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New York Property Tax Cap Squeeze on Schools Fails to Address Underlying Cost Burden

Posted in Property Tax Laws, Property Tax News, Property Tax Trends, Tax Cap

“The property tax is the killer tax in this state, and it has been for a long time,” Governor Cuomo said in his January 2016 State of the State address, and his solution has been the property tax cap. Appealing on its face, but the tax cap fails to tackle the real problems and has been the clear victim of the law of unintended consequences. Indeed, New York has the highest out-migration rate of residents in the nation, according to one source.1-standardized

The tax cap was implemented in 2011, and limits local government and school spending to 2 percent a year or the rate of inflation, whichever is lower. This year, the cap will be limited to 0.12 percent. School taxes represent about 60% of a property tax bill, and the New York City suburbs continue to pay the highest taxes in the nation. Before the cap, school taxes grew an average 5 percent a year; the increases have been about half that since, resulting in massive cuts to important educational programs and services.

When it comes to school spending:

  • New York spends the most per pupil in the nation on its schools: $19,818 per student or 85 percent above the national average, U.S. Census data showed.
  • School aid is set to hit $24.8 billion for the school year that starts July 1, a 6.5 percent increase.
  • Since the 2011-12 school year, school spending by the state has increased nearly 27 percent – up from $19.6 billion, records show.

The increase in school aid will limit tax increases this year, but it also came as schools face a near zero property-tax cap.

According to one news source, the Association of School Boards’ executive director Timothy Kremer observed that, “the 2 percent tax cap is not really a 2 percent tax cap. The quirks and vagaries of the cap formula mean it can fluctuate widely from year to year and district to district.” This year, 36 districts will attempt a tax cap override, compared to 18 last year, according to the state Association of School Boards. Districts seeking to override will need a 60 percent “supermajority” at the polls.

New York’s tax burden of nearly 13 percent of average household income is the highest in the nation, according to the Tax Foundation, a Washington D.C. fiscally conservative group.

New York has five different property-tax programs to curb costs: a STAR rebate; a tax freeze; a check tied to household income; a check for people with children under 17; and the tax cap. But this begs the question, why provide convoluted and often ineffective ways to rebate or cut taxes when the property tax problem could be far more easily resolved if state government took over many local expenses and distributed the burden more fairly through the income tax, while at the same time eliminating an astronomical amount of duplicated efforts and inefficiencies?

“In 2015, nine state mandates consumed 99 percent of the property taxes levied by counties across the state, outside of New York City,” the state Association of Counties said.