COLONIE – To cap or not to cap. That will be one of the biggest decisions that a property tax study commission headed by former gubernatorial candidate and Nassau County Executive Tom Suozzi makes next month. And the battle lines on that issue are starting to emerge.

On Monday, during an informational meeting on the Commission on Property Tax’s progress, attendees heard some arguments against a tax cap, which has been touted as a way to reduce property taxes in the state, tops in the nation. A tax cap would place a limit on how much property taxes could increase annually.

While the idea is popular with taxpayers and some politicians, school officials and teachers unions worry that it would create unrealistic limits on spending.

Caps have caused problems in other states, some participants said.

For instance, Colorado’s tax cap, instituted in 1992, led to referendums against the practice, said Leif Engstrom, program manager for the Capital District Regional Planning Commission. He was among the approximately 30 people who showed up to learn what the tax commission was doing and to offer input.

And Morris Peters, a state Division of Budget examiner who hosted the meeting at The Crossings of Colonie’s town park meeting hall, said California’s Proposition 13 let that state’s schools “fall apart,” due to its sharp limits on revenue. That cap was passed in 1978.

Peters, though, said a 1980 tax cap in Massachusetts limiting local levies, or the amount of money a tax can generate, has worked.

With opinions both for and against a state-mandated tax cap, the issue is emerging as a key part of the commission’s work.

Some politicians have suggested that a hard cap will be difficult to pass, given the powerful political players like teachers unions that worry a cap could hurt school funding.

But others said much of the impetus for the commission came amid calls for an immediate tax cap. Rather than pushing for that, former Gov. Eliot Spitzer instead appointed the commission.

Attendees at Monday’s meet ing said New York’s many local governments – some 1,500 cities, towns and villages in 62 counties – could do a lot to increase efficiency and lower costs.

Berne town Supervisor Kevin Crosier, for example, said he saved more than 30 percent on oil, bottled water and uniforms by combining purchasing with Albany County, which was buying goods from the same supplier.

But Crosier said he tried unsuccessfully to get his Town Board to consider merging snow plowing duties with the county.

And Shenendehowa school Superintendent Oliver Robinson said some of the state’s more than 700 school systems should consider making joint bids for servic es like health insurance, which could provide bargaining leverage. “Let’s regionalize some of these things,” he said.

Other suggestions included ending some of the hundreds of property tax exemptions that exist in the state, including for church-owned property, or placing more reliance on sources such as sales taxes or other revenues to fund the schools.

Ultimately, however, the commission, which is supposed to give Gov. David Paterson a preliminary report on May 22, will have to grapple with whether it wants to recommend a property tax cap.

And whether a tax cap gets enough support may be up to Paterson, said Edmund J. McMahon, director of the Manhattan Institute’s Empire Center for Public Policy.

“He needs to come out at some point and make it clear that what he hopes to see is a real tax cap,” said McMahon.

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