the centerpiece of Gov. Andrew Cuomo‘s proposed $2.2 billion tax-cut plan is a two-year “freeze” on the growth of New York’s smothering property taxes.

An analysis of tax rates in two local municipalities — one urban, one suburban — reveals that Capital Region homeowners’ rebates could be significantly more modest than advertised.

If the Cuomo plan is adopted by the Legislature, taxpayers in cities, towns, villages and school districts that stay within the state tax cap and try to cut costs by sharing services would be refunded any property taxes growth.

At its height next year, the freeze would cost the state about $1 billion a year and save the average homeowner between $350 and $500, officials have said.

But had Cuomo’s plan been in effect this year in Schenectady, which has repeatedly ranked among the highest-taxed communities in the region, the owner of a home the city considers average — one assessed a little above $114,000 — would see a rebate of city, county and school taxes of just $80, according to a Times Union analysis.

A Schenectady homeowner’s check would be $105 on a $150,000 house and $140 on a $200,000 house, according to tax rates provided by the city and school district.

In the town of Colonie, long regarded as one of the lowest-taxed communities in the region, the owner of a $200,000 home in the North Colonie Central School District would have seen a town, county, school and fire tax rebate this year of $230, according to the analysis. The check would be nearly $345 on a $300,000 house, according to tax rates provided by the town, much closer to the touted average.

The main reason for the difference between the two communities is that the proposed rebates are based not on a homeowner’s overall tax burden but rather on the change from one year to the next.

The apparent discrepancy between the actual local numbers and the promised average rebate statewide stems from the fact that the $350 figure provided by the Cuomo administration is an estimate that takes into account future spending levels and both downstate homes with sky-high assessments and accompanying tax bills — some well into five figures — as well as those in more depressed areas of upstate.

Three downstate counties — Rockland, Westchester and Nassau — broke the top five in a 2011 study by the Tax Foundation of the highest median property tax bills in the country. The study also found, relative to home values, the top 10 taxpaying counties were all in upstate.

Schenectady, tops locally, is 26th.

The difference, which Cuomo has highlighted, underscores the fact that property tax relief means different things in parts of the state with starkly different economies and housing markets.

Critics charge Cuomo’s plan is misleading in terms of how much homeowners might receive and fundamentally fails to address the structural factors driving up property taxes and driving residents out of the state.

E.J. McMahon, president of the fiscally conservative Empire Center for Public Policy think tank, called the entire marketing of the plan as a “freeze,” when it actually reimburses taxpayers for rising bills rather than actually capping them, a public relations coup.

“He’s won half the battle by using that terminology,” McMahon said. “The governor understands how the narratives are shaped here.”

McMahon said the plan’s requirement that local governments consolidate or share services in the second year of the freeze in order to make their residents eligible for the rebates falsely suggests the mere existence of the governments drive up taxes.

The true culprits, McMahon said, are too-generous public employee contracts — and the state laws that protect them — that Cuomo has been unwilling to reform.

But state Sen. Hugh Farley, a Niskayuna Republican whose district includes the city of Schenectady, is more open-minded about Cuomo’s effort — even if the upstate rebates may be less than advertised.

“We always support tax relief and tax cuts and anything in that area. But of course, the proof is going to be in the pudding,” said Farley, whose Republican colleagues in the Senate will play a crucial role in making Cuomo’s plan a reality. “I’m not going to pooh-pooh $80 (in savings) — because $80 is $80.”

The veteran senator also applauded the second component of Cuomo’s property tax relief plan, an income-based tax credit or “circuit breaker,” that would kick in as the two-year tax freeze is being phased out. The credit, which officials say would average $500, would be greatest for people whose property taxes consume a larger proportion of an annual income of $200,000 or less.

“I always liked a circuit breaker, and I applaud the governor for embracing it,” Farley said.

Critics worry about the logistical hurdles that might arise in trying to rebate homeowners across the state different sums of money depending on which cities, towns, villages, fire, library or sewer district they live in.

Farley called that concern “a valid criticism.”

While state Budget Director Bob Megna confirmed last week that homeowners would be receiving rebate checks, starting with this fall’s school tax bills, the Cuomo administration has not revealed exactly how the process will work other than to say it won’t be nearly as complicated as some suggest.

Assemblyman Phil Steck, a Colonie Democrat who also represents most of Schenectady, praised Cuomo’s move to tie tax relief to government consolidation.

But Steck said perhaps the biggest impact could be had if the state were to assume major local mandates, like Medicaid costs, while helping devise “alternative ways of raising revenue to properly fund local school districts.” (Cuomo has already capped the growth of local Medicaid costs.)

In many communities like Albany, school taxes make up as much as two-thirds or more of homeowners’ annual property tax burden.

Meanwhile, the Cuomo administration contends the circuit breaker paired with the requirement that taxing entities take strides toward shared services and consolidation are why the plan is not just a temporary reprieve but a step toward long-term relief.

“If you can just work together better, smarter, which we’re going to require in that second year,” said Division of Budget spokesman Morris Peters, “then you’ve created permanent savings.”

© 2014, Albany Times Union

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