Tax cap fight threatens timely New York State budget

New York state lawmakers and Gov. Andrew Cuomo are heading to the wire on the April 1 state budget deadline amid disagreement about a property tax cap.

Gov. Andrew Cuomo has said he will not sign any budget package that does not make permanent the about-to-expire cap limiting growth in property taxes to 2% a year, or the rate of inflation if lower. Cuomo said Sunday during a rally on Long Island that keeping a hold on the property tax cap is more important after the 2017 federal tax bill capped deductions for state and local taxes at $10,000.

The matter is coming to a head because of the imminent expiration of the eight-year cap Cuomo signed in 2011 soon after first assuming office.

The budget passed by the state Senate on a 52-8 vote includes the permanent cap. It is now in the hands of the Assembly.

“When they passed that tax bill that ended deductibility of state and local taxes, it said your property taxes are now going to be taxed by the federal government,” Cuomo said Sunday. “It's more important than ever before that we make sure they're capped and saying it is a permanent tax cap says to people, feel confident, feel secure, your property taxes are not going to go up on the state side.”

Jerry Kremer, president of Empire Government Strategies, said passing a permanent tax cap in the Assembly has faced obstacles because of teachers' unions have a big influence on many members. The cap has a particular impact on school district budgets.

Kremer, a former state assemblyman, expects the tax cap law to at least get extended as part of budget negotiations with both sides likely working through the weekend in an effort to avoid a repeat of 2017 when the April 1 deadline was last missed.

“The tax cap is going to get extended, it’s just a matter of what form,” said Kremer, who chaired the Assembly Ways and Means Committee while representing the western portion of Long Island’s Nassau County in the 1980s. “I see the governor holding out until the last possible minute.”

Kremer said the tax cap has been positive for New York by keeping municipal taxes and spending in check. A recent analysis by the Rockefeller Institute of Government said the tax cap has saved homeowners $25.6 billion of property taxes since the law went into effect in the 2012 fiscal year, including $16.7 billion from school districts.

Cuomo has put a line in the sand on the tax cap as he looks to gain approval of a $175.2 billion budget he first pitched in January that would include extending the current 8.82% millionaire’s tax beyond its scheduled Jan. 1, 2020 expiration date and other revenue raisers like legalizing sports betting. A previous proposal to legalize recreational marijuana as part of the budget vote was removed, but could be voted on separately later this year.

This year’s budget cycle has also revived a push for a congestion pricing tolling plan in midtown Manhattan that could funnel new funds to the Metropolitan Transportation Authority. Assembly Speaker Carl E. Heastie, D-Bronx, told reporters Monday that his chamber is ready to move forward with the proposal, which is already supported by the state Senate and governor.

In his ninth year in office, Cuomo is presiding over the budget process with his party in full control of the state legislature for the first time. Kremer noted that the Democrats seizing control of the state Senate in November has created challenges to Cuomo because new progressive members want to hike spending on programs and social justice initiatives. Other newly elected Democrats from the suburbs have also pushed for more state aid to school districts they represent.

“There is a lot of pressure coming out of the Senate for a whole variety of programs,” said Kremer. “It’s a confluence of events happening all at once.”