For the Empire State’s heavily burdened taxpayers, Andrew Cuomo’s campaign policy agenda holds one major cause for celebration: Now all of the leading major party candidates for governor endorse a meaningful cap on property-tax levies.
Cuomo, who formally becomes the Democratic gubernatorial nominee today, is actually proposing a slightly tighter cap than New Jersey’s Republican Gov. Chris Christie. Cuomo’s plan would limit the yearly increase in county, municipal, special-district and school-district property-tax levies to either inflation or 2 percent, whichever is less. Christie’s would mimic the 2½ percent limit successfully pioneered by Massachusetts.
The Cuomo cap, while it would allow an exception that in effect loosens the limit on county taxes, would be broader and tighter than the one originally proposed by Gov. Paterson. Among the Republican candidates, former Rep. Rick Lazio has proposed a 2½ percent cap, while Suffolk County Executive Steve Levy has called for capping school taxes at a lower level than Paterson favored. (A third Republican, Buffalo-area developer Carl Paladino, wants state and local tax cuts but hasn’t specifically advocated a property-tax cap.)
But, cap plans aside, the key question is this: Which of New York’s would-be governors is most likely to stand up to the powerful public-employee unions that will oppose any attempt to limit government taxes or spending?
Lazio and Levy would both mandate relief designed to address the root cause of high local taxes: labor costs. Both explicitly support repeal of the Triborough provision, which entitles public employees to automatic “step” raises even in the absence of a new contract. Levy can also cite an impressive track record of tough bargaining with the unions in Suffolk County. Cuomo offers a much less direct approach: He proposes an automatic repeal of spending mandates on local governments that the Legislature doesn’t specifically renew within two years.
Cuomo, the candidate who has been closest to organized labor throughout his career, is certainly striving hard to sound more fiscally conservative. But when it comes to details, his agenda (tax cap aside) is often cautious or even timid.
For example, when he promises to freeze wages for state workers, he’s really only stating the obvious: The state union contracts all expire between March and June of next year, and the next governor will be in no position to offer them a raise.
And his Medicaid proposals, at this stage, boil down to a vague promise to make the program more efficient — and to create a “massive pharmacy benefit management agency” to coordinate bulk drug purchases. A would-be New York governor really ought to think twice before advocating any new massive agencies.
Blowing up the clutter of outdated and duplicative boxes on the state organizational chart, as Cuomo also promises to do, is all well and good. But as he surely knows, this won’t save money unless the remaining agencies also employ many fewer employees — yet another area that invites union conflict.
On public pensions, Cuomo’s says he’d end overtime spiking for newly hired police and firefighters, and seek creation of a multimember board of trustees to oversee the state retirement system. But overtime-padded benefits are a small part of a much bigger problem, and boards oversee some of the nation’s worst-run public pension funds.
Skyrocketing pension costs pose a huge and growing financial risk to the taxpayers. The next governor’s first order of business should be to close existing defined-benefit pension plans to new entrants and enroll newly hired general employees in defined-contribution plans — a step both Levy and Lazio say they are willing to take.
Then there’s the crucial issue of state taxes. Paterson and the Legislature last year agreed to a record temporary income-tax hike that is due to expire at the end of 2011. Cuomo has pledged not raise personal, corporate or sales taxes — but he also has endorsed Paterson’s proposal to spend any future surplus revenues on an expensive new “circuit-breaker” tax credit to offset property taxes.
So which comes first — a return to more competitive income-tax rates, or yet another income-transfer to many of the same homeowners already benefiting from the state’s multibillion-dollar “STAR” homestead exemption? Cuomo isn’t saying — a bad sign.
Cuomo calls his plan “An Agenda for a New NY” — an unfortunate echo of his father’s failed 1992 jobs bond act. But labels matter less than priorities. If the next occupant of Albany’s Executive Mansion pursues a taxpayer-friendly agenda with Chris Christie’s zeal, we will truly be living in a “New” New York.
E.J. McMahon directs the Man hattan Institute’s Empire Center for New York State Policy.