Before we cheer or jeer the plans Gov. Andrew M. Cuomo has for New York's projected budget surpluses, we have to take a moment to appreciate how unexpected this problem would have seemed a little more than three years ago.
When Cuomo was elected in 2010 and began to put together his first budget, the projected annual deficit was $10 billion. State aid to schools had been cut severely; new levies, such as the MTA payroll tax, were being added; and property tax hikes were outstripping increases in personal income and inflation, all as home values tanked.
There has been a turnaround, but the ship of state in New York is ponderous, and changes in direction are slow. For years before Cuomo's election, we endured ever-higher spending and taxes. After Cuomo released his newest budget Tuesday, the governor got flak from those who said his proposed tax cuts weren't big enough, spending controls weren't tight enough and the situation wasn't shifting quickly enough. Those complaints are more ideological than realistic. You can't change the world in a day, or a year, and many of the critics' demands will only become possible gradually.
Sure, many of the proposals are politically calculated, seemingly designed to give a little something to every group that might support or oppose Cuomo in this election year. The budget, after all, must be approved by the legislature. But his initiatives should be judged on their merits.
The simply good
Revamping the estate tax: New York is one of only 15 states with such a tax, its top rate of 16 percent is punitive, and the level where it kicks in, $1 million, is far below the federal exemption of $5.25 million. New York's taxes on the living are stiff enough: Such a hefty tariff on the dead -- with an exemption that is easily exceeded by the value of a home or small business on Long Island -- is unfair. Cuomo wants to match the state's exemption to the federal one and reduce the top rate to 10 percent. Both are moves in the right direction.
Revamping the corporate tax: New York's 7.1 percent rate is too high. Cuomo's proposal to reduce it to 6.5 percent and simplify its pointlessly complex structure is a good start.
The well-intentioned but wildly complex
and nakedly political
Property tax relief No. 1: Cuomo proposes that residents of municipalities and school districts that keep annual tax increases below the 2 percent property tax cap wouldn't have to pay those increases. The state would cover the hikes for one year by sending rebate checks to taxpayers. The first ones would hit mailboxes just before Election Day, around the same time when middle-class taxpayers may receive previously promised $350 tax-rebate checks approved last year. Politicians sure love to buy our votes with our own money.
Property tax relief No. 2: In the following year, municipalities and districts that meet savings goals by consolidating services would earn their taxpayers more rebates. The idea is that officials would face pressure from taxpayers to generate those rebates and begin changing how they do business. As proposed, all of the municipalities, their performance and the rebates would be overseen by counties. School district changes would be overseen by the largest district in each Board of Cooperative Educational Services region. In both cases, oversight could be very complex.
All together, homeowners with annual incomes less than $500,000 would net an average of $645 over three years when their school districts and municipalities stay within the cap and create savings through consolidation.
Property tax relief No. 3: The across-the-board property tax breaks earned for taxpayers when entities stay within the tax cap or create savings by consolidation would phase out after two years each. They would then be replaced by a "circuit breaker" that would create a tax break of up to $1,000 a year for homeowners making less than $200,000 a year and whose property taxes exceed a certain percentage of their income.
Renters relief: This would be a permanent tax break for low- and middle-income renters, who would not qualify for the property tax breaks.
Up to the people
Cuomo also wants a ballot initiative on a $2-billion bond to fund technology in schools. Giving voters the choice is fine. But they may want to ask themselves: Does it make sense to give taxpayers back $2 billion in these convoluted property tax breaks, then borrow $2 billion for school technology?
The beauty of Cuomo's best proposals -- the estate tax and corporate tax reforms -- is that both would lower rates and simplify the code. The problem with the multiphase property tax relief is that it could create a lot of complexity to manage tiny, temporary rebates. Consolidation and cost control should be encouraged, but it's worth asking whether this is the most elegant way.
We applaud the financial progress of the state under Cuomo. We want to see it continue. Where his proposals are permanent, lower the rates and simplify the tax code, they can likely help do that. Where they are temporary, make things more complex and appear to serve more political goals than fiscal ones, they probably cannot.