Study: Tax cap would have cut $2G from typical LI bill

ALBANY - A study released Sunday found the typical homeowner's tax bill on Long Island last year would have been $2,110 less had a 4 percent cap on property tax increases been in place since 1996, the last time this was a major issue.

Commissioned by Gov. David A. Paterson to lobby the Assembly for passage of the cap, the analysis shows local homeowners would have saved substantially more in 2009 on their school and other local government taxes than the statewide average of $1,731. Overall, Long Islanders would have paid $2.7 billion less in taxes last year.

The governor's budget office found the typical homeowner in Nassau and Suffolk counties - someone paying the region's average residential property taxes and receiving the average STAR exemption - would have saved nearly $13,400 between 1996 and last year; residents would have paid a total of $17.4 billion less.

The tax-cap issue already is resonating on the campaign trail and in the State Legislature. Both gubernatorial candidates, Democrat Andrew Cuomo and Republican Carl Paladino, back a more stringent cap of 2 percent. In the State Senate, which has passed a 4 percent cap by comfortable margins in recent years, both political parties hope the issue appeals to suburban voters who could determine control of the narrowly divided chamber.

"If we had had a property tax cap in effect all these years . . . homeowners would have saved huge amounts of money," Paterson told Newsday. "The state also may have gotten more revenue because many homeowners might not have moved because New York has the highest property taxes in the country."

But cap opponents argued limits on tax increases without also reducing state regulations on schools and local governments could result in teacher layoffs, cancellation of art and music classes, and the deterioration of highways and bridges. They spoke generally about the issue without having seen the study.

Larger classes predicted

Some school superintendents in Nassau and Suffolk predicted larger class sizes and fewer after-school programs if a cap were implemented. Schools account for the lion's share of a local homeowner's tax bill.

"Where do we balance our budget?" said Pless Dickerson of the Wyandanch schools. "Sixty-two percent of our operating budget is from homeowners because we have a small commercial [tax] base. . . . I know it's a tremendous burden on homeowners to raise taxes, but we have an obligation to educate youngsters."

William Johnson of the Rockville Centre schools said academic programs were likely to be cut because school districts are restricted under union contracts from reducing salaries and retirement and health benefits.

Noting the relatively small tax hikes of recent years, David Albert of the state School Boards Association added, "I question whether there would be tremendous savings for homeowners."

On Long Island, proposed tax levies for the 124 school districts were up by 3.41 percent this year, 2.72 percent in 2009 and 3.87 percent in 2008. The large majority of budgets were approved by voters.

However, some fiscal experts said a cap could help pave the way for more sweeping structural reforms. "The positive effect of the cap is not simply to limit local taxes but also to put pressure on the State Legislature to reform spending on pensions, health care and other costly programs," said E.J. McMahon of the conservative Empire Center for New York State Policy.

Paterson willing to wait

Paterson wants Assembly members to pass his property tax cap soon. But in an interview Friday, he wavered on his threat to force them back to the Capitol before the Nov. 2 elections. He said he would scrap plans for a special session if the Assembly showed him a "concrete plan" for adoption in early 2011.

Tax-cap bills have passed the Senate since 2008, with all nine Long Island members voting in favor. In the 150-member Assembly, Democrats from New York City hold sway, and they oppose a tax cap. The Island's 21-member delegation is nearly evenly split between the parties.

Assembly Speaker Sheldon Silver (D-Manhattan) was unavailable for comment. He has said Paterson's cap would fail in the lower chamber but also expressed a willingness to work on a bill with Cuomo, if he becomes governor.

Paterson's proposal calls for capping yearly increases in property taxes by 4 percent or 120 percent of inflation, whichever is less. The cap would apply to most school districts, special taxing districts and local governments. Tax hikes to pay for school construction would be exempt, and the cap could be overridden by voters.

Robert Megna, Paterson's budget director, acknowledged the study wasn't exhaustive, in part because of an absence of data for some years and some parts of the state. Eighteen villages in Nassau and Suffolk were excluded because of incomplete or inconsistent data.

Megna said, "We had to make some reasonable assumptions and live with the data available to us, but we feel we got close to what the impact would have been had the cap passed years ago."
 

Where they stand on property-tax caps

 A property-tax cap has garnered strong support in recent polls. It has passed the State Senate several times since 2008 but never come to a vote in the Assembly. Here's where some key officials and candidates stand:

ANDREW CUOMO, Democratic gubernatorial nominee

Has proposed a cap of 2

percent or the inflation rate, whichever is lower. The cap would apply to school districts and local governments, including fire and other special districts. A larger tax increase could occur with the endorsement of the local governing board and 60 percent of voters.

CARL PALADINO, GOP gubernatorial nominee

Wants a tougher, 2 percent cap, instead of Gov. David A. Paterson's four-percent cap. Says the 2-percent cap is a "half measure" until his plan for helping counties and school districts cut taxes is implemented.

SHELDON SILVER, Assembly speaker (D-Manhattan)

Opposes 4 percent cap on school districts and other local governments that Paterson is pushing. Has expressed willingness to negotiate the issue if Cuomo becomes governor.

JOHN SAMPSON, Senate chief (D-Brooklyn)

Voted against the 4 percent cap in 2008 but has since endorsed it as Democrats woo suburbanites this election year in hopes of keeping the Senate majority.

DEAN SKELOS

Senate minority leader

(R-Rockville Centre)

Has championed the 4 percent cap for several years and made it a key issue in this year's elections.