Politics & Government

Tax Cap Will Impact School Budgets

Governor Andrew Cuomo signs property tax cap legislation Thursday in Pleasantville.

Governor Andrew Cuomo faced homeowners who pay some of the highest taxes in the state when he signed his property tax cap legislation in Pleasantville Thursday.

The legislation states that local governments and school districts cannot raise their annual property tax levies by more than two percent or the rate of inflation—which ever is lower.

"This will end the madness [of increasing property taxes] finally—once and for all," Cuomo said. "It will mean governments will have to live within their means and balance their budgets."

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Cuomo pushed for a straight 2% tax levy cap, but the version that finally passed the state legislature late last Friday night includes some exemptions and other factors that cut down on the impact of the cap for local schools.

"It's a little better because what the governor was asking for was just a straight two percent cap and people realized though you could do that on one-year or two-year basis, you couldn't do it perpetually," said Pearl River School District Director of Operations Quinton Van Wynen. "The numbers just don't work."

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"Am I happy? No," said Donna Ramundo, president of the Rockland County Teachers Association. "There is nothing in there for health care (cost increases) or unfunded mandates.

"I was always against the tax cap to begin with. Now we have to see how we can still have the quality public education with it and hopefully we won't see the quality go down hill."

According to Van Wynen, the rate of inflation would have put the tax cap it at 1.6 percent for the 2011-12 school year had the law been in place. The increase in the 2011-12 Pearl River budget that passed in May is 2.75 percent.

That is where exemptions will be a factor, most significantly the one related to pensions. Any pension cost increases above two percent would allow districts to raise the tax levy increase above the cap. Van Wynen said that would have led to an additional 1.3 percent increase in the cap for Pearl River for 2011-12.

"That would put us at almost three percent for the year," Van Wynen said. "The really big thing would be the pension. That helps. If they had put in (an exemption for) health insurance, that would have been even better, but you take what you can."

There is no expiration date on the cap. It will remain in effect as long as rent control in New York City is operative or until the legislature repeals it.

Another change is that districts must now submit a proposed budget to the state comptroller, education commissioner and tax commissioner by March 1, well before the state budget will be passed. This will force districts to estimate based on the budget proposed executive budget.

Ramundo has argued that the cap will end up costing taxpayers money in the long run, especially if it forces cuts that lead to a drop in the quality of schools.

"I knew it was going to happen," Ramundo said of the cap. "I just hope people who wanted it understand what it actually is. It's not going to save them money. If it was, I'd be happy because I pay taxes."

Van Wynen has taken the approach all along of preparing for the worst, offering up projections for the next few years that show a large budget deficit in Pearl River. He pointed to further reduction in state mandates and an increase in state aid as keys to maintaining staff services. Most likely, the changes in state mandates included in the bill passed Friday will have very little impact on Pearl River.

"One thing the governor has to do, he has promised a four percent increase in (state aid) to education," Van Wynen said. "If they live up to that, we can be offsetting the two percent local tax cap with additional funds coming from Albany, so you can balance it out."

Many school districts, including Pearl River, have already been finding creative ways to cut costs to make their budgets even without the cap. Pearl River renegotiated contracts with its teachers, administrators, teaching assistants and clerical staff.

"We've been squeezing not only our contractual limits with different unions, but other expenses (such as) supplies and materials and day-in, day-out repairs," Van Wynen said. "We've been putting them off or finding ways to bundle them to keep expenses down. Eventually, that will catch up to us.

"With 70 percent of our costs in salary and benefits, that's where the pressure is going to be. The only way to change your salary model is to decrease the number of people you are paying. Fewer teaches means less services and programs."

Under the law, local communities can override the cap for school budget votes, but only if 60 percent of voters agree. 

"Why 60 percent?" Cuomo asked. "This time we want the odds in favor of the taxpayers."

Hastings Board of Education president Eileen Baecher doesn't agree.

"I don't know why 'no' votes count more than 'yes' votes," she said.

Baecher and Dobbs Ferry school board president Jeffrey O'Donnell said the only way for the cap not to be detrimental to public education is if the state lifts—or at least amends—a number of the mandates imposed on public schools.

"When you limit the amount of revenue that can come in, you can't continue to burden districts with mandates that cost money—when the districts don't have any money with which to do them," O'Donnell said.

Former Pearl River Superintendent of Schools Dr. Frank Auriemma, whose retirement became official Thursday, told Patch in a recent article that mandate relief would be a key factor in allowing school districts to maintain staff and services once the cap was in place.

"If we had a slight increase in state aid ... bump it back up a little because we lost a whole lot," Auriemma said. "Start to address some mandate relief—now we're getting to the point where the objective is a little more doable over time."

Responding to questions about mandate relief and whether the cap actually solves the issue of rising tax burdens, Cuomo said: "From the home owner's perspective, this is the full equation."

Local and school officials who argue against state mandates, "have a point," Cuomo said. "We're working to do even more to decrease the burden."

State Senator Andrea Stewart-Cousins (D-35) applauded the governor's effort, adding: "The law ensures that the discussion about mandate relief is ongoing by creating the Mandate Relief Council."

The law does include a series of measures designed to provide relief from state mandates placed on municipalities, counties and school districts. These include changes to requirements for contracts being entered into, as well as giving discretion to the local districts to consider ridership as a factor in providing bus service. 

But the most onerous mandates on school districts—such as the pension system and the Triborough Amendment—which regulates employee compensation when unions are in between contracts—have not at this point been addressed.

"If pensions could be funded at the state level that would take a lot of pressure off of local budgets," Hastings' Baecher said. 

Briarcliff resident Si Spiegel, who has lived in the same home for 41 years, said he is happy with what the governor did.

"But I am concerned that we don't repeat the mistakes made in California," he said. "We have a lot of services here we need to protect. Now, in California, schools and prisons are severely overcrowded. The situation is much worse than before the cap."


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