Is the State Putting An Unfair Burden on Local Governments?

As Westchester County residents pay the highest county taxes in the country, the subject of tax relief is high on everyone’s list this election year. County Executive Robert Astorino says “stopping the tax madness is his number one priority.” But the issue is not only one of county taxes. With the New York State budget severely strapped, the state has passed down many expenses to local municipalities, putting pressure on local government to raise taxes to close the gap.

Some have called for a cap on local property taxes, however, capping taxes is more easily said than done. Scarsdale Mayor Stevens addressed the issue at a meeting of the Westchester County Municipal Official Association on October 14 and explained why a tax cap would make it difficult for local governments to meet their obligations.

In her words:” I believe that tax caps are not fundamentally sound fiscal policy. These caps restrict the amount that property tax revenue can increase from year to year to a low fixed percentage, a formula based on the inflation rate, or some combination of the two.

While such caps may hold down property taxes, they are likely to impair local governments’ ability to provide education, public safety, and other services residents demand and need. They also are likely to make the local revenue system more regressive.

Property tax caps do nothing to change the main drivers behind higher property taxes. They cannot slow the increase in the cost of pension, health care, or fuel, or for that matter the costs of state mandated programs, which are forces outside of the control of local officials. Nor do they change the demand for local public services, such as quality K-12 education, public safety, and good roads. Academic studies have found that in most cases, property tax limits have led not to a shrinkage in the public sector but instead to a shift to other revenue sources, such as state aid and fees and other taxes which are often more regressive. In places where the caps have had an effect, however, the outcome has been negative.

Further I would suggest that property taxes should only pay for property related costs – such as public safety, roads, sanitation, education, etc. and not for society functions such as Medicaid and pensions for public servants and other similar programs that the state has mandated to the county and local governments. We local governments would not need to raise our taxes as much were it not for the shifting of these programs to county and local governments. I suggest that if the state wants to provide property tax relief it look to reducing mandates to the local governments and face its responsibilities instead of passing the buck.”

The subject is one that is being hotly debated. Candidate Robert Cohen who is running for NYS Senate has come out in favor of a statewide cap on local property taxes and sent the following comment to the site:

"Of course we do need to get rid of state mandated expenses imposed on local governments, but New Yorkers are hurting, and we need to start with long-term property tax relief, now. We need to make a credible commitment that we will bring our property tax burden down to a more reasonable level, and hopefully stop the exodus of residents leaving our state. Then we can continue to work on the complex process of unwinding our decades-old unfunded mandate regime."

His opponent Suzi Oppenheimer favors reducing state mandates on local governments to decrease the burden on the municipalities and here is what she has to say:

"Mandate relief is a major part of my program to help cut costs and reduce property taxes. As Education Committee Chair, I have focused on mandate relief, shared services, and cutting red tape for school districts. One of my mandate relief bills was signed into law this year. I have blocked any new unfunded mandates from being reported out of the committee and am working with the State Education Department to have it reduce existing mandates under its authority. I also have other cost cutting mandate proposals that the Assembly has not yet embraced but that did pass the Senate this year. Continued progress on mandate relief is a major priority of mine for the next session.

This year I sponsored a new law that allows taxpayers to get their local tax receipts by e-mail in order to save costs for local governments.

Other changes we adopted help municipalities and counties, such as the new pension tier, which we passed in 2009 and requires increased employee contribution, and the Medicaid Cap program, which limits what counties have to pay towards Medicaid. To reduce property taxes, I also strongly support the state taking over the county’s share of Medicaid, restoration of the STAR rebate program, and enhancement of the STAR exemption program."

Whether the state, county or the local government foot the bill, ultimately costs are passed through to the taxpayer. If you think you are paying too much in taxes, what do you think can be done to stop the blame game between local, county and state officials, and more importantly, how can we reduce overall expenses?

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