Tax Cap for Rent Regs

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Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, NYS Assembly Speaker (D-64th) Sheldon Silver talks about the deal to cap property taxes and renew rent regulations, plus other remaining items on the legislature's agenda.

Renters in New York City and homeowners outside the city may soon be getting a break on those property taxes and rising rents. 

Assembly Speaker Sheldon Silver and Majority Leader Dean Skelos have agreed to a plan to limit the increases in rates, but the deal isn’t quite done. The proposal would strengthen the rent stabilization law for most renters and cap the tax hikes outside NYC for homeowners at 2% per year.

This is good news for the wallets of those affected, but may have other effects as well, such as on school budgets and the pending expiration of the current rent laws. The bill passed by the Assembly provides for regulation on all increases in rent, will regulate an limit landlords' ability to raise rents, and attempts to limit rent-stabilized and Mitchell Lama housing from moving onto the private market.

Rent regulation and the property tax cap is about giving people certainty that they can afford to live in their homes... People can plan based on those issues.

The Legacy of an Earlier Deal

Under the old "luxury decontrol" laws, if a renter’s incomes rose to $175,000 or if their rent went over $2000, that renter became ineligible for rent control. Silver said he would like to see that change, as rising middle-class incomes and rents brings the previous limits below luxury rates.

In 1997 under Governor Pataki, a battle erupted over rent stabilization laws, with Republicans lobbying to end it entirely. While the outcome was trumpeted as a victory for renters, it included a vacancy bonus for renovated apartments which ultimately took many units — especially in Manhattan — off of rent control and back to private market rates. Silver said the deal was the best they could get at the time.

You have to play the entire game... Our tenants were nervous. Rent regulation had expired.

Sticking Points and Selling Points

Many developers would like to see a renewal of the 421A program, a city tax incentive for developers who include low-income apartments in their projects. Silver said that the current plan makes renewal of 421A contingent on the passage of the rent regulation.

Because rent laws need renewal every few years, one sticking point in the negotiations has been linking the tax cap to rent renewal. The  property tax cap will have to be redebated every few years as well, but advocates for the cap would like it to be a permanent measure. Silver said both the governor and the Senate have committed to using the rent regulation law as a sunset provision. 

I think that’s important. It’s important for tax cap on its own. I think right now we have had escalating property taxes and it’s time to say time out. Let’s see what we’re doing, let’s put the cap in effect but… I think at some point we should say “Let’s see what we have done by it [the cap].”

A Man With a Plan

Silver can see a potential downside to the cap, “depending on government’s commitment to its school districts and its localities.” In 1995 the Assembly passed a cap law that remained in effect only as long as the state government maintained its financial commitment to school districts. School funding has been a major concern of critics of the tax cap deal. Silver has a plan to deal with that, too — reinstate the millionaire's tax, and route that revenue to school districts.

The current iteration of the rent stabilization and property tax cap agreement would include a reintroduction of the millionaires tax. The challenge for Silver will be to get Mayor Bloomberg, Andrew Cuomo and Dean Skelos to drop their opposition of the tax, which only effects those making over a million dollars annually.  Silver said the Assembly reintroduced the tax in the last few weeks and intend to move it forward this year and next, to make it part of the budget debate.

"It would mean, on a state-wide basis, seven to eight hundred million dollars for the balance of this state fiscal year, it would mean four billion dollars next year, in the fiscal year, and it would mean another seven or eight hundred million dollars in the following fiscal year… It’s enough to balance next year the projected budget gap and avoid any further cuts.”

While Silver isn’t optimistic about the reinstatement of the millionaire’s tax, he is hoping that the property tax cap might force the legislature to accept it.

I’m hopeful that this deal on property tax cap will leave no other conclusion that the demand on the state, on the local legislatures will be, fill our school district’s coffers, and how do you do that? By providing them with state revenue, which comes off a progressive tax base as opposed to a regressive property tax.

Same Sex Marriage

Silver said while he wasn’t sure whether the Senate will change its position on gay marriage this month, he is hopeful. While the legislation has died in the Senate on previous attempts, he has no doubt the bill will sail through the Assembly. 

We passed it last year once, we passed it last year twice. There’s no question where the Assembly stands on that issue.

Ethics Deal

An ethics deal would include mandatory disclosure by lawmakers of outside clients. Silver said he and the governor are “in sync” in seeing the need for this type of law. 

I want to point out very clearly, I do no business with the state, I represent no clients with the state. I represent individual claimants in cases involving insurance and I disclose that on my ethics report even though I am not required to. I am perfectly comfortable with a requirement that the Governor’s asking of a full disclosure of representing people who do business before the state or with the state... One of the important things, I believe, is sunshine. That’s what an ethics disclosure law will do.

Check cashing

Everyone but the check cashing industry is opposing a bill passed by both the Senate and Assembly banking committees, which would allow check cashing outlets to provide short-term loans. Critics worry this would enable predatory payday loans. Silver said the assembly is looking at the bill carefully, but would not say he was working to defeat the bill.