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Cuomo tax rebate proposal penalizes ‘efficient’ communities, local officials say

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Gov. Andrew M. Cuomo’s proposal to provide direct tax rebates to homeowners would pressure municipal leaders and school district officials to look at consolidation more seriously, according to the governor’s office.

But local officials argue that the program penalizes communities that already have made significant steps toward government efficiency. They want the governor to lower property taxes for everyone through state mandate relief instead.

“Nobody’s opposed to the concept of cutting local property taxes. But the devil’s in the details, and that’s where the governor’s proposal falls flat,” Jefferson County Administrator Robert F. Hagemann III said.

Rather than providing savings for a targeted group of taxpayers through a “convoluted process,” he said, the state should provide mandate relief for local governments that would lead to significant tax savings for everyone.

Removing the Medicaid burden on county governments would save Jefferson County alone an estimated $19 million annually, leading to an immediate 30 percent drop in the county’s tax rate, Mr. Hagemann said.

Under Gov. Cuomo’s “property tax freeze” proposal, homeowners in taxing districts that keep their levy increases within the state’s “tax cap” would get up to 2 percent back on their property taxes.

The rebate amount essentially would negate tax levy increases, thus “freezing” property taxes for residential property owners.

For example, homeowners in communities with a 1.5 percent levy increase would get 1.5 percent back on their taxes.

Gov. Cuomo recently said the rebate benefits would be extended to communities that keep their levy flat, but he has not shared the formula that would determine the rebate amount in those communities.

The state’s tax levy cap is the rate of inflation — which would be less than 1.5 percent in the 2014-15 fiscal year for public schools — or 2 percent a year, whichever is less.

In the second fiscal year, however, local entities not only have to stay within the tax cap, but also have to present a joint savings plan that would shave off 1 percent of their collective tax levy through consolidation or shared services.

If approved by lawmakers, the state would spend nearly $2 billion — $400 million in the 2014-15 fiscal year, $976 million in 2015-16 and $475 million in 2016-17 — on the governor’s tax relief program.

State Budget Division spokesman Morris Peters said elected officials of local taxing entities can choose not to take the steps necessary for the “tax freeze” the governor is pushing for, but those officials are “going to have to explain to their voters why homeowners in neighboring towns are getting rebate checks from the state and they’re not.”

Both the state Senate and Assembly have offered counterproposals to the governor’s plan.

The state Senate last week proposed its own tax relief program dubbed “Freeze Plus NY” that borrows elements from the governor’s program but would reward local governments and school districts that stay within the tax cap instead of just homeowners.

“This gives local governments more flexibility and approaches tax relief in a simpler way,” said Sarah Compo, spokeswoman for Sen. Patricia A. Ritchie, R-Heuvelton.

The Senate’s program would provide $1.4 billion in additional property tax relief over the next two years, make the existing tax cap permanent and require local governments to submit “efficiency plans,” among other things.

The Assembly, however, favors the $1.1 billion “circuit breaker” plan, which takes into account the property owner’s income and provides tax relief for homeowners earning less than $200,000 a year.

“A lot of the provisions of the proposal are under negotiation and evolving,” said Assemblywoman Addie J. Russell, D-Theresa. “I have been a supporter of the ‘circuit breaker’ plan of relieving people from their tax burden and I hope that becomes a component.”

Potsdam Central School Superintendent Patrick H. Brady said Gov. Cuomo’s proposal is a “short-term” solution to a bigger, more complicated problem.

“My concern with this tax relief program is that it’s a very short-term strategy. Providing rebates to a limited group of taxpayers, it’s a short-sighted look at a much more deep-rooted problem,” he said.

Potsdam and Canton school districts are looking at a merger, and a public vote on that move could take place before the end of the year.

Clayton Town Supervisor Justin A. Taylor said that while he supports Gov. Cuomo’s intentions, it’s unfair for the governor to expect local entities to cut back on spending while the state pushes under- or unfunded mandates and other expenditures onto counties, towns, villages and school districts.

“Gov. Cuomo promised state mandate relief, but we haven’t seen it on the town and village levels,” said Mr. Taylor, who is also the president of Jefferson County Supervisors Association.

Mr. Taylor also said communities such as Clayton — which have been working at eliminating government redundancies and inefficiencies for decades — essentially would be “penalized” under Gov. Cuomo’s proposal for their past efforts to operate as efficiently as possible.

“I know just how much coordination and shared services goes on here in the north country,” Mrs. Russell said. The governor’s proposal “didn’t provide for any room to acknowledge that counties have been sharing services with each other, with towns and villages.” And Gov. Cuomo “did acknowledge that that was a dynamic of different parts of the state and some communities have done a better job than others.”

State lawmakers anticipate passing another on-time budget by the April 1 deadline, she said.

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