The tax cap is too weak

In 2011, the tax cap was instituted by the state legislature at the behest of Governor Cuomo as a means to curtail the ongoing decline of New York State by limiting the growth of property taxes which were already 79 percent higher than the national average.

Although it’s anything but perfect – after just 5 years of 2 percent hikes your taxes will be more than 10 percent higher – it was advertised by Cuomo as being better than the alternative: It had not been uncommon for municipalities and school districts to drive up their levies by more than 5 percent per year. Among the worst in recent memory was a 3-year period ending in 2007 in which my total property taxes (local, county, and school) grew by a combined 17 percent.

In 2013, 2 years into the law, my combined tax burden grew by 3 percent – well above the cap.  That’s nothing compared to what City of Lockport taxpayers will soon experience (my heart goes out to them).

Taxpayers like us who are pained by these growing levies have found out since the cap’s dawning days that there’s a huge difference between the original intent of the law and the reality of what it became. The tax cap is really nothing of the sort, a law saddled with loopholes that permit tax growth far in excess of the mandated 2 percent mark or the rate of inflation if lower, which it is (1.56 percent).  

First and foremost among these flaws is the ability of governing bodies (such as town and village boards) to create a local law applicable to the budget year that would allow them to exceed the cap. To do so, they need only hold a public hearing followed by approval of 60 percent of the board. School districts, too, can pass higher budgets given that, unlike the towns, their residents elect to do so with a vote of at least 60 percent.

The cap’s weaknesses further confound local taxpayers with an exclusion for pensions; their growth is allowed to exceed 2 percent. Unlike private retirement investments such as IRAs or 401(k)s most public pensions have guaranteed outcomes in New York. So, when the economy falters, taxpayers have to make retirees whole by picking up the slack for the low or negative rates of returns on the investments that back state pension funds. As we saw during the Great Recession when Wall Street faltered, a lot was put on New York’s taxpayers. Only now are we finally seeing a decrease in the pension cost to local governments.

The greatest problem with the tax cap, though, doesn’t occur in our neighborhoods. Albany is the root of all evil in this state. The state legislature and executive branch can’t force unconscionable mandates upon taxing jurisdictions and expect them to stay within budget, especially when the state has done little to nothing to reform the requirements of said mandates. If Cuomo and Friends were serious about stemming the loss of New York’s economic lifeblood they would introduce any of hundreds of suggested reforms to these programs, the worst being Medicaid, for which the counties are on the hook for nearly $10 billion annually.

Albany, too, should cap its spending because what’s good for the goose is good for the gander. This year’s state budget is 3.6 percent higher than last year’s. The state shouldn’t preach -- no, demand -- thrift, if they can’t practice it themselves. 

Every government entity - our towns, schools, agencies and capitols - should cap (preferably decrease) their spending…just like we have to in our businesses and families if we expect to stay in business or not lose our homes to foreclosure.

On a side note, I have to do my first revision in ten years of writing this column. In a recent installment about racial profiling I included a report about one of my coworkers having been profiled while in Tonawanda. It was not Tonawanda, it was another community. My coworker was confused; not being from the area he did not know the local boundaries. My apologies to the Tonawanda Police (who took the time to look into the matter) and the reader.   



From the 15 December 2014 Greater Niagara Newspapers