June 8, 2008

Valley Views: School budget reform on shaky legs

By Robert McKeon

A highly anticipated report by the Governor's Property Tax Relief Commission has been released for all to consume. Elements of the 112-page document could lift our spirits but may also produce a delayed hangover.

It's not clear how much relief struggling taxpayers would see, nor does it insure a safe ride home for our educational system.

To be fair, the commission has identified specifics that would reduce bureaucracy, inefficiencies and lower future costs. And the way Nassau County Executive Tom Suozzi and his members went about seeking public input was a model for good government (even if the outcome was predetermined by the initial executive order). But that doesn't mean we should drink up just the same.

The levy cap proposal of the lessor of 4 percent or 120 percent of Consumer Price Index has the approval of the governor, who also believes this to be a "restraining order." The commissioners claim it will "force hard choices," and they cite Massachusetts as the only example. But New York is a more complicated place; with many foreign-born students and a vast geography providing fewer economies of scale. They fail to tell you that Massachusetts experienced dramatic shifting from "taxes" to "fees." After eight years of the cap, "fees" rose 74 percent and exceeded property taxes. The label on the bottle may be different but the effect on anyone at the bar will be the same.

The educational system needs a reliable designated driver of state aid. The commission somehow believes only school districts should be regulated - sometimes for such uncontrollable expenses as fuel and health care. Shouldn't we have the right to expect the same of everyone behind the wheel? After the stock market crash of 1987, Massachusetts cut its state aid by double digits, followed by strong increases in the 1990s. During that time local districts had to walk the sobriety test of 2 percent increases - any financial planner's nightmare. Massachusetts school districts are subsets of their municipalities, so they had the "option" of cutting other services (fire, police, roads, sanitation) but schools were not spared. Educational funding's third partner (the federal government) has in fact left the child behind with its share of unfunded mandates. For all his sins, former Gov. Eliot Spitzer realized New York state needs to do more.

Circuit breaker is a tease

A circuit breaker is a first step toward recovery for taxpayers finding it difficult to get up in the morning. It would limit a taxpayer's total property tax bill to a small portion of their income and refund the difference. The most popular choice on tap at the commission's six hearings, it can succeed in protecting the middle class and seniors. The commission's circuit breaker proposal, however, listed no ingredients.

Property taxes account for less than 4 percent of income in New York - only slightly higher than Massachusetts. The crisis exists because on an individual basis, the level of intoxication can far exceed that rate. Our state insures earners making $45 million a year and $45,000 a year pay the same 6.85 percent income tax rate, but it is comfortable letting property tax burdens fluctuate widely.

A cap is like any "high" that can give off a false sense of the situation. Massachusetts actually experienced greater inefficiencies, as homeowners played musical chairs after assessing their communities' ability to override and support a quality education. Like popular nightspots, some school districts were nearly empty while others spilled out onto the streets. Proof of a lack of correlation between a cap and lower taxes can be seen in the four years prior to the passage of Prop 2 - when per capita burdens actually declined.

So how will we know it's happy hour? Maybe when the clock ticks past the November election. Only then might we be sipping something new at the local hangout - perhaps a mixed cocktail of circuit breaker gently stirred with another round of a millionaire's tax, garnished with an umbrella of consolidation. It could permit New Yorkers to drive safely together on the road to reform.

If the commission has its way, however, we all might have to take separate cars, as they are doing in Randolph, Mass. Why is that, you ask? Because the cap forced them to get rid of the school buses.