NY's property-tax cap just got stronger. Here's how

ALBANY - A paragraph tucked in to New York's $153 billion budget could force counties to give up millions of dollars in state funding if they exceed the state's property-tax cap.
 
The measure, included in a bill removing 16- and 17-year-olds from the adult court system, calls for the state to cover each county's costs associated with the juvenile-justice reform -- but only if county government remains under the annual tax cap.
 
Otherwise, the county would either forgo the funding -- which could total millions of dollars in more-populous areas -- or have to prove a "financial hardship" forced them to exceed the cap, with Gov. Andrew Cuomo's budget director ultimately deciding whether to grant a waiver.
 
The provision gives Cuomo another tool to force compliance with the cap, which limits the growth in a local government's property-tax levy to the lower of 2 percent or the rate of inflation.
 
The governor has repeatedly touted the six-year-old cap as a way to keep taxes in check, much to the chagrin of schools and local officials who say it hamstrings their budgets.
 
“The Governor has made controlling property taxes one of his highest priorities and this provision is another way to strengthen the tax cap," Morris Peters, a spokesman for Cuomo's Budget Division, said in a statement.
 
"The State will cover the local share of raising the age so long as the county is compliant with the tax cap or can demonstrate real financial hardship.”
 
'Raise the Age'
 
County officials criticized the measure, questioning the appropriateness of tying the tax cap to the long-sought criminal-justice reform.
 
Reform advocates spent years pushing for the change, leading a "Raise the Age" campaign that gained traction across the state and country.
 
"It sets up a situation where counties can get penalized for reasons that may have nothing to do with 'Raise the Age' but instead relate to other things going on in county budget," said Jay Gsell, Genesee County manager and budget director. "To me, it's a kind of disingenuous, look-behind-the-curtain thing."
 
Cuomo and lawmakers approved the state budget earlier this month.
 
It lays out a multi-year plan to remove most 16- and 17-year-olds from the adult court and prison systems, starting with 16-year-olds on Oct. 1, 2018.
 
The change is a complicated process that will require significant investments in social services, the courts, juvenile facilities and personnel as the state reshapes its justice system for teens.
 
All told, it's likely to cost hundreds of millions of dollars: Cuomo's office had previously budgeted about $496 million over the next three fiscal years to pay for it.
 
Much of that investment will be in county facilities and resources, including court buildings, probation offices and social service departments, which will be required to offer more services to teens who are diverted away from adult courts and prisons.
 
What's covered?
 
Cuomo's original proposal in January called for counties to have their "local share" costs covered only if they stayed under the cap and received a waiver from his budget division.
It was rolled back after negotiations with lawmakers and their staff: Counties that stay under the cap are automatically eligible.
 
Those that go over the cap can get a waiver from Cuomo's office if their budget was hindered by a drop in federal or state funding, the "incremental costs" associated with the reforms, or various other hardships, including natural disasters.
 
"It will allow escape hatches for counties that exceeded the cap because of certain circumstances," said Assembly Codes Committee Chairman Joseph Lentol, D-Brooklyn.
 
County officials said they are awaiting more guidance on exactly which costs will automatically be covered by the state and which will be subject to the tax-cap measure.
 
The budget language says cap-compliant counties "shall not be required to contribute a local share of eligible expenditures" that wouldn't have been incurred without the juvenile-justice reforms.
 
But it's not clear what costs are eligible and ineligible, some county officials said.
 
Significant costs
 
For more-populous counties, the costs could be significant.
 
Monroe County, for example, has estimated needing $7.5 million to expand a children's detention center as well as millions more in recurring costs, including $2.5 million for probation services and $3 million for a family support center.
 
Cheryl Dinolfo, Monroe County executive, raised concern about the tax-cap provision and whether the costs will ultimately be borne by local taxpayers.
 
"We would expect the state to honor its obligation and promise to counties to fully fund 'Raise the Age'," Dinolfo said in a statement.
 
The 57 counties outside New York City are able to exceed the property tax cap if 60 percent of their governing board approves.
 
Last year, about a dozen did -- including Genesee and Tompkins counties.
 
New York City, meanwhile, isn't subject to the tax cap. The city will have to seek a waiver from Cuomo's office, according to the measure.
 
Under the cap
 
Stephen Acquario, executive director of the state Association of Counties, said it's an "open issue how the state plans to fully reimburse the counties."
 
"There's a lot of explaining and guidance that needs to be put out by the state to ensure the counties that they are not going to be financially responsible for the cost of yet another state mandate, another state policy using local taxes to fund their state programs," Acquario said.
 
Tompkins County Administrator Joe Mareane said the complexities of implementing the reforms could force the county to add to its budget if it has to await reimbursement from the state.
 
That could cause problems with complying with the property-tax cap, he said.
 
"The irony is that to able to meet the staffing needs and deal with the administrative complexity of this, we may have to add to our costs," Mareane said. "By adding to our costs, it may force us to exceed the cap."
 

 

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