New York State’s ill-designed property tax cap tightens the noose on municipal and school budgets as inflation drops. With the consumer price index falling, the tax cap is expected to be the lowest ever, perhaps as little as 0.6 percent for municipal and county spending in 2017 (remember when it was introduced as the “2% cap”?). Of course, the tax cap, being misaligned to CPI as a barometer of school and local government costs, ironically fails to account for the rising costs of health insurance and payroll. This means that once again poor management at the top level of state government will compel local governments across the state to make ever more difficult choices about what the bare minimum consists of, and which programs must be sacrificed.
More municipalities than ever (eight last year) are on a path to reject the cap, though that comes with consequences. The municipalities that have stayed within the cap, or tried to, have dipped into reserves for things like highway improvements, as anyone who cruises the crumbling roadways of the state can see each day (yet the State managed to access some $4 billion for a new Tappan Zee Bridge). “The tax cap is like a set of handcuffs that keeps county governments from doing the kinds of things we should be doing, such as making road and bridge repairs,” said Schoharie County Treasurer William Cherry.
As I have noted in previous posts, the property tax system in New York State perpetuates its dysfunctionality by providing virtually no State-level leadership and centralized mechanisms for fairness in assessment while at the same time pushing down various mandates such as pension fund payments and medicare on local governments and school districts. Albany’s solution to the tax problem? A steadily-shrinking tax cap that effectively cuts important educational and infrastructure local programs while the Governor and State lawmakers stick their collective heads in the sand instead of taking on true tax fairness and levying state-wide costs where they belong: at the State level of government.