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Zack Hutchins
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For Release — Monday, January 7, 2002

LOCAL TAX INCREASES FAR OUTPACED INFLATION
DURING 1990s, NEW STUDY SHOWS

Editors/Reporters: For data on municipalities and school districts in your region, contact Robert Ward at 518-465-7517, ext. 271.

ALBANY—Local taxes in New York State rose 53 percent, significantly more than inflation, during the 1990s, according to a Public Policy Institute analysis of data just released by the Office of the State Comptroller.

If local tax increases had been held to the level of inflation over the decade, around 30 percent, taxpayers would have saved some $6.4 billion in 1999, the Institute found. Local taxes in New York totaled $43.4 billion, or $2,412 per person—a figure that was more than twice the national average of $1,158.

The Public Policy Institute is the research affiliate of The Business Council of New York State. The Institute analyzed data from the Comptroller's Special Report on Municipal Affairs for 1999. The comptroller's office collects financial data from 3,174 counties, cities, towns, villages, school districts and fire districts in the state.

Tax collections by school districts rose more than 60 percent during the 1990s, or twice the inflation rate, to $15 billion. The sharp increase in school taxes occurred despite increases in state and federal aid that were also far above inflation (see table). Statewide school enrollment increased by approximately 12 percent during the period.

In New York City, taxes rose nearly 50 percent, to $16.5 billion in 1999. Combined state and federal aid to the city was up 54 percent.

Outside New York City, county taxes make up the largest share of local tax bills after school taxes, a total of $6.7 billion in 1999. Tax collections in the 57 counties outside New York City—split nearly evenly between property and sales taxes—rose 46 percent.

The 61 cities outside New York City had the smallest increase in tax collections of any group of local governments, at 37 percent. Spending in those cities increased by slightly less than the inflation rate. Most cities lost population during the 1990s.

"Local tax collections jumped in New York during the 1990s partly because of growth in the state's economy, particularly during the second half of the decade," said Robert Ward, director of research for The Public Policy Institute.

"Local sales tax revenue rises when consumers are buying more, and property tax revenue increases when businesses and individuals have the confidence to invest in new industrial, commercial, and residential developments. At the same time, higher tax rates helped drive tax collections higher, especially in local school districts."

State mandates on local governments contributed to higher spending and taxes in municipalities and school districts, according to the Institute's analysis. For instance, social services spending by local governments—driven largely by Medicaid, welfare and other state programs—rose 55 percent, to $11.9 billion.

Yet state mandates are not the entire story, the Institute found. For example, general government expenditures-including spending on elected officers and staff, administrative costs, and operation and maintenance of buildings-rose 48 percent over the decade.

Local tax burdens vary widely from region to region in the state. Total local taxes-including those for schools, county governments, cities, towns, villages and fire districts-amounted to $4,490 per person in Hamilton County, $3,253 in Nassau County, $3,132 in Westchester County, $2,773 in Suffolk County and $2,751 in Rockland County.

Local taxes were lowest in Tioga and Wyoming counties, at $1,117 per capita. Other areas with relatively low taxes include St. Lawrence County, at $1,165 per capita; Jefferson County, $1,176; Clinton County, $1,180; Cayuga County, $1,181; and Chemung County, $1,194. For data on local taxes in other counties, contact The Public Policy Institute.

Local Taxes And Spending in New York State, 1989-99
(millions of dollars)
Inflation during the period: 30.3 percent
 
1989
1999
Increase
Counties outside New York City  
Tax collections
4,613
6,728
45.9%
State aid
1,521
2,160
42.0%
Federal aid
1,034
1,592
53.9%
Spending
9,945
15,239
53.2%
Cities outside New York City
 
Tax collections
975
1,336
37.0%
State aid
394
516
31.0%
Federal aid
178
173
-2.8%
Spending
2,358
3,000
27.2%
New York City (excluding schools)1
 
Tax collections
11,016
16,490
49.7%
State aid
3,162
3,871
22.4%
Federal aid
2,345
4,662
98.8%
Spending
25,724
38,312
48.9%
Towns
 
Tax collections
1,761
2,638
49.8%
State aid
348
393
12.9%
Federal aid
78
131
67.9%
Spending
3,175
4,526
42.6%
Villages
 
Tax collections
548
840
53.2%
State aid
97
103
6.2%
Federal aid
52
68
30.8%
Spending
1,153
1,693
46.8%
School districts
 
Tax collections
9,331
15,009
60.8%
State aid
8,108
11,966
47.6%
Federal aid
868
1,849
113.0%
Spending
19,414
31,740
63.5%
Fire districts2
 
Tax collections
196
354
80.6%
Spending
237
400
68.8%
Total
 
Tax collections
28,441
43,395
52.6%
State aid
13,630
19,010
39.5%
Federal aid
4,556
8,475
86.0%
Spending
62,005
94,910
53.1%
Spending totals reflect inclusion of other revenues such as license and fee revenues, and interest on investments.
1 New York City figures for 1999 include hospitals and other funds that previously were separate.
2 Data for state and federal aid unavailable.
Calculations by The Public Policy Institute; data from Office of the State Comptroller

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