On March 14, the Fulton County Board of Supervisors approved Local Law 1 of 2011 titled "A Local Law Enacting Truth in Taxation in Fulton County" - the first of its kind in New York state. The new local law requires officials to itemize the county tax bill and to explain costs that originate from state and federal mandates. Anyone who believes that his or her property taxes are too high should appreciate the new law and its goal to bring transparency to the property tax system.
Citizens and businesses are relocating out of the state in droves to avoid New York's high taxes, but state legislators continue record spending. Over the last decade, the state's multibillion-dollar budget has increased every year. According to the Legislative Gazette (December 2008), in 2000-01, the state budget was about $71 billion, burgeoning to over $121 billion last year. All the while, new unfunded mandates were also increasing property taxes to record levels. State legislators have not only increased their spending to unsustainable levels, they have "hijacked" the property tax system to spend even more. This maneuver is unconscionable and equates to "taxation without representation." It is what America's colonial patriots rose up against when, in December 1773, they heaved trunk after trunk of tea into Boston Harbor to protest unfair taxation by the British Crown.
Many officials at the state level are heaping accolades on the recently enacted state budget because it was on time, and purportedly, reduces spending. According to the New York State Association of Counties, the final spending plan totals about $132.5 billion. While it represents a 2.6 percent reduction in total funds spending compared to last year, general fund spending is projected to increase 3 percent, or $1.7 billion. The budget imposes a "two-year budget cycle" for Medicaid and school aid. According to this plan, Medicaid will be allowed to grow by up to 4 percent and education aid can grow by just over 4 percent during the period. Does that sound like reduced spending?
Much of the gracious ballyhoo about the achievements of this budget claims that great strides were made in controlling Medicaid spending - "Medicaid Redesign" as it's being called by the governor. NYSAC estimates that about $1 billion of so-called Medicaid cost containment remains undefined in the budget. Budget legislation gives the state commissioner of health discretion to find the reductions somewhere within the next two years. What that means is that the savings or spending cuts aren't even figured out yet. There's a good chance the commissioner will find those cuts by reducing aid to county governments and providers, which will mean a cost shift of more state spending to property taxes. In budget or finance lingo, "undefined" is not usually good news for taxpayers.
The new state budget does little to alter the huge morass of spending on health and human services programs that has become financially unsustainable. It includes a number of areas where state program costs are shifted to counties in the Safety Net welfare program, probation services, nursing home reimbursement, juvenile detention and adoption subsidies, among others. These unfunded mandates and similar ones upon school districts will end up on your property tax bill.
Over the last year or so, there has also been much adoring talk about the advantages of mandating a property tax cap upon New York's local governments. There has been little talk about the drawbacks. A 2010 research project conducted by the Association of Counties revealed that, on average, nine state mandates consume 90 percent of county property taxes collected statewide. The property tax bill has become a state tax bill. Statistics prepared by the Fulton County budget director show that annual growth of the nine mandates far eclipses the 2 percent tax cap that has been proposed. Just the annual increases in Medicaid and public-assistance mandates will exhaust a 2 percent cap. Increases in the other seven state mandates will exceed the cap by about $1.5 million each year. That means about $1.5 million of local programs like highway repairs, sheriff's patrols, senior citizen services and tourism promotion will have to be eliminated to fund the state mandates. Other states that have used a property tax cap don't mandate local governments (property taxpayers) to pay half the state share of Medicaid; New York does. In Fulton County, the state Medicaid mandate cost property taxpayers $13.4 million this year; that's 52 percent of each person's tax bill. Without mandate relief to local governments, a tax cap will produce bad results.
What is really needed is a spending cap at the state level. A property tax cap is not a spending cap. While many people think a tax cap will stop spending, it will not. Without substantial mandate relief, a property tax cap will shift spending from local priorities to state priorities. Local input and local control will be diminished, and eventually, it will be gone. Remember, New York already has the highest tax rates in the nation. These tax rates should be lowered dramatically, not increased. As currently proposed, a tax cap will push local government officials to increase taxes up to the cap level every year - a guaranteed increase. We already have an example of a so-called "cap" from Albany legislators - the Medicaid "cap." It results in an absolute increase in county property taxes by about $400,000 every year, no matter what. As currently fashioned, a property tax cap will increase property taxes from a starting point that it is already the highest in the nation. Taxes should be cut. Without mandate relief, a property tax "cap" will likely guarantee incremental property tax increases each and every year.
Confusion and anger over high property taxes is widespread, but citizens are not provided with accurate information about the source of their property tax bill. They are forced to pay a ridiculously high property tax or face losing their home to government foreclosure. The last option is to flee their home and move to another state whose tax-and- spend politics is different. This year, the Tax Foundation declared April 12 as "tax freedom day." That means Americans worked more than three months before they have earned enough money to pay this year's tax obligations at the federal, state and local levels. Only when citizens are provided with the truth about the source of their taxes will they have the ability to use the polls to bring about much-needed reductions in government spending.
The "Truth in Taxation" Law arms each citizen with a tool to reduce his or her taxes. Every county in New York state should arm its taxpayers in the same way.
Jon R. Stead, a guest columnist, is administrative officer/clerk of the board for Fulton County.