Cuomo unwraps $1.66 billion tax cut plan
By Tom Precious | January 14, 2015 – 12:03 PM News Albany Bureau | <a href="https://twitter.com/TomPreciousALB" title="Find email: tprecious
ALBANY – About 1.3 million homeowners will be eligible for a property tax break paid for by all the state’s taxpayers under a plan Gov. Andrew M. Cuomo said Wednesday will be part of his 2015 budget plan, which will be unveiled next week.
The program will reduce local property taxes for people earning under $250,000 a year by an average of $950 a year, though residents in upstate regions like Erie County will see considerably less savings because property taxes are not as high as downstate.
While tax cut programs usually enjoy strong political support, the Cuomo idea was greeted as inadequate by some business leaders and Republicans for its selective approach that cuts out millions of taxpayers as well as corporations that pay property taxes. Moreover, critics said having the state subsidize some people’s local property taxes will do nothing to encourage localities and schools to cut costs.
The program, a circuit breaker approach that Assembly Democrats and left-leaning groups have pushed for years, provides higher benefits to people who pay more than 6 percent of their annual income on local property tax bills. Those making under $75,000 a year will get the most benefit, and the program fades out for households with incomes over $250,000.
Administration officials said they could not yet provide county-by-county breakdowns for the benefits outside of Long Island.
“This proposal actually gives the homeowner a cut,” Cuomo said Wednesday at an event on Long Island, home to some of the nation’s highest property taxes.
The administration did not give specifics on how the $1.66 billion plan would be funded. It will not become fully effective for four years.
The plan was endorsed, with caveats, from left-leaning organizations like the Working Families Party, which said it has backed such a property tax approach since 2007.
A fiscal watchdog said property taxes are not really being cut at the local level, and that cuts for some are being covered by all taxpayers across the state.
“A circuit breaker wouldn’t reduce property taxes but subsidize them,” warned E.J. McMahon, president of the Empire Center for Public Policy. “The state would simply be redistributing a portion of the property tax burden to the personal income tax base, but it wouldn’t be addressing the cost factors that create a high tax burden.”
He also said Cuomo’s program would provide no relief for commercial building owners that pay high property taxes, thereby doing little to encourage economic development. And he noted the state already spends $3.4 billion subsidizing the STAR property tax program that also does not encourage localities and schools to cut spending.
The property tax plan comes as part of a rollout strategy by Cuomo to build momentum for his State of the State and budget address next week. Plans were being made for Cuomo to be in Rochester on Thursday to unveil some details of a pot of funding worth at least $1.5 billion for revitalization efforts in upstate areas outside the Buffalo region. The program is based on Cuomo’s Buffalo Billion program.
“I want to signify that this is probably the single most important challenge we’re facing as a state,” he said.
Those homeowners making less than $75,000 a year who spend at least 6 percent of their income on property taxes, will get a credit of 50 percent on the amount spent above that percentage threshold, with a maximum credit of $2,000. The relief drops as low as 40 percent of the credit, or a benefit with maximum relief of between $1,500 to $2,000, for incomes between $75,000 and $150,000. For those with $150,000 to $250,000 of income, the maximum benefit would be $1,500 annually when fully phased in.
High property taxes are crippling households, Cuomo said, noting statistics that show taxes in upstate counties, including Western New York, are among the highest in the nation when property taxes are factored against home values.
The state’s 2 percent tax cap program, enacted in 2011, expires later this year and jockeying has already begun in Albany over whether to temporarily extend the cap or make it permanent.
Cuomo was silent on that debate during his tax rollout plan Wednesday.
The latest variation of the property tax issue, which first saw a cap on increases above 2 percent, then a state-funded freeze for homeowners in communities that kept levies within the cap level, now moves to a cut for some New Yorkers.
The Cuomo administration said the program will provide $1.7 billion in tax relief, with benefits rising for homeowners the less they make in income.
The average benefit to eligible homeowners will be $950 – though with wide swings based upon their geographic location, said Robert Megna, the governor’s budget director.
In Nassau County, for instance, the average savings for eligible homeowners will be more than $1,200 annually.
The average income tax credit for all eligible upstate residents will be $781.
Eligible homeowners will get a credit up to 50 percent of the amount over which their property taxes top the 6 percent of income threshold.
To woo New York City lawmakers, the tax plan also includes benefits for renters, though details were sketchy.
The proposal is subject to negotiations with the Legislature as part of the budget talks for the fiscal year beginning April 1. Cuomo will release his full budget plan Wednesday in Albany.
Assembly Democrats signaled some positive reaction to the plan their members have sought to get into the budget for at least six years. “We support tax relief that is fair and equitable for all New Yorkers,’’ a spokeswoman for Assembly Democrats said of the proposal, still without specifics.
For years, Democrats have unsuccessfully pushed property tax relief that targets benefits for lower- to moderate-income residents. Senate Republicans have resisted those efforts, pushing instead broader relief, in part, because many members of the conference represent downstate suburban areas where taxes and salaries are higher.
Senate Majority Leader Dean Skelos, a Nassau County Republican, said he wants to see a property tax plan that “ensures all middle-income families in every region of the state” benefit.
But the state Republican Party said Cuomo’s plan is like “putting a Band-Aid on a bullet hole” by giving benefits to a limited number of New Yorkers and not addressing state mandates that help increase local government expenses and, therefore, property taxes.
The proposal would only apply to residents in localities that agree each year to set property tax levies within the state’s tax cap limits approved in 2011.
Greg Biryla, executive director of Unshackle Upstate, a business group, said Cuomo’s plan “misses the mark” for its scheme to have state taxpayers pay for what is now being paid for on the local level and for leaving business out of any tax relief. Instead, he said, Cuomo should push to make the existing tax cap permanent and help with long-stalled efforts to reduce state mandates.