Is the property tax cap working in Western New York?
New York state’s 2 percent property tax cap has been hailed by fiscal conservatives as a great success story for the state, having saved taxpayers billions of dollars since it was instituted by Gov. Andrew Cuomo in 2012. The other side of that coin is that the cap has a tendency to be almost punitive on smaller municipalities that are stretched thin in providing basic services.
Justin Sondel, City & State’s Buffalo reporter, wrote a lengthy dive on the implications the tax cap has had in Western New York (which appeared in our latest print issue), where property valuations are skyrocketing, but tax rolls remain more or less stagnant. The piece calls into question whether the one-size-fits-all model of the property tax cap makes sense in a state like New York with vastly different economies and markets, from Buffalo to the North Country to New York City.
I posed a few follow-up questions to Justin on how the property tax debate is playing out in Buffalo and whether anything will change in the foreseeable future.
Nick Powell: Buffalo and Western New York are an interesting test case for the efficacy of the property tax cap, and budget officials for Erie County Executive Mark Poloncarz said in your piece that the county has had to maneuver to fall in line with the limit on revenue growth. Did he say where some of the tough cuts have to be made?
Justin Sondel: At this point it’s less about cuts and more about deciding which of the many dire needs in the county can be addressed and to what degree. Right now, there are battles between the administration and the Republican-controlled Erie County Legislature over funding plans from Poloncarz to address severe opioid addiction and lead poisoning issues. In addition, the administration has expanded road work programs, done a lot of work to improve parks, expanded snow plowing services and put more money into arts and cultural institutions, all moves they argue are popular with constituents. With inflation so low, the administration feels they are handcuffed, not able to provide services constituents want despite the positive trend of rising property values
NP: One of the main concerns with the property tax cap was how it would disproportionately affect school funding and force the state to fund schools through other mechanisms (i.e. higher taxes) or shift the burden to municipalities. Has this been the case in Western New York since the cap was instituted?
JS: That’s not a complaint I heard in my reporting. However, county officials said that school districts were allowed additional relief from the cap with exemptions on capital projects. They said they would like to see additional carve-outs for added value through improved properties and their associated rise in values and assessments – on top of the existing quantity change value exemption – particularly at the county level, given that the local municipalities are the entities the set the assessments.
NP: You mention in your article the fact that localities can vote to exceed the tax cap limit, but that doing so often comes with political peril as nobody likes a tax hike. Has Buffalo or any Erie County municipality ever come close to voting to raise the limit, and consequently was there any political fallout?
JS: I can’t think of any municipalities that have voted to exceed the limit off hand, but the small town of Springville is considering exceeding the 0.61 percent limit this year, despite having made significant cuts in several areas of the budget. They actually would be 1.78 percent, coming in under the 2 percent figure often associated with the law. Some lawmakers and advocacy groups argue that the cap should be a hard 2 percent, not that figure or the rate of inflation if it is lower, as it is now. They say that since Gov. Andrew Cuomo only holds his own budget office to a hard 2 percent limit – not by law but by principle – the same should be true for municipalities.
NP: Judging by the tone of Cuomo’s spokesman in your piece, it doesn’t seem like there is much of an appetite for repealing the tax cap or making changes to the law itself. Is it fair to say that the main focus of the property tax cap debate over the next few years will center around doing away with some of the state's unfunded mandates for local municipalities?
JS: I’d say that there is no appetite for repealing the tax cap in the executive’s office or the Legislature has much of an appetite for repealing the law now or in future sessions. It has too much appeal with constituents. And, especially with the developments of the last week, it’s definitely not on anyone’s radar this year. If municipalities are going to get relief it will almost definitely be in the form of carve outs, additional aid or amendments like the hard 2 percent cap, and those will have to wait until future sessions.