Property Taxes and You. There Is A Fix

Friday, Februray 22, 2008

Folks,

The other night Vic T and I drove up to Rhinebeck for a forum on school property taxes hosted by State Assemblyman Kevin Cahill (D-Kingston). Assemblyman Cahill has written a bill (A4746) which will do two things: It seeks to find a way for the State of New York to provide quality education to every child and at the same time removes the burden of crushing property taxes for educational funding. Mr. Cahill has twice submitted this bill - with bi-partisan sponsorship - and all it does is die in the Education Committee.

Also in attendance, and co-sponsors of the meeting, were Assemblyman Marc Molinaro (R-Tivoli) and Assemblyman Joel Miller (R-Poughkeepsie).

While all three told the audience they feel our pain, only Mr. Cahill has a bill in Albany that makes good sense. Yet for reasons that none of the 50 or so people who attended could comprehend, the bill won't move out of committee.

There was much talk of stop-gap measures like spending caps and some talk about Assemblywoman Sandy Galef's bill, and they all agreed these were not solutions but rather intermediate steps to provide some immediate relief. Only Mr. Cahill's bill provides an amicable and permanent solution.

I asked Mr. Cahill who was stopping the bill but he would only say that the Assembly and Senate both lacked the political will for a genuine solution.

If you will permit me, let me translate that into what I believe was actually said:

Eliot Spitzer, Sheldon Silver and Joe Bruno are stopping the bill because it does the one thing they've promised not to do: raise income taxes.

The bill does raise income taxes and it does so especially for those who can most afford to pay.

[As a side note, the Governor has convened a commission to "Study" the problem but I'm willing to bet he comes back with a politically correct but short-sighted, stop-gap solution and nothing in the way of anything permanent.]

In order for the state to provide adequate funding to schools across the state and move funding away from property taxes we need to raise $25 billion a year and that requires an income tax based solution.

There is no other way.

To see what this means for you, take a look at your school property tax bill and let's do some math. If we were to eliminate your school tax bill and instead added 4% to your state income tax tally, would you come out ahead or behind on that 4%? Does that 4% represent more than you're paying in property taxes for our schools or less? If you're on a fixed income or earn little, how does it work out for you? (Please respond on that!)

Here's a tidbit: NY does not have a graduate income tax. All taxpayers in the state who earn between $25,000 and a trillion-billion dollars pay the same rate, just shy of 7%. Moreover, our state income tax rate is middling for the nation as a whole.

If we instituted a tiered income tax system - like we had before Rockefeller - the tax burden across the state would be much fairer. At that time, those earning the higher income brackets (which now would equate to about $250,000+) paid 10% and up where most of you and I would pay about 5%. The very top earners paid 15%.

The way Joel Miller put it, 'if we pass Kevin's bill we're going to have to raise your taxes 40%!' was specifically meant to kill the bill when what he intentionally didn't say was that the 40% amounts to about 3 or 4 percentage points on your current State income taxes, hence my experiment above.

Politicians will exclaim, "Do you want your taxes raised 40% to pay for this?" and you automatically look at your entire tax bill and go ashen white. But by not telling story in context, they're intentionally lying to you so they can say at the next election, "I held the line on taxes!" While you've already sold your house for pennies and moved out of state, they've kept their promise but at a horrible cost.

Those of us living in the Hudson Valley and on Long Island and who bought their homes 5 - 10 years or more ago, have found the value of our homes have far outstripped our earnings and hence our property taxes have become a crushing burden forcing many to sell - if they can - and move away. Just take a drive around and see all the FOR SALE signs...

While all three men recognize this as a problem, Mr. Miller kept reminding people that you can't tax the super rich otherwise they'll move out of state and take their money with them.

Now, Rhinebeck is not some backwater burgh and its inhabitants are solidly upper-middle to upper class, well educated and quite aware of politics, business and wealth. But even they weren't going to buy this as an excuse. Mr. Miller, Assembly and Senate Republicans and some weak-in-the-knees Assembly Democrats favor quick stop-gap measures designed to give immediate relief right in time for the elections. Here's a personal caveat:

I fear that if we shoot for short term relief the impetus
for a permanent solution will be lost.

In order to repair the problem and seek an equitable solution, we need to move to an income tax based system and the Governor has promised not to raise taxes, Democrats are beholden to his word and Republicans refuse to raise taxes for anyone, especially the very well-to-do.

(Let me ask: is it fair that you earn $47,000 a year and pay $6000 in school taxes while your new neighbor who is earning $78,000 a year is also paying $6000 in school taxes only because your homes have a similar value?)

So, what's the solution? It's pretty simple actually. Write the Governor. Write Vinny Leibell. Write Sandy Galef (who, thanks to our 'heat' is now interested in Mr. Cahill's Bill), and write the Assemblyman whose Name Shall Not Be Mentioned and urge them - in the strongest possible terms to support movement and passage of Kevin Cahill's bill - this session. We can have quality, equitable and affordable education in this state if we have what our politicians do not have:

The Will To Make It Happen.

Assemblyman Joel Miller is facing an exceptionally tough re-election campaign this year so he will be most obstinate in his opposition to a permanent and fair solution and will do what he can to shoot for the quick and easy.

Here's the bill number and text: (scroll to the bottom for a portion of the bill's Summary)

http://assembly.state.ny.us/leg/?bn=A4746

Tell them that stop-gap, politically pleasing "fixes" are a waste of time and that only a permanent solution is the way to go - and that solution is A4746.

Here's a list of members who sit on the Assembly Education Committee so you can write them too.

# Chair: Catherine Nolan

# Carmen E. Arroyo
# Michael Benedetto
# James F. Brennan
# Karim Camara
# Barbara M. Clark
# Ruben Diaz, Jr.
# Patricia A. Eddington
# Steve Englebright
# Aurelia Greene
# Earlene Hooper
# Susan V. John
# Tom Kirwan
# William B. Magnarelli
# Alan Maisel
# David G. McDonough
# Joel M. Miller
# William L. Parment
# Amy Paulin
# Phil Ramos
# Bill Reilich
# Bob Reilly
# Joseph S. Saladino
# Teresa R. Sayward
# Robert K. Sweeney
# Fred W. Thiele, Jr.
# Harvey Weisenberg

Bill Summary:

BILL NUMBER:A4746

TITLE OF BILL: An act to amend the education law, the real property
tax law and the tax law, in relation to abolishing certain school
taxes, providing for alternative taxes and state distribution to
school districts; and repealing certain provisions of the real
property tax law and the tax law relating to certain taxes

PURPOSE: The purpose of this plan is to permit the financing of
public schools in New York State within the context of the following
objectives:

1) the elimination of the inequitable and regressive real estate tax
as the support of public schools;

2) the retention of present levels of local control by school
districts; and

3) the guarantee of quality and equality of educational opportunity
for all children of the state.

SUMMARY OF SPECIFIC PROVISIONS:

The plan consists of the following basic principles: 1) The state
shall assume all the costs of Basic Quality Education (BQE), including
all general and special education services which the commissioner,
under guidelines established by the legislature, shall define as
necessary. Basic quality education as defined by the commissioner,
shall allow sufficient latitude so that choices may be made by local
districts with respect to their individual needs. "BASIC" shall be
defined in terms of equal services to all pupils regardless of
differences in cost in different districts for those services.

2) The "BASIC" costs shall be borne by increases in statewide business
and individual income taxes in conjunction with the elimination of
school district real estate taxes. New York City, which does not
identify the school portion of its real estate taxes, and also
collects an income tax, shall apply the full amount of the school
portion of its budget toward a reduction in the real estate tax. The
same formula shall apply to the cities of Buffalo, Rochester, Syracuse
and Yonkers. Property tax reductions would be passed through to
tenants on a pro-rate basis where lease permits. Where this is
precluded by a lease, tenants will be entitled to tax credits or
rebates on their state income taxes for the duration of the lease.

3) BASIC budgets shall be submitted by local boards of education to
the State Education Department for approval.

4) All monies for BASIC budgets shall be collected by the state
through the business and personal income tax. The "BASIC Education
Tax" shall be levied as a percentage of the business or individual
income tax.

5) Transition period: During the first (seven) years after enactment,
a district may opt to receive as its BASIC BUDGET one of following: a)
budget amount of the school year during which this law shall take
effect (dollar save harmless); b) the district budget of the school
year during which this law shall take effect increased or decreased by
changes in enrollment (pupil save harmless); or c) the amount
resulting from the application of the BQE formula, but not to exceed
the average statewide increase over the prior year, plus 10% growth
ceiling. After five years only option (c) will apply.