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The visit to Nassau County was the Governor’s first stop on a statewide tour in which he will detail the savings a property tax cap could yield for New York’s families. The state’s rising tax burden has impacted its ability to retain young families, seniors and businesses – especially in the face of a national economic downturn. The Governor has made controlling taxes a chief priority of his administration.
“New York is the highest taxed state in the nation and we can no longer afford to ignore the reality that property taxes are driving people and businesses out of our state,” said Governor Paterson. “This trend is disrupting our quality of life because it is straining family budgets, separating grandchildren from grandparents, and discouraging the entrepreneurship that creates innovation and jobs. On Long Island, as in other parts of the state, the story is no different: New Yorkers are calling on their elected officials to come together to comprehensively address this issue.”
Governor Paterson’s Proposed Legislation
The Governor’s proposed legislation differs from the Commission’s recommendations in one significant way – by preserving the right school district residents to vote on proposed levy increases of less than the 4 percent cap. Under the Commission’s proposal, school boards are authorized to adopt levy increases up to the cap without seeking voter approval. The Governor’s proposed legislation preserves the existing right of residents to vote in these circumstances, thereby assuring that all levy increases are subject to voter approval.
The Commission presented its findings to Governor Paterson on Tuesday after four months of study, including public hearings, meetings, and community roundtables that took the panel all across the state.
The Commission’s Preliminary Report highlights a number of key facts:
- New York State's local taxes are the highest in America - 79% above the national average.
- Outside of New York City, 62% of property taxes are school property taxes.
- In terms of tax rate, nine of the top ten counties highest taxed counties in the nation are in Upstate New York. They are Wayne, Niagara, Monroe, Erie, Chautauqua, Onondaga, Cayuga, Chemung and Schenectady Counties.
- In terms of amount of taxes per household, Nassau, Westchester and Rockland Counties are in the nation’s top ten.
- Property tax levies are rising at more than twice the rate of inflation and salary growth.
Commission’s Principal Recommendation
The principal recommendation of the Commission’s Preliminary Report is a school property tax cap to address the unsustainable growth in property taxes. The Commission recommends a cap on the growth of school property tax levies at 4% or 120% of the Consumer Price Index (CPI), whichever is less. The proposed cap is set at a level that allows for reasonable growth of school expenses, while encouraging new construction and protecting capital expenditures separately already approved by voters.
The property tax cap would put voters in control of their school taxes. Voters could choose to levy more than the cap by “overriding” the cap at the ballot box. A vote by at least 55% of the voters would be required to override the cap. If a school district has received a 5% or greater increase in state aid, 60% of the voters would be required to override the cap.
Alternatively, if voters want a smaller increase in the tax levy (or no increase at all), they could enact an “underride” of the cap. As an incentive to save tax capacity for future years, in school districts where the maximum levy growth permitted under the cap is not used in a given year, the unused portion would be “banked” and may be used in any future year to increase the levy by up to 1½ percent.
Other Recommendations
The Commission’s report also recommends that a STAR (School Tax Relief Program) “circuit breaker” be enacted, but only after a cap is put into place. The STAR circuit breaker would provide targeted relief to individual taxpayers based on income and ability to pay. An income tax credit would be provided for a percentage of property taxes paid when the taxes exceed a percentage of the owners’ income. The Commission believes that it would be unwise for the state to adopt a circuit breaker without addressing the core problem - the overall growth of property taxes - with a property tax cap.
Also included in the report are several recommendations to address the root causes of high property taxes. The Commission recommends providing school districts and local governments with relief from costly state mandates that, in turn, increase the property tax burden. Also proposed are several measures to reduce local costs that, again, are passed onto property owners.
Background on the Commission
The Commission on Property Tax Relief was established by Executive Order No. 22 in January 2008 to investigate and make recommendations regarding:
- Root causes of the high property tax burden, including unfunded mandates and local expenditures;
- Impacts of increased state aid and existing property tax relief programs;
- Effectiveness of property tax caps in other states and, potentially, in New York; and
- The most effective means to impose a limit on school property tax growth without adversely impacting the ability of school districts to provide a quality education to all students.
The Commission is charged with submitting its Final Report on December 1, 2008. Following the release of its Preliminary Report, the Commission will be inviting subsequent comments from the public and interested parties, in addition to conducting further research into the root causes of the property tax burden and other related areas. | 
