Tax Reform Effort of Northern Dutchess

2007 Property Tax Negotiations Conclude in Albany
Package consists of targeted relief rather than overall reform
by Robert McKeon, March 31, 2007

For those who have been following the travails in Albany with regard to the 2007 budget negotiations, you can relax now - it’s all over except for the autographs. During the first three months of the new administration, property tax reform, the single largest issue during the campaigns; took a back seat to the tried and true marquee attraction - the personality parade.

While the group of three (Spitzer, Bruno, Silver) may have increased in size, the results continue to emerge from behind a closed door. Here are the highlights of what has transpired since “Day One”.

Spitzer announces campaign to target increases in STAR and state funding of schools:

Majority of increase in distribution to go to needy upstate urban districts
Middle Class STAR increases largely go to those making under $80,000 /yr. (a combined $3 billion of additional relief and school aid distribution).
Senate proposes and quickly passes a bill to institute nearly $6B billion of additional STAR in the coming years. No indication of where funds were to be derived; relief is proportional to taxes paid and benefits are higher for wealthier suburban districts.

Property tax groups (ours being an exception) quickly denounce the Governor’s proposal as “adding on to a broken system” while demanding a complete transition to income tax funding. The Senate proposal garners little attention and is deemed to be “political cover”.

A change in the method of distributing financial aid by retooling the Foundation Aid formula
Increased STAR benefits targeted (in percentage terms) towards the middle class, though more of the net dollars will go to suburban districts than originally proposed.
Taxpayers will receive increased rebate checks if they make less than $250,000 / yr.

So where do we go from here?

The notion that Albany can simply wake up one day and replace financing schools with an income only option has continued to confound us. Such a dramatic change would have profound implications - it has been estimated that even if we revert back to brackets of up to 15.5 % (as was the case in the 70’s) that it would only partially cover the amount levied on real property.

So are we any closer to a complete overhaul?

Well, yes and no. Any phasing of methods will have to be gradual in nature and will need to begin to move towards the ultimate goal: a relationship between what people can reasonably afford to pay and what they are being asked to contribute. By introducing an income based feature to STAR, Spitzer can allocate relief to the middle class and begin to inch closer to the dollars that ultimately will be paid on a “more heavily weighted towards income based program”.

But some very basic structural problems still exist:

Identification of Revenue Sources - no real reform of the methodology can begin to occur until the other side of the ledger is identified. To quote a character in Jerry Maguire - “Show me the money”. The amount of funds that were to be saved by Medicare fraud have not yet materialized and a promise of no new taxes implies that excise or other revenue sources are nowhere on the horizon. So where is the soon to be $20 billion to come from.
Accountabilty - As long as the folks up in Albany have safety in their seats, there isn’t likely going to be an increased burden put upon the more affluent constituents. It’s not in their best interest to mess with those who fund their campaigns.
The Nitty Gritty - Anyone who has ever tried taking the backroads to a new destination will know that you need to have a road map handy. The same is true for the an effective path towards reform. A great deal of energy and effort have been put into identifying the problems with the current system, but until investments are made into what school funding should look like and assessments are made of any potential impacts of proposed changes, than it’s mostly empty words.
Please stay tuned for more…including our forums on A Road Map for Reform.

This entry was posted on Saturday, June 9th, 2007 at 7:33 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.