Governor David Paterson began his tenure in the spring of 2008 on a promising note by embracing a broad, no-exceptions cap on school property taxes, almost exactly as proposed by the Suozzi Commission on Real Property Tax Relief.  But when the Senate actually passed his bill a few months later, he backed off and dropped the issue.

Last year, Paterson quietly reintroduced the cap — but added a massive exception that would destroy its effectiveness.  A few months later, he switched gears and began advocating a property tax circuit breaker–i.e., no limit on property tax levies, but subsidized tax credits for some homeowners.  The circuit breaker would begin flowing if the state budget ended a year in surplus under a separately proposed statutory spending cap.  This byzantine proposal has attracted no interest in the Legislature.

Today, the governor backed even further away from the property tax cap recommended by the Suozzi Commission.  His latest tax cap proposal would extend to all local governments, but adds a further carve-out that makes the exercise virtually pointless.

The governor’s office did not immediately release the details of the tax cap bill.  But buried at the bottom of his news release is this passage:

This (property tax) cap would provide immediate relief to all taxpayers. At the same time, this bill would protect critical municipal services by allowing local government officials to override the cap with a two-thirds vote of a local government’s governing body when circumstances demand an additional tax levy. [emphasis added]

The original, Massachusetts-style school property tax cap recommended by the Suozzi Commission could be overridden only by taxpayers in a district-wide referendum.  This new version of the cap could be overridden by the elected officials who set the tax rate, such as school board members, if they decide (in the words of the governor’s release) that “circumstances demand” it.  Which means that, in the vast majority of cases, it would not actually cap anything.

At this point, why does Paterson even bother?  Tax cap advocates will see through this, and the teacher unions and local government groups will continue to oppose any kind of cap, no matter how porous.

The press release announcing the governor’s latest property tax cap brainstorm actually led with another proposal — a constitutional amendment to cap state spending.   A constitutional cap would certainly be more meaningful than the statutory cap Paterson first proposed last year.  But talking about inflation-based budget caps at a time when spending needs to be reduced is beside the point.

Constitutional amendments are submitted to the state’s voters for ratification only after passage by two consecutively elected Legislatures, which means the governor’s spending cap would have to be approved this year and next, when Paterson will have left office.

But Paterson already has the constitutional power to veto any line-item of spending added to his budget by the Legislature.  The closely divided Senate is incapable of mustering a two-thirds override vote, which means Paterson could make any veto stick.  At this late date, he has sent the Legislature no signals on whether he intends to use the power he already has.  Indeed, one reason state spending continued soaring beyond affordable levels in 2009-10 is that Paterson was unwilling to use his veto last year.  Instead, he agreed to a budget that boosted state funds spending by 8 percent (counting temporary stimulus funds) and complimented the Legislature for joining him in making “difficult choices.”

About the Author

E.J. McMahon

Edmund J. McMahon is the Empire Center’s founder and research director.

Read more by E.J. McMahon

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