GOV. Paterson seems to have a bad case of am nesia on the issue that once identified him most strongly with New York taxpayers’ interests.
Just less than a year ago, Paterson endorsed a blue-ribbon commission’s recommendation for a broad and comprehensive cap on the growth of local school-tax levies — the single largest factor in sky-high property taxes outside New York City.
To show he meant business, Paterson quickly followed up by sending the Legislature a bill to implement the tax cap exactly as proposed by the commission, which was chaired by Nassau County Executive Thomas Suozzi. The governor then launched a statewide tour to promote the idea, hammering away despite frantic opposition from the powerful New York State United Teachers.
Assembly Democrats under Speaker Sheldon Silver predictably countered by passing NYSUT’s preferred approach — a huge property-tax subsidy financed by a “millionaire’s tax.” That didn’t mean the cap was dead, however. Some of ex-Gov. George Pataki’s greatest achievements in office — notably, charter schools and workers’-comp reforms — also initially faced Silver’s opposition or resistance.
But a funny thing happened after the state Senate, then controlled by Republicans, passed the governor’s bill last August. Paterson complained about the timing — and then essentially dropped the subject.
Last week, the governor created another opening to promote the property-tax cap when he convened a public meeting with legislative leaders on property-tax relief. Here, surely, Paterson would once again spotlight the Suozzi Commission’s key recommendation, right?
Wrong. In a rambling introduction, he didn’t mention the cap. Instead, he invited legislators to join him at yet another meeting, tentatively scheduled for next week, where “members interested in property-tax relief and mandates” could “have a discussion” and “work through some of these differences we have.” It was almost as if the Suozzi Commission had never existed.
Senate Minority Leader Dean Skelos tried to jog the governor’s memory on the importance of treating the tax cap as top priority in any tax-relief program. But Silver, Senate Majority Leader Malcolm Smith and Assembly Minority Leader Brian Kolb were happy to play along with Paterson’s new, process-oriented approach — a good way of burying the idea.
Meanwhile, back in the real world, school districts throughout the state will hold votes next Tuesday on proposed 2009-10 budgets that would raise per-pupil spending by an average of 3 percent and per-pupil tax levies by 2.75 percent. These are nominally the lowest increases in years — but adjusting for inflation, which is essentially zero, they represent much larger hikes from the perspective of millions of New Yorkers reeling from the drop in home values and threatened (or actual) job losses.
Ironically, if Paterson’s proposed cap — 1.2 times the inflation rate, or a maximum of 4 percent — had been enacted last year, it would’ve had little effect in 2009-10. But enactment of the cap this year would protect New York taxpayers from dire threats in the near future.
Federal stimulus funding, which the state has used to prop up its own unaffordable spending, will expire after 2009-11 — after which Albany’s budget gaps are set to explode. In 2011-12, schools will begin feeling the delayed effect of the state Teachers Retirement System’s massive investment losses. As a result, districts’ teacher-pension costs in two years could rise by hundreds of millions of dollars, because by law they must make up the shortfall.
School districts have limited room to cut budgets in the short term because they’re locked into long-term contracts that will raise teachers’ salaries by an average of 5.7 percent this year. That leaves cost-conscious districts with little choice but to lay off staff — which many are doing, because few unions are offering any concessions to save jobs.
Tighter constraints on property-tax hikes would strengthen the hand of school-district negotiators in future teacher-contract talks. But the cap needs to be buttressed by other key Suozzi Commission recommendations — especially pension reform and repeal of the “Triborough” provision, which guarantees incremental pay raises for teachers even in the absence of a new contract.
Paterson’s pretense — that all the state lacks is a political consensus on property-tax relief — is preposterous. Our high taxes are a direct result of the Albany consensus. If the governor really wants a new paradigm, he needs to stop mediating and start acting like a leader again.
E.J. McMahon directs the Manhattan In stitute’s Empire Center for New York State Policy. ejm@empirecenter.org