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Local Governments Nervously Watch Cost Shift from Albany

Wednesday, March 23, 2011

NY Comptroller Tom DiNapoli's analysis of the effects of Cuomo's budget on school budgets. (NYS Comptroller)

Governor Andrew Cuomo hung the responsibility of passing a budget squarely on the shoulders of lawmakers in a video message to New Yorkers on Wednesday. “Either the legislature will pass, or will fail to pass, the state budget that I have proposed,” Cuomo said in a video on his website. “The budget that I proposed does what you sent me here to do. It closes a $10 billion deficit with no new taxes.”

That’s no new taxes at the state level. But with cuts to municipal and county budgets in the offing, some of those costs may be passed straight to local property tax bills, which are already among the highest in the nation.

The antidote to that, long-championed by Cuomo, is a two-percent property tax cap. But as of Tuesday, Cuomo said that wasn't likely to be included in the final budget. He still wants it, but Assembly Speaker Sheldon Silver wants a cap to be considered in conjunction with a extension of rental protections, and Cuomo told reporters there may not be time before approving the budget. (A Cuomo spokesman did not reply to a request for comment.)

New Yorkers overwhelmingly favor of a property tax cap — a Siena poll in January clocked support at 83 percent — but talk of a cap has local leaders nervously eyeing their bottom lines.

Cuomo's budget would cut aid to local governments by $1.8 billion according to an analysis of Cuomo’s budget by Comptroller Tom DiNapoli. Almost all of that — $1.6 billion — would affect local school budgets. DiNapoli released a district-by-district analysis last week, and found that overall, district spending would drop by 3.7 percent.

In the face of these cuts, a property tax cap would limit how much local governments can raise taxes to make up the difference. The trade-off Cuomo offered to local governments was "mandate relief," a catch-all term for new funding mechanisms or amended state laws to save counties money. Governor Cuomo convened a Mandate Relief Team to offer recommendations. The team recommended changes like restructuring local pensions and eliminating certain record keeping requirements in its preliminary findings on March 1, but no substantive bills have passed so far. (Property tax relief does show up in this internal budget negotiation memo obtained by The New York Times, as a way to encourage local governments to consolidate services.)

"It remains to be seen what actions the state will take to shift costs that it should be spending for its programs to local governments," said Stephen Acquario, the director of the New York State Association of Counties and a member of the governor's Mandate Relief Team. 

The State Assembly and Senate have restored some of the funding for local school districts, but Barbara Bradley, spokeswoman for the New York State School Boards Association, said schools districts are considering everything from cutting freshman sports to reverting from full-day kindergarten to half-day to closing schools altogether.

"We think it is dire," she said. "There are costs that continue to rise — fuel, pension, health care costs — while at the same time, districts have had cuts in state aid, and federal stimulus funds are going to dry up."

Property tax cap or not, Bradley said school boards across the state know that passing on the higher costs is also not an easy sell. "They can't afford to put budgets out toward their communities that have higher tax rates. Their communities are going to vote them down," Bradley said.

Without more revenue, local governments may look to layoffs and union concessions to balance their budgets. Most school districts in the state submit their budgets in mid-May, so they expect to spend the spring negotiating union givebacks when they know the final numbers from Albany. In New York City, Mayor Michael Bloomberg has already detailed the potential impacts in the city when he released a school-by-school list of potential layoffs — 4,600 in all.

Meanwhile, across the border in Connecticut, the new Democratic Governor Dannel Malloy is taking a totally different tack on aid to local governments. The mayor of Stamford for 14 years before becoming governor, Malloy wants to maintain funding for local governments and balancing the budget with a whole score of higher taxes at the state level — including higher income and sales taxes.  In a recent interview with WNYC, he suggested that the it hasn't proven to be honest when state officials touted low taxes while cutting local aid.  

"All’s that was doing was raising property taxes, and other people up here could beat their chests about how they didn’t raise the state’s taxes, but they were raising the burden,” Malloy said.

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