NYSUT loses lawsuit challenging tax cap

On Board Online • May 23, 2016

By Cathy Woodruff
Senior Writer

An appellate panel has upheld a lower court's dismissal of a challenge to New York's property tax cap. But New York State United Teachers, which brought the lawsuit with several parents and voters, is poised for a likely appeal to the state's highest court, seeking a green light to move forward with the case against the cap.

In a majority opinion for the Appellate Division's Third Department in Albany, Justice Eugene P. Devine rejected NYSUT's contention that the property tax cap (and a related provision known as a tax "freeze") adopted by state lawmakers is unconstitutional and that it denies equal protection under the law for school children.

Devine's ruling cited a lack of clear connection between the tax cap and any diminished ability to provide all children with an opportunity for "a sound basic education," as required by the state Constitution.

While the state constitution requires the state to "offer all children the opportunity of a sound basic education," the appellate court found, it "does not require that equal educational offerings be provided to every student."

The court also ruled that NYSUT failed to show that the tax cap law impairs financing of local educational programs sufficiently to prevent them from meeting the state's "minimum standard."

But a detailed dissent by Justice Michael C. Lynch offers a preview of potential arguments in an appeal. He said that the tax cap law could have implications that imperil local control and that would run counter to educational protections within the state Constitution.

"Our inquiry is not limited to a question of minimal funding," Lynch wrote. "Rather, the focus must be on the ability of a local school district to provide funding for enriched educational programs that go beyond the bare minimum."

New York's tax cap generally is described as a 2 percent limit on property tax levy increases. But, because the formula for calculating the cap is tied to inflation and because local variables can affect the cap in each district, the cap can be significantly above or below 2 percent.

The average maximum levy limit this year is 1 percent. The cap is actually zero or a levy decrease in some districts. Districts can exceed their tax level cap only if they obtain 60 percent voter approval.

While NYSUT challenged the supermajority requirement, the Third Department said it did not impose an excessive or unfair burden on school districts.

The property tax cap was conceived with the "legitimate goal in mind of restraining onerous property tax increases that were believed to be depressing economic activity in the state," the appellate decision said.

Part of local control includes the "variable willingness" of taxpayers to pay for educational services and facilities beyond the basics, the court said.

In his dissent, Lynch said New York's tax cap and freeze legislation has led to a situation in which taxpayers in poorer school districts wind up subsidizing, "at least in part," the tax credits received by those in wealthier districts.