While he carefully avoids a flat rejection of the idea, Assembly Speaker Sheldon Silver has been expressing doubts about Governor Eliot Spitzer’s proposal for a cap on school property taxes.

As reported in today’s Schenectady Daily Gazette:

Silver, D-Manhattan, told a state Conference of Mayors meeting that Gov. Eliot Spitzer’s proposed state budget is a good start, but the Assembly majority has concerns about it. “High among those concerns,” he said, “is the governor’s proposal for a property tax cap.”

Silver said he is worried about the cap limiting revenues needed for important goals such as universal pre-kindergarten programs and reducing class size, and making good on the state’s commitment to fund the settlement of a lawsuit mandating increases in funding for New York City schools.

Silver also expressed concerns about caps limiting revenue for other worthy government programs helping the poor, sick and elderly, and wondered where the state would find extra money if a commission appointed by Spitzer to study the issue just proposes shifting costs to the state.

But such concerns were nowhere in evidence when a sweeping proposal to tightly cap annual growth in all local property taxes in New York was first introduced in the Legislature —by none other than Assembly Speaker Sheldon Silver.

It was 1995, and legislative Democrats were resisting a huge cut in state personal income taxes proposed by newly elected Republican governor, George Pataki.  One of the arguments used by Silver and other income tax cut critics was that it would result in a “tax shift” from the state to the local level.  To prevent this from happening, Silver proposed the Real Property Tax Limitation Act (A.6171 of 1995-96).

As explained in this press release issued by the speaker’s office on March 14, 1995, the bill “would allow local revenues from the real property tax to grow at no faster than the annual inflation rate as reflected in the Consumer Price Index.”  The bill hinged on a maintenance-of-effort provision: the cap would remain in effect only as long as state aid was not reduced.  Local government officials could vote to exceed the limit, but only in “extraordinary circumstances” after a public hearing, the speaker said.

The property tax cap was passed by the Assembly but was never taken up by the Republican Senate majority.

Two years later, Pataki proposed an inflation-linked annual cap on school property tax levies as part of his original STAR (School Tax Relief) plan.  In the face of strong opposition from the statewide teachers’ union, New York State United Teachers (NYSUT), the governor stripped the cap provision from the bill before it was enacted.  His subsequent, half-hearted attempts to resurrect the cap proposal in different forms were rejected out of hand in the Legislature.

Spitzer has now assigned a special commission headed by Nassau County Executive Thomas Suozzi, to recommend a cap on school property taxes and to study other property tax and local finance issues.

About the Author

Tim Hoefer

Tim Hoefer is president & CEO of the Empire Center for Public Policy.

Read more by Tim Hoefer

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