A New York property taxation commission yesterday recommended capping the state's property tax growth, reducing unfunded mandates, consolidating school districts, and decreasing personnel costs.

The proposals, which are part of a final report released by the New York State Commission on Property Tax Relief, suggests capping annual property tax growth at either the lesser of 4%, or 120% of inflation based on the consumer price index, but capital spending and debt service would not be included in that cap.

"The reason we have the highest local tax burden is because we spend too much," commission chairman and Nassau County Executive Thomas Suozzi said at a press conference.

New York has the highest local tax burden in the nation, 78% above the national average, according to the report.

"Property taxes really have been the enabler of Albany's dysfunctional culture," said Gov. David Paterson. "Politicians for too long have overspent what budgetary allowances would make and the problems were passed along to the local governments. New York's local taxpayers paid the price for it. This addiction has got to stop. We've got to limit the spending and we've got to limit the supply."

The New York State Union of Teachers, a federation of local teacher's unions, opposes a cap. NYSUT president Richard Iannuzzi said the cap would be harmful to school districts at a time of economic distress.

"It takes away from the school districts their ability to deal with their own economic problems by limiting their ability to raise money at the same time that the state is sending clear signals that they are going to pull back on their financial support," Iannuzzi said.

Last week, Paterson sent a letter to school districts warning them of large cuts after a proposal to cut $800 million in the current fiscal year went nowhere when a special legislative session was canceled. Division of Budget spokesman Jeffrey Gordon last week would not comment on whether new cuts would include capital spending, whereas the original mid-year budget cuts were limited to operations.

The commission recommended consolidating the state's 201 school districts with fewer than 1,000 pupils and granting the state commissioner of education power to consolidate 207 districts that have fewer than 2,000 pupils, potentially affecting more than half of the state's roughly 700 school districts.

Standard & Poor's senior director Robin Prunty said that in past consolidations, one district typically assumed the other's outstanding debt. Despite incentives for consolidation and decades of discussion, consolidations have not been common, she said.

Earlier this year, the Republican-controlled Senate passed a 4% or 120% CPI property tax growth cap that Paterson had introduced, while the Democratic-controlled Assembly passed a "circuit-breaker" tax credit that would have reduced a homeowner's property taxes based on income and ability to pay. Neither bill passed in the other chamber.

The commission was created by executive order in January.

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