Tuesday’s school budget votes marked the fourth year in which school districts, as well as other governmental bodies such as towns and counties, have been living under the property tax cap that Gov. Andrew Cuomo pushed through at the start of his first term.
While government officials and groups like teachers unions have chafed under the mechanism — which holds annual tax increases to approximately 2 percent — a coalition of business groups argue the cap has saved New York taxpayers an estimated $7.6 billion since it first took effect.
“It’s really been a total reset,” said E.J. McMahon, president of the fiscally conservative think-tank the Empire Center, which joined sympathetic groups — including the state Business Council — at a presentation at the Capitol.
The tax cap law is set to expire or “sunset” in June 2016, although a unique clause tucked into the 2011 legislation creating the device links its survival to renewal of New York City’s rent control laws, which are due for renewal in June of this year.
Few believe that the rent control laws will expire; lawmakers have kept them going for decades. And there’s been no talk of letting the cap die, either.
But Senate Republicans and Cuomo on Tuesday said they believe the tax cap should be made permanent.
“The more we can do to keep property taxes down, the better off we are,” said Senate Republican Majority Leader John Flanagan, whose bill making the cap permanent was approved by the chamber Tuesday afternoon.
That vote came just after the Democrat-dominated Assembly passed its own one-house bill extending rent laws. Both measures are expected to be adjusted in final negotiations.
“The tax cap has successfully broken the cycle of skyrocketing property tax increases,” said Cuomo in a statement.
Assembly Speaker Carl Heastie was less enthusiastic. The cap “is something that’s on their list,” he said, referring to Senate Republicans.
His conference’s main priority for now is renewal of the rent controls, which keep costs in check for thousands of their constituents in New York City.
Education groups, especially teachers unions, insist that the cap helps perpetuate systemic underfunding of schools, especially in neighborhoods or regions burdened by poverty.
Lawmakers also will grapple with another downstate housing measure in the coming weeks: Continuation of the tax abatements for New York City developers. Known as the 421-a program, those could also be linked or used as a bargaining chip.
Senate Republicans are squarely behind 421-a, while Assembly Democrats are focused on rent control — although Heastie on Tuesday also acknowledged the importance of the developers’ tax break as an incentive to various kinds of residential development.
One likely scenario could be renewing all three — rent control, 421-a and the tax cap — for another finite period of time.
On Tuesday, the Empire Center, the Business Council, the National Federation of Independent Businesses and other groups made their argument for a permanent tax cap by focusing on school taxes — a piece that makes up roughly two-thirds of the average household property tax bill, with county, municipal and others government entities making up the rest.
The $7.6 billion savings estimate was based on the historic growth of school taxes prior to the cap. McMahon pointed out that before the cap, school taxes over three decades rose an average of 6 percent annually.
Since the cap, annual growth has averaged 2.2 percent, which is the lowest rate of increase since 1982.
Voters in local school districts can exceed the cap with a two-thirds majority vote, although few have done so.
Tax cap supporters have even created a “Keep the Cap” website (http://www.keepthecap.com)that lays out estimated school tax savings by region since the advent of the cap.
In the greater Capital Region, for example, property tax payers have saved an estimated $587.2 million since the cap took effect, with $253 million worth of savings this year.
During a debate before Senate passage of the cap, Syracuse GOP Sen. John DeFrancisco said the cap is popular with constituents.
“I get more comments on the property tax than anything else,” he said. “People want to keep it going. They don’t want to go back to that old cycle.”
The measure passed 47-13.
© 2015 Albany Times Union