Cuomo battles legislature over property tax freeze

ALBANY -- Although the payoff for taxpayers may be small, the fight between the State Legislature and Gov. Andrew M. Cuomo over his centerpiece issue of freezing property taxes has become the biggest battle of the 2014-15 budget.

"What we heard in the budget hearings was that nobody liked the governor's proposal the way it was presented," said Sen. Diane Savino (D-Staten Island). "Obviously, the unions don't like it, the local governments didn't like it, school districts didn't like it -- nobody liked it."

Cuomo has made it clear the property tax issue remains his top priority. "To me, it's the single most important thing in the budget," Cuomo said.

As budget negotiations enter their final full week before the April 1 deadline, Cuomo has made a priority of first freezing, then curbing the growth in property taxes, which he said is New York's No. 1 problem. Legislative leaders, however, say Cuomo's modest savings would further cut services for residents, while pushing many governments closer to fiscal crisis after years of layoffs and cuts.

Assemb. Keith Wright (D-Manhattan) said he expects an agreement. "This is one we will be able to negotiate," said Wright, who has seen more than 20 years of state budget battles. "It will not -- will not -- threaten an on-time budget."

The nonpartisan Tax Foundation think tank ranks five New York counties -- including Westchester, Nassau and Suffolk -- among the dozen most heavily taxed in the nation. When property values are factored in, many upstate counties also make the top 50.

Freezing property taxes is a budget win in an election year for Republicans, moderates and Cuomo, who tries to balance fiscal conservatism with progressive social policy. For liberals, this is the first fiscal year since the Great Recession when tax revenues are meeting and sometimes exceeding projections, so they have money to spend on their programs, making a property tax freeze less contentious.

Despite the political fervor over finally tackling high property taxes, New Yorkers might not feel much of a break even if Cuomo's plan passes.

A typical home in Brookhaven would see a two-year benefit of about $100, said E.J. McMahon of the fiscally conservative Empire Center on Public Policy think tank. "That is why this whole thing is bogus," McMahon said.

Cuomo's office disputed that number Sunday night, saying the average savings for Suffolk homeowners would be $500, in the second year -- the peak year.

Meanwhile, legislators and Cuomo report progress on other budget issues that once seemed to be sticking points.

Cuomo appears to be winning the day on creating a statewide expansion of prekindergarten using state funds rather than a New York City tax increase on high earners pushed hard by Mayor Bill de Blasio. Lawmakers have warmed to legalizing marijuana for medical use as an alternative to Cuomo's more restricted legalization, which he can do by executive order.

Public financing of campaigns appears to remain solidly blocked by Senate Republicans and the Dream Act, to provide college financial aid to immigrants brought to the United States illegaly as children,was defeated in the Senate a week ago. Cuomo, however, is being pressed to revive that issue in the budget, and it would cost a relatively small $25 million in the $142 billion budget.

Cuomo showed how important he sees his property tax freeze proposal by pressing it in a statewide tour last week.

Two hundred local officials support his plan, he said. "What does it take to explain to the legislature that we can't keep raising property taxes?" Cuomo said. "You are pushing New Yorkers out of this state. You are pushing business out of this state."

Cuomo's plan would offer a $400 million state subsidy to local governments and school districts for up to two years, which would give taxpayers a direct tax credit that would offset the increase in their bills. Taxpayers whose government did not have a tax increase would get a tax credit equal to 2 percent of their tax bill.

But in exchange, local governments and school districts would have to stay within the state-imposed 2 percent cap on spending growth as well as consolidate or share services in long-term savings plans approved by Albany. Local governments would have to show 1 percent cuts in spending for each of the three years once the two-year subsidy ends.

The issue has torn even some majority lawmakers who like Cuomo's idea of seeking government consolidations.

"To me, it's an idea that has come, but it's hard to tell local officials to close up shop," said Assemb. Joseph Lentol (D-Brooklyn). "I think consolidation is a good idea. You can't deny we have to cut when we can, but that's only me. . . . The politics is hard."

More than 100 local government officials have said the plan is impractical or impossible after layoffs and spending and service cuts by local governments in recent years.

"People like their local governments," Savino said. "They like their own police departments, they like their own schools. So consolidation hasn't worked."

Senate co-leader Dean Skelos (R-Rockville Centre) and Assembly Speaker Sheldon Silver (D-Manhattan) are negotiating with their own property tax plans, which reject Cuomo's requirements for local governments. The Senate Republicans' current proposal obtained Wednesday called for a two-year, $1.4 billion benefit and "doesn't pit the state against local leaders."

The Senate's alternative is called "Freeze Plus-NY." It is being pushed as easier to implement, and gives credit to local governments and schools for often deep cuts made in recent years. The measure would make the state-imposed 2 percent spending cap on increases permanent and have schools and local governments work with the state for long-term savings and cuts.

The Assembly is pushing for a "circuit breaker," which would subsidize local property taxes based on a resident's income or ability to pay.

Cuomo tweaked his position Thursday. He said governments that made cuts in recent years should get credit for that and his priority isn't consolidation of governments.

With Yancey Roy