Another tax cut gimmick won't help
Gov. Andrew Cuomo’s tax-relief panel will get no argument from us about property taxes in the state being distressingly high. Yet, without a magic wand, the state may not find it easy to offset $1 billion worth of local property tax hikes next year, or the year after, without creating problems for itself — problems that taxpayers will ultimately be called upon to solve.
In other words, the plan to have the state underwrite a freeze on local property taxes looks like another shell game, designed to help taxpayers temporarily and incumbents in an election year. That’s when the first year of the recommended two-year tax freeze would be implemented — with the only requirement that the locality observe the state’s 2 percent tax cap. (Isn’t the 2 percent limit enough?)
In the second year, the locality would have to do something to reduce structural spending growth — a worthwhile objective that the governor has been pushing for with little success. Would the lure of another 2 percent offset from the state be enough to get localities to undertake major consolidation measures, for example? It doesn’t seem likely because far-larger incentives haven’t done the trick.
The state’s financial picture appears to have stabilized with the U.S. economy, and it may be able to afford some tax relief for next year. But with tax revenue growth expected to slow nationally then, the state Budget Division is already forecasting a $1.7 billion deficit by the end of the year. Then what? A state tax hike? Deep budget cuts?
The state has already agreed to cut the income taxes of “middle-income” New Yorkers next year, with $350 rebate checks due families with earnings between $40,000 and $300,000 right before Election Day. That will cost the state $1.1 billion over three years. While additional tax relief would be appreciated — especially by the people who won’t be getting a check — would it be worth the burden it seems likely to create for the state?
The panel’s recommendations for business tax relief — which account for roughly half of the $2 billion total proposed — are more defensible. Given the uneven application of the property tax relief (it would exclude New York City entirely), and the likelihood of the political angst this will create in Albany, the state would probably be better off confining its efforts — and money — to giving overtaxed businesses a break.