By JOSEPH SPECTOR
Albany Bureau Chief
ALBANY -- The state's new property-tax cap has drawn criticism from local governments, but Gov. Andrew Cuomo said the cap is working as intended.
Local governments preparing their budgets for 2012 are being tasked to keep the growth in the property-tax levy to 2 percent a year. Officials said the measure is crippling their budgets and limiting services.
Cuomo said in an interview with Gannett's Albany Bureau that the cap is instilling fiscal control and oversight that had been lacking for too long. New York has among the highest property taxes in the nation.
"Property taxes are going up at too high a rate. Everybody knows it. This brings a discipline, a rigor and a scrutiny to the process," he said. "It doesn't ultimately limit or direct, but it challenges the local governments to find savings. It informs the citizens, and it's working."
So far, many local governments have indicated they plan to stay within the cap, which takes effect in January. Of 416 taxing entities that have relayed their plans to the state Comptroller's Office, 62 said they might override the cap, about 15 percent.
The tally is early, and the state has roughly 10,000 different entities that can levy taxes in New York. The tax cap on school budgets takes effect in their next fiscal year, which starts July 1. School budgets are crafted in the spring and voted on in May.
The Democratic governor stressed that the cap doesn't restrict local governments and schools. Municipalities could override it with a 60 percent vote of their governing boards. They have to pass a local law that first requires a public hearing.
For schools, 60 percent of voters would have to approve an override at the polls.
"They want to increase their taxes 5 percent, 10 percent, 20 percent, that's up to them," Cuomo said. "If they want to buy a fire truck for every resident and park it in front of their house, fine. Whatever you want to do. It's your money, it's your community, it's your decision. It's up to you."
Some towns and counties plan to override the cap, saying costs are growing at an unsustainable rate. The Tompkins County Legislature is proposing to raise the tax levy 3.99 percent.
The town of Windsor in Broome County raised its tax levy by 5.1 percent. Supervisor Randy Williams said there was no other option for a town of roughly 6,500 people with about 20 full-time town employees.
"It all sounds good in theory, this cap," Williams said. But "it's impossible. I don't know how people can stay under 2 percent."
In some communities, the public and governing boards have beaten back attempts to override the cap.
Chautauqua County Executive Greg Edwards proposed a 12 percent tax increase. The county Legislature, in an election year, revised it and came under the 2 percent cap through funding cuts and other steps.
Cuomo said the cap gives residents a greater voice.
"It is the scrutiny and the attention more than anything else," Cuomo said. "And part of it is frankly saying to citizens you have to get involved. You have to get involved before the fact rather than complain after the fact. And this is a vehicle to get them informed and get them engaged."
Jeffrey Graff, an attorney for municipalities in Ontario County, has advised governments to override the cap -- even if they intend to stay under it. He said it would protect them if the Comptroller's Office, which is overseeing the program, finds a mistake in how they calculated the cap.
Many communities abiding by the cap say it has been painful. They said it has led to layoffs and service cuts.
The town of Poughkeepsie's tax levy is increasing .85 percent in 2012, down from 5.2 percent this year. Supervisor Patricia Myers said the town cut $300,000 for road repairs and eliminated three police positions.
Myers said she supports the intent of the property-tax cap.
"It's made things difficult, but maybe it will make people think a little harder, try to think outside the box a little more," she said.
Myers and local officials pointed out that the cap applies to the tax levy - the total amount collected in taxes - not the tax rate, which is how much each homeowner and business pays.
Poughkeepsie's tax rate is rising about 3.75 percent, Myers said.
"The governor and the state were kind of misleading when they put it out as a 2 percent tax cap, instead of saying a 2 percent levy cap. There's a big difference," she said.
The cap excludes pension costs that increase more than 2 percent a year, as well as taxes associated with growth in a community. Dutchess County, for example, is proposing to increase its tax levy by 3.28 percent, but is meeting its capped limit. The tax rate would rise by 6.5 percent.
"It's been widely misreported, misrepresented and misunderstood that it's a 2 percent cap, but it's not," said Dutchess County Executive William Steinhaus.
Steinhaus and other county executives have criticized the cap.
They say the state imposed the cap and didn't do enough to alleviate state-mandated programs that counties must fund.
The largest is Medicaid, the $53 billion health-insurance program for the poor. Counties pay about 17 percent of the cost; the state pays 25 percent and the federal government pays the rest.
Counties and some state lawmakers want a state takeover of Medicaid over eight years.
Frustrated by the lack of mandate relief, Steinhaus' budget keeps Medicaid spending flat - even though it is expected to rise 3 percent next year. He wants the state to pay for the increased expense.
Cuomo has ruled out picking up the counties' Medicaid tab. The state in 2006 capped counties' Medicaid costs at a growth of 3 percent a year, he said.
Rockland County Executive Scott Vanderhoef said Medicaid has to be addressed. He said all the money the county collects in property taxes goes to fund Medicaid.
Vanderhoef has proposed cutting nearly 800 positions, closing a hospital and charging taxpayers $160 to pay off a county loan. But his budget proposal meets the 2 percent tax cap.
"It's the worst budget I've ever had to do," he said.