Returning to the question of possible alternative other than (or in addition to) the property tax:
-- Some have suggested a 'circuit breaker' to take the burden off of property owners, as noted in the following:
http://www.empirecenter.org/Special-Reports/2011/03/case4acap030111.cfm
-- New York State School Boards Association offers other alternatives in its report: Property Tax Cap: Pass or Fail For School Districts, available at:
http://www.nyssba.org/index.php?src=news&srctype=detail&category=Press%20Releases&refno=1578
Anything here worthy of further consideration?
The Circuit Breaker Shift
ReplyDelete(http://www.empirecenter.org/Special-Reports/2011/03/case4acap030111.cfm)
“Unlike a local property tax, a statewide tax credit would not put pressure on schools to hold down growth in teacher salaries and benefits.” This is a good thing for teachers and is obviously supported by New York State United Teachers (NYSUT).
However, this article recognizes the economic research that suggests, “higher income tax rates necessary to finance these alternatives would undermine economic growth in the state, ultimately weakening the tax base at every level.”
As stated in a publication, Property Tax Cap- Frequently Asked Questions (White Plains) a clear description is given if a tax cap is imposed on the White Plains City Schools: “In the coming year alone, despite school board efforts to control those costs which they can control, a property tax cap would result in budget shortfalls that would require wholesale cutting of programs, increases in class size and layoffs of teachers, all of which are vital to our children’s education.”
The publication goes on to say, “Despite these efforts by the local districts, there is no question the public wants and needs property tax relief, but cutting school aid and imposing a property tax cap does not provide relief and will devastate schools. There are other options, and we urge our elected officials to consider addressing the cost drivers and provide a circuit breaker, which offers tax relief without threatening school quality.”
A Circuit Breaker is a micro, targeted remedy directed at each household’s tax burden. It sets a maximum tax bill burden for each household based on the income of each household. For less affluent households, a tax bill that exceeds a specified percentage of household income would “throw the circuit,” limiting their tax bill to the specified percentage of income. The tax bill for affluent households would not exceed the specified percentage of their income, and therefore, they would be expected to pay their full assessment (www.saanys.org).
If economic research suggests that, “higher income tax rates necessary to finance these alternatives (circuit breaker) would undermine economic growth in the state ultimately weakening the tax base at every level,” I question whether this option would make long term sense.
There are some interesting points about the circuit breaker. It already exists in New York. John Whiteley, a NYS Property Tax Reform Coalition and proponent of the circuit breaker writes, “The circuit breaker system is nothing new or radical. Now used in some 35 states, we even have it in New York, but the household income limit ($18,000) established in the 30-year-old legislation defies today's reality that property taxation has become a crisis directly affecting our entire, shrinking middle class.”
ReplyDeleteI am wondering if this concept would work or even have a chance to get raised from $18,000. Our politicians in control seem to stray away from possible solutions that involve taxing higher wage earners more. This is in essence what the circuit breaker does. It shares the burden from those that “trip” the breaker to others. I am not sure there will be support for this. Also, if this is a worthy idea, why not implement it overall, not just for property owners. What is true is that we need ideas such as the circuit breaker to consider and analyze as possible solutions instead of relying on old systems that are not working.
Circuit Breaker & Tax Cap
ReplyDeletehttp://www.empirecenter.org/Special-Reports/2011/03/case4acap030111.cfm
Two points covered in this article prove interesting for discussion. The circuit breaker shift idea is supported by opponents of the tax cap on property tax levies in New York State. First, the article mentions that “the circuit breaker” would neither reduce nor restrain the growth of the overall tax burden.” Just that statement alone would make one wonder about its effectiveness. Shifting the burden to a statewide tax base can be appealing to any local property owner; moreover, it is supported by NYSUT. Let’s face it, we all feel wonderful when we think or know someone else is paying for something. Secondly, shifting more of the upstate property tax burden to downstate New York may cause for some debate. The question of “why me” will come into play. Who has the right to define a “well paid worker?” Why should they bear the burden? In these challenging times, one has to constantly ask who or what determines a well- paid worker. Personally, while the “circuit breaker” can be a possibility, additional support and research is needed.
http://www.nyssba.org/index.php?src=news&srctype=detail&category=Press%20Releases&refno=1578
Tax Cap Article - Cumulative gap would be $3.3B from 2010-11 to 2013-14
“School districts across New York face a potential shortfall of $815 million per year over the next four years just in meeting personnel costs under a property tax cap, according to a report issued today by the New York State School Boards Association.” If this isn’t frightening, I don’t know what is. It’s interesting to note that the article illustrates how a tax cap of 2 percent or the rate of inflation – whichever is less – would limit property tax increases in school districts to an average of $229 million per year over the next four years. At the same time, school districts could have a projected average annual increase of more than $1 billion in salaries, health insurance, and employee pension contributions. That would leave school districts with an average shortfall of $815 million each year just in meeting these basic personnel costs. Kremer noted that over the next four years, school districts would be forced to cope with a $3.3 billion cumulative shortfall between property tax revenue and personnel expenses, assuming no layoffs or personnel changes. Kremer, also stated that personnel costs make up about 70 percent of a school district budget. Lakeland’s personnel costs amount to approximately 60 % of the budget.
The article suggests that establishing a mandatory minimum employee health insurance contribution, creating a defined contribution pension plan for school district employees, amending the Triborough Amendment of the Taylor Law, authorizing regional collective bargaining, and implementing a temporary freeze on public employee salaries, may be the trend for the future, but these initiatives must make “baby steps.” Only time will tell.
The tax cap proposal brings the issue of equity for poorer school districts and communities to the spotlight in the debate of its advantages/disadvantages to New York State. In more affluent areas gaps in funding may often be supplemented by residents alone. Residents of wealthier communities – especially with their children in the school system - are more likely to be involved in educational issues and often have the ability to affect outcomes with their influence. This issue of fairness is addressed in “The Case for A Cap: Why and How It Can Work in New York”: (http://www.empirecenter.org/Documents/PDF/TaxCap). “Three points can be made in response to [inequity] claims:
ReplyDelete• Affluent school districts already receive minimal percentages of state aid, and
their residents have been voting to tax themselves more heavily for years. The
cap, linked to a supermajority override provision, will make it slightly more
difficult for them to do so.
• Leaving tax levies uncapped is ultimately least fair to residents of poorer
districts. Absent a cap, as the tax burden continues to grow much faster than
inflation even while the tax base stagnates or even shrinks, many struggling
communities in upstate New York risk taxing themselves into oblivion.
• The equity issue is best fought out at the state government level, through
debates over the proper size and configuration of the state school aid budget.
The override provision is a safety valve, allowing residents of wealthier communities
to indulge their appetites for higher spending without clamoring for state aid
increases that would have economically damaging implications for the statewide tax
base. At the same time, it will allow residents of poorer, more fiscally stressed
communities to veto increases they cannot afford.”