Cuomo, Paladino both target high property taxes

ALBANY - Gubernatorial candidates Andrew Cuomo and Carl Paladino are far apart on social issues such as abortion and gay marriage, but they agree high local property taxes are driving people from New York and undermining its fragile economy.

Both are pushing plans to curb the growth of taxes and to reduce them over time. The proposals are more sweeping than the 4 percent cap on yearly tax increases by school districts and other local governments that Gov. David A. Paterson has been unable to get state lawmakers to adopt.

Still, experts are skeptical either candidate will succeed. Despite years of rhetoric and study commissions, they noted the last major property tax relief was the STAR exemption begun in 1998. Under the $4-billion program, the state pays a portion of the homeowner's bill.

"Like Novocain, all STAR did was dull the pain for a while, and it's now worn off," said E.J. McMahon of the conservative Empire Center for New York State Policy. "What's needed is a property tax cap, but it's opposed by the special interests."

With campaign cash and get-out-the-vote operations, the New York State United Teachers union, Local 1199/SEIU and others have used their influence over state lawmakers to successfully oppose attempts to lower taxes. 

Voters also have sent mixed signals. They say they don't want to pay more taxes, but don't want fewer services, particularly for education and health care.

Robert B. Ward of SUNY's Rockefeller Institute of Government in Albany, said, "People have been talking about property taxes for a couple of decades and the problem only has gotten worse."

Cuomo: A lower tax cap

Cuomo wants to rein in taxes through consolidation of more than 10,500 local governments statewide and elimination of state requirements on them that don't also come with funding.

The centerpiece of Cuomo's initiative is a tax cap of 2 percent or the inflation rate, whichever is less. The cap would apply to school districts, counties, towns, villages, cities and special taxing districts for fire, garbage, water, sewer and other services.

He said the cap should apply to all governments, not just schools, which account for the lion's share of a homeowner's property tax bill. He cited a report from the state comptroller's office showing the average property tax increase between 2002 and 2007 was 7.5 percent for schools statewide, 7.6 percent for fire districts, 5.6 percent for towns and 5.7 percent for counties. Inflation averaged 2.9 percent during the period.

"The cap says to local governments, 'You have to start doing what every family has done. . . . Live within your means,' " Cuomo said.

The cap could be overridden by a 60 percent vote of residents. It also wouldn't apply to communities needing to raise funds for large building projects, legal settlements or state-mandated social services, except Medicaid, where the county contribution is already capped.

As state attorney general, Cuomo championed a 2009 law easing the process of merging local governments. He now proposes grants and technical assistance to spur action.

The Democrat also promises to direct a portion of future surpluses from a cap on state spending to tax relief for low- and middle-income homeowners.

Paladino: Beyond a cap

Paladino has endorsed the 2 percent tax cap after initially deriding it as timid. He now vows to win passage of a cap with no exceptions as a "first step," to be followed by measures aimed at cutting property taxes.

"I support capping before cutting, like I support walking before you run," the Republican said. "Our state needs to be running. . . . I will set a cap and then move resolutely to cut state spending deeply."

Paladino prefers a two-year freeze on property taxes while he eliminates state agencies and requirements on local governments, and slashes spending, particularly for Medicaid. These steps, he said, would reduce costs and, therefore, homeowners' tax bills.

Much of the savings would come from Paladino's drive to cut Medicaid by $20 billion in his first year. The price tag of health care for the poor is split between the federal and state governments. In New York, counties pay a portion of the state's obligation.

Paladino estimated his cuts would lower counties' payments by two thirds and county property tax bills by one third.

The Buffalo developer also would reduce taxes by merging school districts so there is no more than one per county. He says the move would eliminate high-paying administrative jobs while boosting districts' leverage in negotiating contracts with the teachers' union and service providers such as bus companies and trash haulers.

Paladino would retain local school boards to determine curriculum and other policy. 

However, he wants a cap on school spending and a freeze on educators' salaries "until they are back in line" with private-sector jobs.

Property tax bite on LI

Long Islanders pay some of the nation's highest property taxes in terms of both the typical bill and taxes as a portion of income.

Median tax bills:

Nassau: $8,940

Suffolk: $7,361

U.S.: $1,917

Rank nationwide: Nassau is No. 2 and Suffolk is No. 11

Tax as percentage of household income:

Nassau: 8.6 percent

Suffolk: 8 percent

U.S.: 3 percent

Rank nationwide: Nassau is No. 5 and Suffolk is No. 8

Compiled by James T. Madore

SOURCES: The Tax Foundation; U.S. Census 2009 American Community Survey