New York State School Boards Association

A Blunt Instrument, A Frank Discussion: Governor Paterson Proposes Tax Cap Legislation

Wasting no time following the June 2nd release of the Tom Suozzi-led Property Tax Relief Commission’s (preliminary) report and press conference the following day, Governor Paterson has already prepared comprehensive legislation to cap school property taxes and overhaul the whole school budget vote process.  Today, NYSBBA obtained a copy of the Governor’s Program Bill #62, which has yet to be introduced in either house of the Legislature.  We expect the measure to be formally introduced shortly.

The Governor’s bill would impose a property tax levy cap on all school districts but the Big Five school districts.  The cap proposed is the familiar 4% or 120% of the CPI used for contingency budget calculations.  This year the lower number is the latter or 3.36%.  But, unlike the contingency budget rule, the governor’s cap is to be placed on the levy within the school district, not the underlying school district spending increase or the tax rate used to calculate an individual property taxpayer’s tax bill.

It is very important to note that the governor’s bill only addresses the tax levy cap.  It does not include proposals from two other sections of the Tax Relief Commission report’s recommendations.  Missing is (1) mandate relief (discussed extensively in the report) and (2) the much anticipated circuit breaker proposal to replace STAR.  Following commentary below, an overview of both the commission’s recommendations and the governor’s bill, some of which already abandons the commission’s recommendations , is presented.

For NYSSBA’s analysis of the governor’s tax cap proposal, and the bill text click here:

For a copy of the Tax Relief Commission report, click here:

For highlights of the Tax Relief Commission’s Report click here:

For NYSSBA’s press release click here:


What happens next with the governor’s tax cap proposal in the short run – to the end of this year’s regular session scheduled for conclusion June 23 – is honestly anyone’s guess.  Frankly, we think the prospect for enactment of the governor’s proposal in this short time frame is highly unlikely given the glacial pace of most legislative measures, let alone the highly controversial, politically charged, and technically complex nature of the tax cap.  Of course stranger things have already happened this year…

This commission – a legacy of the former governor – and its (preliminary) recommendations have now been embraced by the succeeding governor, but only in part.  Missing, despite extensive treatment in Chairman Suozzi’s report, is any help with mandate relief to actually tame or eliminate the multitude of uncontrollable cost drivers school districts wrestle with day and day out.  Of course, if the Wicks Law “reform” slipped into the budget earlier this year, real help may never be forthcoming.  There is no STAR reform, nor is there a circuit breaker to help those taxpayers without the current income to be able to reasonably afford to pay their property taxes, even if they want to support our schools.  Finally, there is no guarantee that the remainder of the promised four year increase to state school aid will continue, especially considering the ever worsening fiscal situation.  And no mention was made of working to hold our federal representatives accountable for the flagrant shortfall of billions of promised federal education aid for IDEA and NCLB.

If the tax levy cap is enacted, then we will be faced with the worst equation of all: A cap on our ability to make ends meet with local resources minus adequate state and federal aid subtracted by no management flexibility to save taxpayer resources due to crippling mandated cost drivers.

In the longer run, if no action is taken before session ends, then look next to this November’s general elections when our entire state legislature is up for election.  If no action is taken in the short term, then expect state legislative campaigns to focus on the tax cap and the cost of public education.  Control of the state Senate is up for grabs, and it could be a very competitive and even nasty election.  School board members will need to be on their “A game” for the debate.  At the same time, this may well be an opportunity, however unwanted, to present our case and explain just what is at stake to politicians who may attempt to demagogue the issue.

Following the November election, but before the new Legislature meets in January, there may be a special session.  Topics could include the current fiscal situation and even calls for mid-year cuts if things have deteriorated badly.  It could include judicial and legislative pay raises.  And it could include further tax cap discussions, but absent the loaded atmosphere of contested elections and battle for control of the state Senate.  In fact, if such a session occurs, much of the 2009-10 state budget parameters may be agreed to.  The Assembly Speaker has already signaled that discussions of a property tax circuit breaker, even if he views it favorably, cannot commence outside of the context of the next year’s budget.  It is likely that the state school aid phase in plan will be reviewed in the context of the tax cap proposal.  Also, maybe some of the mandate relief measures can be taken up then.

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