Tax Cap Must be Made Permanent While Republicans Still Maintain Senate Control

May 11, 2018

New York State’s property tax cap, which has saved over $7.6 billion for School property taxpayers in just the first four years since its inception in 2012, is on the verge of becoming extinct. Few realize that when the cap was first passed, it was only for a short period of time.

While Governor Cuomo and the state Senate majority wanted it to be permanent, then-Assembly Speaker Sheldon Silver insisted that it be tied to passage of rent regulations and sunset after four years. It came up for renewal in 2015 and passed with little fanfare. It was extended out to the 2019–20 legislative session.

In a typical Albany session, this wouldn’t raise much of an eyebrow. However, there is the potential for a seismic powershift in the state Senate this November, which could tilt the balance of power from suburban Long Island Republicans to liberal New York City Democrats. The last time this happened in 2009, a massive payroll tax was enacted on suburban businesses to help fund the MTA.

The state Assembly has never been an ardent supporter of the concept of a property tax cap. Municipal unions and school districts recoil at what they claim is an artificial constraint that the cap places on their ability to expend funds as they wish. Some anti-tax entities even filed a lawsuit to invalidate it. They lost.

But having lost the battle, they still may win the war, if they are able to convince a newly constituted state Senate that the cap be allowed to sunset. This is not some pie in the sky scenario. Gubernatorial candidate Cynthia Nixon has already made the abolition of the cap part of her platform. While it’s unlikely she will win the governorship, she does reflect the power the Working Families Party and the far left wing of the Democratic Party have over the electoral process.

Republicans who traditionally held control of the Senate are facing a huge challenge this November. They have lost one special election after another, and now actually have a minority of the seats – 31, to the 32 Democrats hold. The only thing maintaining their slight hold on power is Democratic Senator Simcha Felder, who has agreed to caucus with the Republicans until the November election.

The odds of the Long Island Republican Senate block keeping power are daunting. First, they are facing the fact that this is an off year election, with a Republican in the White House, which traditionally bodes ill for the party in power. Secondly, the governor has been pushed so far left that his previous tactical wink and nod support for Republican control of the Senate is a thing of the past.

That is why it is so essential that the Long Island Senate Republicans, who still maintain control of the Senate, make the permanency of the tax cap their number one priority as this session winds down. They floated this bill in the past, only to see it the whimper out. But, as we have seen, they hold a great number of cards, given the fact that the Democratic Assembly must negotiate with them to pass not only a budget, but end of year resolutions as well.

We’ve seen from the past that a party can get its way on a priority issue if it is made clear from the outset that nothing else will move forward without it. There are a plethora of issues that are worthy for consideration in the last few weeks of session, but none are as important to suburban taxpayers than making the cap permanent.

This may be the last chance in a while that suburban senators hold a semblance of power. If they lose control, there will be no champion in power to make the extension possible. New York City legislators will be able to extend rent regulations without the need to compromise with the Long Island delegation.

Certainly, the cap Is not a panacea. While it’s stated to be at 2%, there are many loopholes. Pension costs, interest on capital improvements, tort settlements and rising property assessments, all are exempt from the cap. Nevertheless, according to the Empire Center, the average increases in school tax levies in the six years since the cap’s inception is approximately 2%, compared to the over 6% that was the norm in the decade prior to the implementation of the cap.

The fact is, forced prioritization works. And while there were dire predictions of chaos that would ensue within the schools, it never came to pass.

New York has seen the largest exodus of residents to cheaper pastures than any other state in the nation. According to the LI Index,41% of our young people, ages 18 to 34, still live with their parents. Fewer and fewer Long Islanders, according a Long Island Association poll, consider themselves part of the disappearing middle class (58% today, compared to 67% in 1990).

The cap alone is not going to change this, but it will at least help many keep their heads above water for a while. So let’s make the cap permanent so that we can start concentrating on our efforts to actually reduce the tax burden by eliminating costly state mandates, such as mandatory arbitration, the Triborough Amendment, and unsustainable defined benefit pensions.

Steve Levy is President of Common Sense Strategies, a political consulting firm. He served as Suffolk County Executive, as a NYS Assemblyman, and host of “The Steve Levy Radio Show”