The looming state budget gap, which could easily exceed $10 billion, is the most obvious and immediate challenge facing Gov. Andrew Cuomo.

As Cuomo said during his campaign, “raising taxes is not an option.” State taxes and fees already have been raised by at least $9 billion in the past three years. Meanwhile, counting temporary federal stimulus aid, New York’s state operating funds budget has grown by 11 percent since fiscal year 2007-08, when the Great Recession began.

To clean up the budget mess, Cuomo must push for deep reductions in recurring “baseline” spending. Temporary cuts won’t be enough; as former Lt. Gov. Richard Ravitch put it, New York has a massive “structural” problem demanding fundamental changes to the way government does business.

Having won by a landslide, Cuomo can now draw on a deep well of political capital as he fights the forces of status quo in the state Capitol. But the new governor will invite a voter backlash if he balances the state budget merely by shifting expenses to New York’s heavily burdened local tax base. For Cuomo, success will ultimately be spelled “C-A-P.” He must deliver on his promise to seek a binding limit on state spending — and, above all, on property taxes.

A tight, comprehensive property tax cap was the cornerstone of the “bold new approach” to governance that Cuomo promised when he formally launched his candidacy last spring.

Step one is to introduce a bill that contains the basic elements of his campaign proposal:

The annual growth in county, municipal, school district and special district property tax levies will be capped at 2 percent or the rate of inflation, whichever is less.

No exceptions will be made, other than natural growth in the tax base, one-time legal settlements and “extraordinary” capital expenditures.

The cap could be overridden in any given year by a 60 percent majority of the voters in the affected jurisdiction.

Once the bill is proposed, Cuomo must resist the inevitable attempts to drill it full of loopholes, such as an exclusion for pension costs. For example, as shown in a recent Empire Center report, likely increases in tax-funded contributions to teacher pensions alone would be enough to boost school tax levies by 3.5 percent a year over the next five years.

Cuomo should push the Legislature to give local governments the added tools they desperately need to better manage their expenses under the new cap. These would include a statewide freeze of public-sector salaries; changes to state Taylor Law provisions governing collective bargaining with public employee unions; mandated increases in local employee contributions to health insurance coverage; and, last but not least, fundamental reform of the public pension system.

Above all, however, the property tax cap must come first. It is an essential catalyst — an absolute prerequisite for real and lasting change at every level of government in New York. If Cuomo can drive home that point and make it stick, he will score an enduring triumph.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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