The Governor's Plan for Tax Relief

As a member of a County Legislature, I was asked by a representative of the Governor to endorse the tax reform plan he's included in his current budget proposal.

A summary of the proposal can be found here. It was prepared by the Bipartisan New York Tax Relief Commission, headed by former Governor Pataki. It doesn't seem complex, but it's not clear, either. Can you make heads or tails of this:

The Executive Budget provides a 2-year property tax freeze to residents in local taxing jurisdictions that agree to abide by the property tax cap in the first year.

So does the County Board freeze taxes (no increase) or act within the tax cap (in 2013 it was 1.66%)? Not sure. I think it means that the municipality must stay within the tax cap, and at the end of two years taxpayers are sent refunds for those capped increases. Got it?

In the second year, the municipality needs to stay within the cap (or freeze?) and achieve savings from sharing services with other municipalities. If the savings are enough, and the tax/freeze rules are followed, taxpayers get their refund checks, ranging from about $200 to about $800 (Otsego County properties would be closer to the $200 end).

A 'circuit breaker' provision kicks in later; the summary provides a vague “...when fully phased in...” and news reports indicate this would start in the third year. “This relief program is progressively structured to provide a greater proportion of benefits to those with the highest property tax burdens as a share of their income.” The math should be interesting, but it is an attempt at progressive tax relief.

I'd love to support a plan that sends rebate checks to taxpayers. But the problem is, many taxpayers across the state will get $0. If their municipalities have a disaster (a flood, a bridge collapse, a hurricane, a huge embezzlement, or any other unexpected expense) and can't stay within the cap, that's the end of tax relief. If the municipality can't find ways to share enough services, and create enough savings, that's the end of tax relief. In these cases, the municipalities are set up to take the fall for taxpayers not getting the kinds of checks their friends down the road are getting.

If this proposal were accompanied by some substantial reduction in unfunded mandates, it might be a better risk. If the 'circuit breaker' provision began in the first year, it might be a fairer deal. As it turns out, noone outside the executive branch seems to like this plan: the Democratic Assembly is working on an alternate plan that expands the 'circuit breaker;' the Republicans have denounced it, and schools and municipalities seem inclined to oppose it (although noone seems to be keeping score yet).

If Albany wants to provide property tax relief, then the municipalities which levy those taxes should be full partners in developing a plan that is going to be in the best interests of all the taxpayers, all over the state.