Property Tax Bills; Fear and Loathing at the Mailbox!
by Matthew F. Guilbault

With some trepidation, New York homeowners make their annual trek to the mailbox this week in anticipation of their annual school tax bills. And their fear is not undeserved – as any homeowner can testify to, school property tax hikes add up to truly punitive spikes in costs nearly every year. When was the last time your property tax didn’t go up?

School budget increases considered by voters across the state in May averaged 6 percent -- almost twice the rate of inflation. For typical suburban homeowners, that means a tax hike of $500 a year or more! Moreover, these increases weren’t unexpected. State Comptroller Alan Hevesi reported back in April that total property taxes rose an incredible 42 percent in just five years.

You may ask yourself (or your local elected official) why we constantly face these increases? The answer is obvious -- ever-rising school spending. This year’s school budgets brought the average funding to $16,469 per pupil, (excluding New York City, Yonkers and three big Upstate cities.) And although local voters may occasionally reject school budgets, state legislators have made sure that anti-tax votes don't affect major cost centers such as teacher contracts. Clearly, there is no end in sight to school spending increases.

But fear not, as there IS a cadre of politicians and political candidates beginning to echo taxpayer frustrations and promising to fight to reduce school and property tax rates. As it takes more than just political rhetoric to cut taxes, however, these same politicos have come up with various schemes designed to give taxpayers the appearance of relief.

For instance, both of the leading candidates for Governor have endorsed plans to “reform” school property taxes through a dramatic expansion of the state’s S.T.A.R. (School TAx Relief) program. The major problem with these well-intentioned proposals is that they’re based on a flawed program.

Begun in 1997, the STAR program reduces the school taxes paid by a homeowner by exempting some of the home’s value from taxes. School districts don’t lose out though – the state makes up the difference in funding to districts. The program cost the state $3.2 billion last year. So in reality STAR has done little to reduce or even keep school property taxes in check (they continue to rise faster than inflation). Comptroller Hevesi’s report makes it clear that STAR has actually encouraged faster school spending growth by hiding the increases from homeowners.

But Governor Pataki and the State Legislature take the prize for the most recent ill-conceived property tax “relief” program. Legislation passed by the Legislature and signed into law by the Governor will provide direct “rebate” checks to New York homeowners in October – just before the elections. And while we think that anytime government returns money to taxpayers it’s likely a good thing, this program relies upon funding from budget surpluses and does nothing to stem the tide of spending, which necessitates property tax increases. In fact, one could argue that this program -- like STAR -- will actually encourage school spending increases by disguising them from taxpayers.

This year the state could “afford” the checks with a $5 billion surplus. The real kicker arises, however, on the day when the state no longer enjoys the surplus necessary to pay for these “rebate” checks. The program saddles future state budgets with an additional $1 billion in spending each year. . This news becomes particularly alarming when one realizes that (according to the Division of Budget), New York is facing a budget deficit of $8.6 billion in its General Fund over the next two fiscal years. ($3.2 billion in State fiscal year (SFY) 2007–08 and $5.4 billion in SFY 2008–09).

Moreover, the Comptroller’s office estimates that as a result of the end of session spending spree by the Governor and Legislature, the out-year budget gap in the General Fund will exceed DOB’s projections by more than $5 billion! ($5.9 billion in 2007–08 and $8 billion in 2008–09).

So even the near-term success of this shell game is already suspect. To what extent will taxpayers facing school property tax bills in the thousands of dollars feel “relieved” after receiving a state rebate check in the mail totaling a few hundred dollars at most? But legislators, especially Republican senators, are betting their political careers on the program.

NYSTU has a better idea for the money. First off, we realize that spending as much as we possibly can on schools every year is not the way to improve our kids' education. Moreover, we realize that we'll never –ever - get property taxes under control unless we first control spending.

Therefore, NYSTU is asking taxpayers to sign over their “rebate” checks in an act of defiance. Think of it as a virtual tea party -- the first barrel of tea being dumped into the harbor in a new tax revolt. Not only will the act of signing over the checks in the name of reform be recognized by the politicians as a rebuttal of their ill-conceived program, but NYSTU pledges to use the money to fight for true and meaningful tax reform and spending restraint.

The checks themselves aren’t large, but cumulatively they represent significant political power that could be used to fight for sweeping tax reform designed to make the tax system both fair and comprehensible for the folks who actually pay those taxes.

Interested parties are encouraged to contact NYSTU directly at:

New York State Taxpayers Union

P.O. Box 7294, Capitol Station, Albany, New York 12224

Email: Matthew@NYSTU.org

Telephone: (518) 605-8100

Those persons interested in NYSTU’s work are encouraged to visit the group’s website at www.nystu.org.

Sept. 13, 2006