Gov. Andrew M. Cuomo recently released a report on the first year of the state's property tax cap. The report found that in the cap's first year, it succeeded in holding average property tax growth to 2 percent - 40 percent less than the previous 10-year average.
"The promise of a new New York was based on a simple idea: to return our state government to the people of this state and to the taxpayers," Cuomo said. "For years, out of control spending drove property taxes higher and higher, forcing families and businesses out of our state. New York had no future as the tax capital of the nation, and last year people in all corners of the state came together to help us put in place the property tax cap which empowers communities to take control of their own spending and tax levies. One year later, it is clear that the property tax cap has been a tremendous success, saving hard-earned money for New York families while ensuring that local governments learn to do more with less."
When the governor took office, local property taxes were higher in New York than anywhere else in the country. The median property tax paid by a homeowner in New York ($4,090) was twice the national median ($2,043), and when property taxes were accounted as a percentage of home value - 13 of the 15 highest-taxing counties in the country were in New York.
Recognizing that rapid growth in already high property taxes was fueling New York's negative tax climate reputation and driving families and businesses from the state, the governor introduced the state's first-ever property tax cap shortly after taking office, and it passed the Legislature in June 2011.
The cap limits increases in school and local property taxes to 2 percent a year, or the rate of inflation, whichever is less, with narrow limited exemptions. Carefully constructed based on lessons learned from other states, the cap empowers citizens to scrutinize the taxes that they have to pay and take control of local spending decisions and tax levies.
The report revealed that out of 3,077 local governments and school districts reporting a proposed levy in the past year, 84 percent reported a levy within the capped amount. Other highlights of the report include:
"One year later, it is clear that the property tax cap has been a tremendous success, saving hard-earned money for New York families while ensuring that local governments learn to do more with less."
Gov. Andrew Cuomo
642 of 678 or 95 percent of school districts stayed within the cap.
1,944 of 2,399 or 81 percent of local governments that reported a proposed levy stayed within the cap.
The cap has helped encourage school boards to propose lower tax increases. According to the report, 92.8 percent of school districts presented voters with budgets that were at or below allowable tax levy increases under the cap. Of these, 99.2 percent were approved by the voters on the initial vote.
The cap also increased voter participation and communication between school boards and the voters. Fifty-two districts proposed budgets that exceeded the tax cap and required a 60 percent "supermajority" to pass. Of those 52 districts, 33 passed their budgets on first vote, and 18 others received approval on revote after reducing their proposed budgets.
The data collected for the report show that local governments and school districts have begun a course toward more sustainable property tax growth. Even those school districts and local governments that elected to override the cap had proposed tax levies that were below average rates of increase for the past decades. Through increased public participation in the budget process, the cap has encouraged local governments to explore all avenues of reform and efficiency before they increase the local levy.
The full report is available at www.governor.ny.gov/assets/documents/CappingPropertyTaxReport.pdf.