In his visit to Buffalo earlier this month, Gov. Andrew M. Cuomo identified what he believes to be the most important issue hindering growth in upstate New York: property taxes. He is clearly correct. While state income taxes may be a drag, it is the weight of property taxes that gives this state its unwanted distinction as having the country’s highest cumulative tax burden. Those taxes are a killer.
For most property owners, they include county and city or town taxes, and for a few, village taxes as well. Most burdensome, though, and far outweighing the others, are school taxes. Plainly, school taxes fund a vital function and amount to a legitimate cost for living in an advanced nation that understands the critical need to provide children with a challenging education. But it is also true that New Yorkers spend more per student than any other state, and for results that are only average.
Resolving such complicated, intertwined and politically sensitive issues will be difficult, but it is important to get a grip on them. Cuomo began that work by shepherding a property tax cap through the State Legislature early in his first term. The first order of business is to protect that cap. School and municipal leaders across the state don’t like it because, frankly, it makes budgeting more difficult.
Indeed, that’s the point. Officeholders crafting public budgets need to work within a set of boundaries that allows their entities to function, but without the too-easy reliance on raising taxes. That was the practice for decades, and it led to New York’s status as the highest-tax state – one that required companies and individuals alike to think hard before locating here. It’s why New York needs gimmicks such as tax incentives to attract businesses.
But more than that needs to be done and, although Cuomo didn’t mention it, the state has a prominent role to play. Its fingerprints are all over the problem of the local taxes paid by property owners. For the most part, there are two big issues: unfunded mandates and state labor law.
Unfunded mandates are the requirements that the state loads onto school districts and municipalities without paying for them. The most infamous of them was the state’s requirement that counties pay half the non-federal cost of Medicaid. During the years that Joel Giambra was Erie County executive, the Medicaid bill absorbed by county taxpayers ate up the entire property tax levy. The state is now paying more of the Medicaid costs, easing but not eliminating that burden. And there are other mandates, including child welfare, youth detention, public assistance, pensions and indigent defense. None of these is unimportant, but they are implemented in New York in a way that is especially punitive to property taxpayers.
State labor law, meanwhile, vests tremendous influence in the hands of public-sector unions at the expense of taxpayers. It disincentivizes honest negotiation, especially by police and fire unions which, in exchange for a no-strike provision of the law, can turn to binding arbitration. In schools, teachers continue to get “step” raises, even years after a contract has expired.
The consequence in Buffalo is that the teachers union simultaneously bellyaches about the lack of a new contract – the last one expired in 2004 – while declining to negotiate seriously. It prefers the status quo to the givebacks on health care and work rules that it would need to offer in order to win a new pact.
In addition, the part of labor law known as the Triborough Amendment requires the terms of an expired contract to remain in place until a new deal is approved. That further disincentivizes real bargaining by the unions, whose ability to influence elections terrifies lawmakers, many of whom practically live in the pockets of the big unions, including New York State United Teachers.
Resolving these issues won’t be easy. The prohibition against strikes by police officers, firefighters and teachers is critical to communities, for example. Those unions legitimately deserve a counterbalance to the loss of that traditional union tool.
Yet, the consequence in New York has been to help drive property taxes to levels so intolerable they required the intervention of Cuomo’s tax cap. But more needs to be done.
As Cuomo observed, municipalities and school districts have to stop approving contracts they can’t afford. But the state also needs to step up. It has an important role to play in reducing the state’s terrible property tax burden, whether it wants to acknowledge that dirty fact or not.
Cuomo identified a real issue troubling all of upstate. He needs to be among those providing the solutions.