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Legislative Memo

Ken Pokalsky
Senior Director, Government Affairs
T 518.465.7517 x205
www.bcnys.org

BILL:

S.5856 (Skelos) / A.8518 (Lopez) @ request of the Governor

  Support

SUBJECT:

Cap on Real Property Tax Levies

 

S.5856 (Skelos) / A.8518 (Lopez) @ request of the Governor

DATE:

June 24, 2011

 

The Business Council has long supported the imposition of a statewide cap on increases in local real property tax assessments. 

This legislation will impose much needed fiscal discipline on local taxing jurisdictions by putting effective limits on year-to-year increases in real property tax levies.  While a property tax cap in and of itself does not solve all the state’s property tax issues, it is an important step in controlling the cost of local government.

In addition, we strongly agree that adoption of a cap must be accompanied by broad mandate relief for local government, thereby giving local government more control over the spending side of the budgets.  We support the mandate relief provisions included in this bill, and the creation of a Mandate Relief Commission that will make recommendations for additional mandate reform.

We support S.5856/A.8518 because it meets our major criteria for an effective cap - it applies to virtually all local taxing jurisdictions, it applies to all classes of property owners, and it contains limited provisions for exceeding the statutory cap.

In addition to providing relief for residents and homeowners, these reforms will help the state’s economy and small and large businesses statewide.

Real property taxes are a major business cost and a significant anti-competitive factor for New York State’s economy.  Outside New York City, business pays nearly $9 billion in total property taxes – 40% of the state total, and for many businesses, property taxes are the largest single tax levy they pay.  By almost any measure, real property tax burdens and combined state and local taxes in New York are among the highest in the nation.

Other programs and proposals, including the existing STAR program and proposed circuit breakers, will do nothing to help control increases in local taxes because they simply shift the cost of high property taxes from local taxpayers to state taxpayers.  For example, research shows that average property taxes increased at double the rate in the five years after adoption of STAR than they did the five years prior to STAR. 

Moreover, business taxpayers receive no benefit from STAR, nor would they under a circuit breaker.  Businesses already pay disproportionately high property taxes, and the effective tax burden on business property is about $1 billion higher than it would be if taxed the same as residential property.

There is a desperate need for fiscal discipline in New York State.  The state’s overall spending and tax policies are having an adverse impact on the state’s economic climate and the availability of good paying jobs for New Yorkers.  The state needs to cut the cost of state and local government and the level of state and local taxes, not shift these costs to other taxpayers. 

An effective real property tax cap, coupled with mandate relief and real property tax administrative reform, is an essential step to improving the state’s economic competitiveness.

For these reasons, we strongly support final approval of S.5856/A.8518.