State tax cap fails to rein in many towns, school districts

City of Mount Vernon resident John Gallagher speaks City of Mount Vernon resident John Gallagher speaks out against a proposed budget which calls for considerable tax increases during an open meeting at City Hall. (Dec. 6, 2012) Photo Credit: Xavier Mascarenas

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As the Hudson Valley's already-high taxes continue rising, local leaders and taxpayers are bemoaning the state's tax cap, which hasn't worked as well as many had hoped.

In 2012 budgets, 19 percent of local governments and 5 percent of school districts overrode the cap. Final data for the 2013 budget season are not available -- because some municipalities are still in the throes of budget negotiations -- but so far the outlook on tax rates for next year looks bleak.

In Rockland County, the county is considering an override of the cap, as are the towns of Clarkstown, Haverstraw and Ramapo. In Putnam County, Carmel and Putnam Valley went over the cap. In Westchester County, the cities of New Rochelle and Mount Vernon are considering overrides, as are the towns of Pound Ridge, Lewisboro, North Salem, Mamaroneck and Mount Pleasant.

"It's getting harder and harder to stay under the cap," said Peter Parsons, town supervisor of Lewisboro, which is trying to reduce what now looks like a 7 percent tax increase.

Many local leaders cite unflagging costs as the cause of their budget woes. The cap, they say, has done nothing to reduce underlying expenses. It simply limits the revenue.

"Unfortunately, the Legislature's failure to pass meaningful mandate relief this year, along with double-digit increases in mandated pension and health insurance costs, means cities will have a very difficult time staying under the cap in 2013," said Peter Baynes, executive director of the New York State Conference of Mayors.

Gov. Andrew Cuomo is not backing down on the cap. Just last week, he called it a key priority. His office issued a report in September citing 2011-12 budgets as evidence that the cap is working to restrain tax increases.

In the first year of the tax cap, the average rate of property tax increases was less than 2 percent, significantly lower than the 10-year average rate of tax increases, according to the governor's report.

"As we saw last year, many local governments who said they were going to pierce the cap ended up within it once their final budgets were approved," governor's office spokesman Richard Azzopardi said. "The final numbers definitively show that the tax cap worked to reduce property tax increases and give taxpayers the relief they need."

Those words and statistics come as cold comfort to Maryanne Olive, a business owner in Nyack. Her Rockland County taxes would increase 18 percent under the proposed budget passed by lawmakers last Wednesday. The Rockland budget now heads back to the county executive's desk.

"I would definitely say that I have not noticed things easing up," Olive said. "My taxes have multiplied so much it's ridiculous."

LEADERS: COSTS OUT OF OUR HANDS

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When Mount Vernon Mayor Ernie Davis faced more than 200 fed-up residents last Thursday to explain a proposed 9.8 percent tax increase, reaction was intense. Mount Vernon resident Angela Fontanez echoed the sentiments of dozens who approached the podium to blast city officials.

"You're looking at people who have struggled over the years, and we will not allow you to continue raising our taxes, year after year," Fontanez said. "It's just wrong."

Davis said the city is being squeezed from all sides, suffering from an eroding tax base and rising retirement and health care costs.

"It sounds good to have a 2 percent tax cap, but how do you accomplish that when 75 percent of your budget is with unions?" Davis said.

Parsons said that Lewisboro can't cut much more from its budget, explaining that the city can't go down to half of a building inspector.

"The assumption was made when they passed the 2 percent cap that all or almost all towns had been run laxly and there was a great slush fund there," Parsons said. "Quite honestly, of the smaller towns in northern Westchester, that is just not true."

OUTRAGE IN ROCKLAND

The tax cap pressure cooker won't stop once municipalities pass 2013 budgets. School budget season is just around the corner, promising another round of frustrating battles.

While taxpayers condemn the ease with which local officials can override the cap, with a simple 60 percent majority board vote, even in the face of public outcry, school officials see it the opposite way. They say it's unfair that they have to get a 60 percent supermajority of the public vote to override the cap, while towns can override with a 60 percent vote on town council.

The New York State United Teachers has promised to file a lawsuit challenging the tax cap law by the year's end. The Middletown school district also has retained a lawyer.

Only a handful of school districts in the Hudson Valley attempted to override the cap in 2012. Only three succeeded, and two of those had to take proposals to voters for a second time.

"The towns will be able to prevent themselves from going over the fiscal cliff and save a lot of things, and school districts won't," said Howard Miller, a labor and employment law attorney at Bond, Schoeneck & King.

At a recent Rockland County budget hearing, Clarkstown resident Ralph Sabatini called for the Legislature to make tough decisions, including laying off employees, rather than follow through on the planned 18 percent tax increase. Sabatini is vice president of a group called Clarkstown Taxpayers, which was organized to try to ease the tax burden.

"Frankly, I think it's a travesty, and clearly they don't much care what the people think," Sabatini said. "We can't keep going to the taxpayer ATM and putting in our card and saying, 'OK, you pay it.' "

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