Though Governor-elect Cuomo has yet to hang a family photo in his executive office, consideration of his proposed two-percent property tax cap is in full swing. 

Like nearly every property tax debate, opinions have already divided sharply between the business community and the voters who own homes and send their children to our schools.  In an odd and unfortunate twist of the norm (or perhaps just reality politics), big business supports Cuomo, the Democrat, while the opposition is backed by a host of middle- and low-income groups as well as a range of education-focused associations. 

Though I have fought in Albany repeatedly on behalf of the business community to protect and grow New York’s commercial sector, in this case the local govs and schools have it right.  The proposed tax cap is an end without a means; all show and zero substance. 

The proposal should come as no surprise: it would allow the incoming Governor and Albany lawmakers to continue to spend and spend as irresponsibly as ever — funding much of their excess by a combination of inconspicuous income taxation and a heavier property tax burden that appears to emanate from local governments – while forcing the diminution of many local health and welfare services (police, fire, sanitation) and driving drastic cuts in a rapidly deteriorating public education system. 

There is little centralized state management or control over local spending in New York, except when it comes to the items Albany doesn’t want to pay for, such as pensions and healthcare (recent example: in September the Democratic state comptroller’s office announced it was requiring still greater pension contributions).  Oddly enough, local governments pay the state pension funds that administer the retirement accounts of many municipal employees; increases in the contributions to the retirement system are now among the highest in recent years, rising, for example, to 21.6% for police and firefighters. 

With greater centralized state control and leverage — read, backbone – these costs could be trimmed and also paid for by means more effective than the property tax.  Property taxes are also being driven upward as a result of sluggish sales-tax revenue and declining state aid, both of which stem from Albany’s embarrassing failures in the act of governance.  Point is, there is a broad array of identifiable culprits behind the state’s enormous property tax burden that require executive leadership and mettle to solve, yet Mr. Cuomo has chosen to sidestep them all in favor of an empty soundbite about capping taxes that has been attempted by two other recent governors without success.

Unconvinced?  School property taxes outside of New York City would need to increase, on average, 3.5% per year just in order to pay for the higher pension contributions required by the state comptroller, according to one think tank.  That alone far outstrips the 2% Cuomo cap on property taxes.

Worse yet, Mr. Cuomo has managed to fool even his own supporters by floating a plan that has so many exceptions and loopholes that there is virtually no case in which property taxes would actually remain capped at two percent. 

The tax cap fails to do the most important thing required to reduce our local tax burden: implement a coordinated statewide (or even countywide) local spending plan.  Rather than take the high road and implement real reform, Cuomo has decided to let each town, village and city continue to limp along as its own island without the coordination, consolidation and economies of scale an effective state government could design. 

The business community should rethink its support for the cap as well.  The measure will, through the back door, drive still more skilled workers out of the state by forcing towns to offer less while charging more, and in so doing put New York even further out ahead of the nation as the acknowledged leader in population loss.   Take just one look at the municipalities that are unable to offer quality public education and services to the community and you will find shuttered stores, high vacancy rates, and empty office buildings.  Cuomo’s pitiful pandering to his well-heeled financiers glosses over the inextricable nexus between a thriving commercial sector and strong local property values.

The Cuomo proposal for a tax cap is yet another tourniquet for a badly broken system and, ironically, despite strong support from the business community, one that will ultimately crush commercial interests even further.  A spokesman for Mr. Cuomo reportedly stated, “Gov.-elect Cuomo has proposed one of the most aggressive property-tax caps because he believes New Yorkers are overtaxed and deserve real tax relief.”  Unfortunately, there is nothing “real” about this proposal, and there is certainly no “relief” in sight.