Property-tax levies across New York State jumped an inflation-adjusted $7.6 billion from 2000 to 2005, The Public Policy Institute's director of research told an Albany forum that examined the rising tide of property taxes in the state.
School districts, counties and municipalities imposed those tax increases not because other revenue sources were declining, but because spending on payrolls and other costs was rising sharply, Director of Research Robert Ward said at a January 10 forum sponsored by the Center for Governmental Research.
"We won't control taxes until we control spending," Ward said.
Data from the Office of the State Comptroller show that total property taxes rose by $11 billion, or 42 percent, from 2000 to 2005. Inflation during the period was 13 percent. If property-tax increases had been held to the rate of inflation, taxpayers would save $7.6 billion a year.
Local taxes are rising partly because local-government and school payrolls are up sharply, Ward said at the forum, held at the Rockefeller Institute of Government. Employment in local governments and public schools rose by 119,000 jobs over the decade ending in 2006. That represented an increase of more than 12 percent. New York's population rose by only one-third that amount, about 4 percent, during the period.
School employment, in particular, rose even more sharply -- more than 20 percent, while enrollment increased by only 5 percent over the decade.
Citing previous research by the Public Policy Institute, Ward said New York State has an "extra" 156,000 local-government jobs compared to what public payrolls would show if the state matched nationwide trends. Those additional jobs cost taxpayers some $6.7 billion statewide, with more than half of that cost in Upstate New York.
To control property taxes, state and local leaders should look for ways to reduce payrolls, and bring the cost of retirement and health benefits closer to those in the private sector, Ward said. Elected officials should also eliminate mandates such as the Wicks Law and prevailing-wage rules, which drive up public construction costs; reform the Taylor Law that governs public-employee relations by repealing the Triborough amendment; and reform the state's costly Medicaid system, he said.
Governor Spitzer has sent the right message by telling the Legislature that Albany must "rein in spending" rather than raise taxes, Ward said. The governor's initiative to consolidate local governments could drive savings in local payrolls, he said.
E.J. McMahon Jr., director of the Manhattan Institute's Empire Center for New York State Policy, told the forum that the state's STAR program does not reduce property taxes as promised. Instead, he said, it amounts to "a tax shift," with costs imposed at the state level rather than through local property taxes.
McMahon called for a "Prop Four," similar to Massachusetts' Proposition 2 1/2, that would limit increases in school-tax levies to 4 percent or the inflation rate. Governor Pataki called for such a tax limit when he initiated the STAR program in 1997, and Assembly Speaker Sheldon Silver proposed a different form of a statutory limit on local revenues in 1995, McMahon said.
Frank Mauro, executive director of the Fiscal Policy Institute, said property taxes have risen partly because Albany has failed to increase revenue-sharing aid to localities.