Tax cap fever

Nope, not Madison.  These tempers were flaring at the Legislative Office Building’s Well in Albany on Tuesday morning (believe me, you won't have to watch the whole thing to get the flavor of it):

We've written about the issues surrounding a property tax cap several times; this post, for instance, may be helpful since it describes the experience of Massachusetts with a cap over the course of several decades.

While the debate over a tax cap has been raging for a while, the alternate scenario that seems to be getting the most play currently is the so-called circuit breaker.  At the Ithaca Journal:

Opponents of a cap have pushed for a "circuit breaker" approach, which would limit property-tax rates for low- and middle-income taxpayers.

Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, said the circuit breaker is the choice of the people, and the only way to provide meaningful relief.

Although it's certainly not made clear in the Journal article, the way such a circuit breaker would probably work would be like this (in the Empire Center's The Case for a Cap):

A circuit breaker provides homeowners (and, in some versions, apartment dwellers as well) with a state income tax credit for a portion of their property taxes paid on their homes that exceeds a given percentage of their household income....

[....] One current version, co- sponsored by Assemblywoman Sandra Galef (D-Ossining) and Sen. Elizabeth Little (R-Queensbury) would apply to homeowners with incomes below $250,000 who have lived in their homes for at least five years.a The credit would be calculated as 70 percent of the amount by which property taxes exceed a limit depending on income; for example, a downstate homeowner with income of $100,000 and a $9,000 property tax bill would be eligible for a state tax credit of $2,100.

Although the bill sponsors have issued no estimate of its fiscal impact, an independent analysis suggested it would generate about $1.6 billion in tax credits– meaning it would require either a state tax increase or offsetting state budget cuts in the same amount. (p.15)

So, since the circuit breaker, which amounts to a statewide tax credit, shifts part of the burden from the local property tax base to the statewide tax base, it would not put pressure on school districts and municipalities to hold down growth in employee salaries and benefits, for instance.

So the circuit breaker alternative isn't the route to take.  But if you have a hard 2% property tax cap, then

[l]ocal government and school officials [will be] concerned that a comprehensive property tax cap will make it difficult for them to continue providing essential services while dealing with the mounting costs of state-mandated contracting rules and employee benefits. However, an ever-rising burden of property taxes can’t be seen as the only alternative.

Here are a dozen mandate relief priorities—most of which have been embraced by a broad spectrum of county executive, mayors and school board members around the state—that will give local governments the tools they need to reduce costs and live within a cap:

1. Impose a statewide freeze on public-sector salaries for up to three years. The Legislature has the statutory power to defer scheduled base salary and pay increment increases in light of the state’s fiscal crisis.

2. Repeal the Taylor Law’s “Triborough” amendment, which requires local governments and schools to continue paying longevity “step” increments even after a contract has expired...(p.19)

Read the whole thing.

Human nature being what it is, without the hard tax cap being in place first, there will be little incentive to make the difficult but necessary choices in NYS.