Next years New York budget season and the argument about tax rates are open.
The discussion began last week when former Gov. George E. Pataki, who co-chairs with former Comptroller Carl McCall a commission charged by Gov. Andrew M. Cuomo to develop tax cut recommendations, advocated a plan based upon income tax cuts from the highest to the lowest tax brackets. Immediately, that proposal was dissed by Mr. McCall, who focused his remarks on property tax relief and corporate tax reductions.
Gov. Cuomo joined the debate the next day, pointing out that New Yorkers who pay more in property taxes than they do in income taxes needed relief. The property tax is a crusher, especially in the suburbs and upstate, the governor told Capitol Pressroom on Tuesday morning.
The governor, acknowledging his predecessors proposal for income tax reductions, said, Whats happened is this: First of all, I want to cut taxes, period, right? We have one of the highest-taxed states in the nation, and everyone understands everyone that you have no economic future as one of the highest-taxed states in the nation.
He is exactly right, so finding the proper mix of taxation and expense control to balance the budget becomes the challenge to providing the relief required.
Property taxes are imposed and collected by local government, especially school districts. The state itself does not levy a property tax, but it requires certain levels of local government and school spending in return for financial aid.
The challenge for local governments has been balancing ever-growing pension, health care and energy costs as well as salaries with no-growth revenue streams. The governor argues that his administration has reversed that direction.
We do have funds to do a tax cut because we have exercised discipline in spending, Mr. Cuomo said. He cited projections for a $1.8 billion surplus this fiscal year.
If property tax relief is in the cards, it is likely that extra funds will come to local school districts that impose the highest property taxes across the state. That may be welcome newsbut only as long as extra aid provides a strong incentive to school districts to consolidate in order to become more efficient, to accomplish their responsibility and to provide students with an education that prepares them to compete in the nations job market.
Extra state aid to school districts plagued by declining school enrollment and the inability to deliver even the basic requirements of education will only perpetuate the ultimate fear of some school superintendents in the north country who have warned their boards of education that their districts are nearly educationally bankrupt. St. Lawrence Countys school enrollment has fallen nearly 11,000 students over the last 34 years.
Any extra state aid to rural school districts must be predicated on accomplishing meaningful efficiencies driven by mergers or sharing services. A tax cut will be pleasant for the property owner. But if the school district supported by those taxes continues to atrophy, the gain will short term and illusory.
A promise of additional state aid to education or to local governments must come with requirements for administrative efficiency, new governing models and consolidation all aimed at using the money to allow enhanced delivery of government services.
The debate has begun between proponents of income tax reductions and property tax relief. The winner of this debate will have to demonstrate that the immediate beneficiaries of the lower taxes will be the creation of more private sector jobs and improved government efficiency that provides New Yorks children with the tools to be productive participants in the 21st century economy.