In the News

Letter to Editor, August 2007

School funding reform has been a continuing issue of concern to citizens throughout New York State because of the current reliance on property taxes for the funding of schools. The property tax burden has driven low and fixed income homeowners away. It has made home purchase difficult for young families. And high property tax bills create tension between those in a community who want to maintain excellent schools through rich school budgets and those who can no longer afford to support them. This is a system that must be changed.

The Property Tax Reform Task Force, of which I am a member, is a coalition of New York towns, community groups and citizens based in the Hudson Valley -- see our web site at www.hvpropertytaxreform.org . We believe school funding should be based on a more equitable income-based tax, as employed in New York City, for example. Albany has been making some, small changes in school funding, primarily by increased supplemental school aid from the state, but has been unwilling to consider fundamental reform -- or even to establish a blue ribbon commission to study such a possibility.

We have been told, however, that school governance and expenditure are local issues and that local voters have it in their own power to limit their tax burden. Really? Seems to me that much of what occurs at the local level is determined by school law set at the state level, which limits local voter control. For example, not all school taxpayers are eligible to vote on local school matters -- those with second homes in a school district, who provide funding through property taxes at the same tax rate as local primary homeowners, are excluded. What happened to the good old American tradition of no (local) taxation without (local) representation?

State mandated programs impose costs on which there is no control by either the local school or local citizen. Teacher and other staff compensation comprises about 82% of school budget costs and is negotiated between a school board and the statewide-organized teacher's union. The local school board is widely acknowledged to be on the light side of the balance scale. School boards cannot negotiate collectively, even though they share many similar local conditions and costs.

Other factors that have significant impact on the underlying cost structure of local school funding include the escalating public pension and health benefits costs, again established by the state. My colleagues and I on the Property Tax Reform Task Force don't want to put teachers in the same kind of vulnerable economic position that so many people in the private sector face on the issue of pensions and health care. These escalating costs clearly have a major impact on local school costs, however, and at some point will have to be addressed by, for example, considering defined contribution pension plans for newly hired teachers and state workers, or a medical benefits Volunteer Employee Beneficiary Association (VEBA) trust. A VEBA trust is a device into which employees pay on an ongoing basis and which the state funds to some pre-determined amount through general fund revenues. For every dollar set aside in such a trust, market appreciation can significantly increase the value of the investment, helping to reduce the long-term cost of the program without using property taxes as a funding source. Such a plan for New York State could, on the educational side, save about 22 cents on every educational dollar spent in the state.

All of those issues, however, are entirely outside the control of us local folk. We must continue to pressure state elected officials to look at ways to address school funding reform and remove property taxes from the formula. That is local control. Send a message to your elected representatives if property taxes are getting you down.

Judith Gustafson Cottekill (Ulster) NY

New York State Taxpayers Union News, 6/25/07

NYS Legislators Say NO to Homeowners & YES to Unions

Teachers and their families are productive members of our society, our neighbors, our families and our friends. Like you and I, they struggle with household budgets and view rising property taxes as an increasing burden. Then why, we ask (and so should you), did their Union (NY State United Teachers - http://www.nysut.org) single-handedly kill property tax reform?

You see, earlier this year, the Senate passed legislation [supported by the NYS Taxpayers Union] (S.1052) that would create a Blue Ribbon Property Tax Reform Commission. The commission would examine the property tax system and offer reforms to relieve homeowners and other property owners of their increasing tax burdens. The proposal became a focus of taxpayer groups all around the state, who rallied for its passage in the Assembly. And our efforts seemed to be working -- Assembly Speaker Sheldon Silver commented publicly that he supported the concept of a Property Tax Commission.

But the Teachers Union got wind that the Commission might actually look at "spending restraint" and unleashed their massive political might to squash the concept in its tracks -- and with it the hopes of New Yorkers suffering under truly punative property tax rates.

NYSUT is a federation of more than 1,200 local unions with more than 585,000 members who wield incredible political might in Albany.

The Teacher's Union attack was timed for maximum effect. NYSUT's action in springing its opposition at the very last minute left insufficient time for what otherwise would likely have been approval of the revised Assembly bill in time for Senate passage of its companion bill. Nonetheless, our champions never gave up. Both Senator Little and Assemblywoman Galef swiftly introduced amended bills to remove the "offensive" language - (A9239 / S1052A ).

But alas, the blow was fatal and the blame for the absence of any hope for property tax relief can be laid squarely at the feet of the Teacher's Union.

If anything, their disregard for the plight of the overburdened taxpayer (and arguably their members) only emboldens citizens to continue to fight for relief. For in the end, there is no larger "interest group" than the American taxpayer - and no cause so great as our struggling homeowners. The battle continues ...

New York Post, 5/25/07

Gold Plated Schools

The Census Bureau yesterday reported that New York spends more per student on its schools than any other state in America. The news is no surprise--but it certainly does serve as a good reminder of why New York also leads the nation in state and local taxes.

Empire State schools collectively have claimed first or second place in the nation for years--in terms, that is, of how much they spend per student.

The Census data show that New York spent $14,119 per student in 2005--a jaw-dropping 62 percent more than the national average. Even the state's higher cost of living can't explain such an off-the-chart discrepancy.

New Jersey Senate Passes Tax Plan, Ending Impasse

At best, the property tax reforms making their way through the New Jersey Legislature are disappointing. Unless Gov. Jon Corzine uses the full power of his office to strengthen them, the state will continue to be plagued by the highest property taxes in the nation.

Last week, the Assembly approved the politically popular part of the tax package — a 20 percent property tax credit for families earning $100,000 or less and smaller amounts for most people earning more — and the Senate is likely to pass it this week. But the politically unpopular parts of the package — those aimed at sustaining property tax stability over the long run — have either been watered down or lack sufficient support to pass.

...To his credit, Mr. Corzine has been the first governor in years to commit himself to achieving real and lasting property tax reform. If he does not hold firm to his goal, property taxes in New Jersey may never be stabilized.

New York Times, 2/7/07

Rell Proposes More Money for Schools and Tax Increases

Months after a decisive victory in her bid for re-election, Gov. M. Jodi Rell on proposed increasing education spending by $3.4 billion over the next five years and increasing the state’s income tax by half a percent over the next two years to pay for it.

In a speech today to the State Legislature, which Democrats control with a veto-proof majority, the Republican governor characterized the tax increase as a “wrenching decision,” but said it was the best way to pay for a huge increase in the basic way the state pays for public schools.

The tax increase was part of her $35.8 billion two-year budget, which must be approved by the State Legislature. The governor also proposed increasing the state’s cigarette tax by 49 cents, to $2 a pack. Aides said the increase would bring in $169.2 million over the next two years.

Spitzer's Budget

...Few taxpayers think the property tax system is worth a bucket of warm spit. And, yet, this [Gov. Spitzer's] budget pours billions of dollars into propping it up.

...So here's a question: Why would the reformist governor - no fool, he - throw money at the state's education and property tax systems when the very models of public education and property taxation appear to be broken?

...Here's guessing that the throwing of money at the existing public education system and the existing property tax system that locally supports education really is designed to clear the deck.

...In our crystal ball, it looks like a setup to begin to reform education in New York...

New York Times, Danny Hakim, 2/1/07

...The governor's budget reflects a fundamental rethinking of both property taxes and education-aid policy, but he is heading in opposite directions with those two proposals.

...With property taxes, he is making an existing and much-criticized system for offering prroperty tax relief even more complex by offering new relief to the middle class.

The governor's strategy is to tie the two proposals together so that they can be more easily sold to the Legislature. The Senate is led by upstate and suburban Republicans who have been quick to express suspicion about changes to the school aid formula. But increasing property tax relief has been one of their highest priorities.

...Senate Republicans are uncomfortable with the proposals, in part because overall property tax bill[s] for their higher-income constituents could continue to rise and partly because they [Senate Republicans] are proposing to distribute $6 billion over two years instead of three.

Albany Times Union, Rick Karlin, 2/13/06

...Perhaps the biggest problem with the much-ballyhooed election-year rebate program, some lawmakers admit, was that many taxpayers derided it as a cynical ploy by politicians to make it look like they were doing something for residents of the nation's highest-taxed state.

"I've got a 6-inch knife in my back. You pull it out 2 inches. Don't blame me for not saying 'Thank you,'" said Bruce Pileggi, a New Paltz resident involved in a group that wants to ban property taxes as a way of funding schools.

The trouble is, simply ratcheting up the rebate doesn't solve the underlying problem of high school costs and property tax rates, said Carole Kraus, who observed that many people near her in Ulster County are paying 10% of their gross income in property taxes. She and members of her organization, the Property Tax Reform Task Force, met with a representative of Spitzer during the campaign and warned him that simply "enhancing the STAR benefit will not solve this."