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ALBANY -- Many New Yorkers will see an immediate property tax freeze and future spending cuts in local governments and school districts under the state budget agreement sealed Saturday.
The package -- valued at $1.5 billion in savings to as many as 2.8 million taxpayers -- would use a state subsidy in the form of an income tax credit. The credit would cover the increase in their next local property bill. Taxpayers would get that if their local governments and school districts keep their tax growth under the state-imposed 2-percent cap.
To benefit from the freeze for a second year, local governments and school districts would also have to detail cost-cutting plans that would reduce the tax levy at least 1 percent for each of the following three years. That plan would have to be approved by Cuomo’s budget director.
But the budget bill printed Saturday for a vote by the Legislature on Monday also provides credit for some deep cuts already made by local governments and schools. That would help municipalities and school districts avoid at least part of the required 1 percent in annual cuts.
The measure also includes a “circuit breaker” for two years for homeowners and condominium owners. That provision will factor in household income and the ability to pay into a property tax break.
For their taxpayers to remain eligible for the breaks, school districts, counties, cities, towns and villages must adhere to the state’s 2-percent cap. Renters will also see a tax credit.
The nonpartisan Tax Foundation think tanks ranks five New York counties -- including Westchester, Nassau and Suffolk -- among the dozen most heavily taxed counties in the nation.
The final budget deal is based on Gov. Andrew M. Cuomo’s top priority of addressing what he says is the state’s most onerous tax. He said high property taxes are forcing New Yorkers to flee to other states and keeping employers from setting up shop or expanding in New York. He had initially emphasized the need for thousands of local governments and school districts to consolidate, which isn’t a prominent goal in the final deal.
The circuit breaker was sought by Assembly Speaker Sheldon Silver. Sen. Jeff Klein (D-Bronx), who leads the Independent Democratic Conference, sought to include renters in the tax break. Senate co-leader Dean Skelos had sought the greater value of the property tax cuts over Cuomo’s initial propsal.
“It was a very balanced approach,” Klein said in an interview Saturday. “We applied a formula that I think will force local governments and school districts to come up with a savings plan to provide tax relief.”
For school districts and their teachers and students, the final deal is less restrictive on their finances, but still forces further cuts after layoffs and program slashing over five years of recession and fiscal crisis.
“We continue to worry that schools that have made big cuts already just how much more they are going to be able to cut,” said David Albert of the New York State School Boards Association.
“We have concerns the plan could be divisive in communities, pitting those who seek to protect educational programs against those seeking lower property taxes,” Albert said in an interview.
The state budget deal puts pressure on local government leaders and school boards who, if they fail to adhere to the fiscal restraints required, would deny the tax breaks to their constituents.