Friday, February 15, 2008

The Case Against A Property Tax Cap

Its The Spending, Stupid (And The Paucity Of State Aid)

All the talk -- from Spitzer to Suozzi, and every talking-head in between -- of capping school district taxes as a means of controlling tax hikes inevitably leads us (and all people of reason and intelligence, we hope) to the conclusion that a cap will do absolutely nothing to lower property taxes (even the potential for containment is dubious), let alone control the spending at the district level that lights that all too short fuse under the property tax skyrocket.

Caps, where they have been imposed, haven't worked out very well, either for the taxpayers or the school districts.

Even spending less, when much of the school district costs are fixed, contractual, or otherwise mandated (yet unfunded), may not be achievable barring cuts to the essential foundations of a sound education.

The solutions (some of which may well cause a hard swallow, particularly among State Legislators - in an election year, no less) must include so-called "circuit-breaker" legislation, which limits not the property tax itself, but rather, what the taxpayer has to pay, coupled with an across the board replacement of the regressive school property tax with (now hold your ears) a progressive income tax at the State -- not local -- level. [Equitable and adequate State Aid to public schools is essential in order to maintain quality education, and the State income tax as a means to fund the heretofore unfunded and underfunded is the lynchpin.]

Of course, getting State Legislators to so much as talk about -- let alone take action on -- an increase in income taxes is tantamount to campaigning for the other guy on a "read my lips" platform.

Then again, someone, somewhere, in some position of authority has to take a stand and bite that bullet, as the homeowner/taxpayer has had to do for far too long.

The income tax -- one of those inevitables nobody likes, and everybody wants to cut -- would provide the necessary stream of monies to finance public education, posing far less of a burden than the onerous, property-based tax.

And shifting the burden from localities to the State, from cash-strapped homeowners to all who pay income tax, is not only fundamentally fair, it is essential to maintaining schools of excellence, sustaining the growth of the local economy, and preventing property owners from fleeing New York, taking their wallets and investments with them.

Removing the property tax from the school funding equation should be a given. Capping the tax, however, is not only treating the symptom rather than curing the disease, it is akin to performing open-heart surgery with a chain saw.

Let not the operation be a success and the patient (be he student or taxpayer) wind up dead on the table.

If we are truly going for property tax "reform," let's do it right from the get go.
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From The Poughkeepsie Journal:

Valley Views: Property tax cap wouldn't be much help
By Robert McKeon

A choir of elected officials from all branches of state government have begun harmonizing a tune in the property tax reform movement - and it's not one we will enjoy if it gets produced.

Last week, Gov. Eliot Spitzer added his voice by suggesting he will propose "caps."

Unfortunately, caps almost always wreak havoc on educational performance and deliver no relief to the great many who are financially strapped. A little background on what lawmakers are auditioning around the valley:

- The Property Taxpayer Protection Act (A8775) is a bill local Assembly Republican members are headlining on their election-year tour. The legislation would "cap" the annual tax levy increase to the inflation rate or 4 percent, whichever is lower. John Whiteley of the tri-county (Warren, Washington and Essex) tax reform group points out, "Districts don't pay taxes, people do. It doesn't mean everybody will be capped at that rate - it's all based on individual assessments." Overburdened taxpayers would see higher property taxes. My local assemblyman claims it will provide "breathing room." For politicians perhaps, but not for taxpayers.

-History tells us not to buy a ticket to this show. Whether it's California's Proposition 13 or Massachusetts Proposition 21/2, states that enact "caps" show declines in education - sometimes dramatic. Passed in 1980, Proposition 21/2 (the levy increase limit) had some troubling opening performances; including an immediate 12 percent cut in teaching staff. No coincidence that the governor referred to the cap as a "blunt instrument." With overrides requiring a two-thirds voter referendum, only the wealthiest districts will thrive, further dividing New Yorkers by economic class. Studies confirmed alarming disparity in educational results according to the community's ability to override, and it is incredibly difficult to turn around a school district once it goes downhill.

-The notion that any one entity can control spending (and at the district level especially) continues to frustrate those who study educational funding. The federal and state governments determine how much they will contribute to the equation. Local school districts have no say. Nor can they dictate the Wall Street performance of union pension funds. A cap merely means the boiling stew will overflow and create additional "messes" to be cleaned up later.

-State senators are touring with a few catchy songs under their belt. Legislative bills include ridding us of unfunded mandates and a doubling or better of the infamous STAR. Gioia Shebar of the Ulster County-based Tax Nightmare group rightly calls that opera "Franken-STAR" after the monster of a misguided program that it has become. Our state senator told a captive audience his chamber passed a bill to phase out property tax for primary homeowners over five years. The reformation hymn at last. When it came time to disclose where the nearly $10 billion of replacement funding would be coming from, he developed a sudden case of laryngitis.

-If they want better reviews, then they need to play the people's kind of music. Any "cap" should be on the amount of money the taxpayer has to contribute. A better opening act might be to adopt circuit-breaker legislation that would limit what an individual would be required to pay, such as the Galef/Little bill (A1575/S1053). It calls for homeowners to be reimbursed for school taxes that exceed a certain percentage of their income. Then they will be playing our song - a direct relationship between the income we earn and the taxes we pay. Price tag - around $3 billion with some important modifications. The next step to an income-based system would be a much smaller leap.

Spitzer hasn't yet released what his caps look like. Let's hope he proposes something that won't injure one of the most important "services" a high-paying employer looks for - good schools. The only cap our member groups are advocating for are the ones that go with a matching gown.

Robert McKeon is an executive committee member of the New York State Coalition for Property Tax Reform and is the director of The Tax Reform Effort of Northern Dutchess (TREND). Web site:

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