Editorial: The tax cap gets tighter, but is doing its job

Letting local government spending increase faster than incomes Letting local government spending increase faster than incomes isn't sustainable. Photo Credit: iStock

advertisement | advertise on newsday

When you hear school and municipal officials complain about the painful tax cap, remember: It's supposed to pinch, to force hard decisions and prioritize spending.

That's the only way to stem our property tax burden, which, according to the state comptroller's office, grew twice as fast on Long Island as inflation from 2000 to 2010. Worse, incomes here during that period remained flat.

Letting local government spending increase faster than incomes isn't sustainable, but making the budgets work is getting tougher as the cap takes hold. This is particularly true in school districts, which get almost all their local revenue from property taxes.

We'll hear from officials that this budget year -- the second since Albany capped property tax hikes -- is tougher than the first. Last week Comptroller Thomas DiNapoli announced that every entity operating on a fiscal year that begins Jan. 1 will face a cap of 1.66 percent on tax growth. All New York counties and towns will deal with the lowered caps, as well as most cities and a few villages.

The cap, which Gov. Andrew M. Cuomo signed into law in 2011, limits increases on property tax levies to 2 percent, or the growth in the Consumer Price Index, whichever is smaller. The cap doesn't limit the increases of each property owner, however, because the rate used in calculating those bills changes based on the value of all the combined property in a taxing district.

Last year the cap was 2 percent.

Nassau Executive Edward Mangano says there won't be a tax increase in 2014. Suffolk County Executive Steve Bellone hasn't announced whether he will seek a tax increase, but Suffolk is far less dependent on property taxes than most counties, so residents won't feel much of a pinch if there is a hike.

 

That 0.34 percent between 1.66 and 2 percent isn't likely to be noticed by taxpayers. It will however, be felt like a branding iron by officials constructing budgets. After all, they must pay for increasing health care costs and contractual salary bumps for employees that are rising faster than the taxes. They will have to continue to find ways to cut other spending, and, if they want to keep residents happy, avoid cutting service quality or desirable programs. That means more efficiency and productivity.

But a bigger hit, and the louder cries of anguish, may come in January, when the comptroller's office sets the tax cap for school districts. It's too soon to say what the school district cap will be, but it may fall near 1.66 percent.

For a school district with a $100-million local tax base, like South Huntington, the difference between a 2 percent hike and a 1.66 percent increase is $340,000. That's enough to provide for pay and benefits for two or three teachers, or to fund extracurriculars and clubs. Many districts have enacted or threatened significant programming cuts even when they've been able to hike taxes the full 2 percent, so an even lower cap would have even more consequences.

Yet despite those threats and cuts, the taxpayers have mostly supported the cap. During this year's school budget votes, seven Long Island districts sought the 60 percent approval from voters that is needed to raise taxes by more than 2 percent. Six of those seven failed.

The real lean times are probably still in the future. There will likely be years when the cost of living again increases by 4 percent, as it did in 2008. There could again come a year when inflation hits 13 percent, as it did in 1980. Yet the tax cap would still be 2 percent.

 

Getting government and school spending under control never was going to be painless. We want top schools, beautiful parks, smooth roads, safe streets and the many other services that make our quality of life attractive. The response has traditionally been for school districts and municipalities to claim they can't provide those services without more and more money.

But, finally, they have to figure out how to do so, no matter how difficult that is. That's what taxpayers wanted, and needed -- and so far, it's working.

You also may be interested in: