Friday, October 10, 2008

Budget Battle Blog Retired

Checkout for the latest on the New York budget fight.

Monday, August 18, 2008

Siena Poll: New Yorkers prefer circuit breaker almost 2-1, Newsday Doesn't Get It

Today’s Siena NY poll confirms what should be obvious, New Yorkers prefer a tax cut in the form of a circuit breaker over a cap in the amount property taxes can increase:

"Voters continue to support the circuit breaker over the cap if only one action is taken 58-33 percent (up from 52-36 percent last month)."

Although they prefer spending cuts to raising their own taxes to balance the budget, New Yorkers weren’t asked if they support the millionaire’s tax, which previous polls showed was backed 4 – 1.

E.J. McMahon from the Empire Center is shocked (!) that defenders of public education appear to be working together to fight a school funding cap.

Newsday’s editorial board doesn’t love the WFP’s ad campaign against the school-funding cap:

“A television ad from the Working Families Party and the Alliance for Quality Education calls the cap a "gimmick" and a "scheme" that "won't cut property taxes." At the same time, NYSUT's Web site says that $460 million in local revenue for education would have been lost over the past four years had the cap been in place. So, which is it?”

We're sorry to ruin Newsday's Gotcha moment, but here's the explanation: a school-spending cap doesn't lower property taxes, only the rate they can increase. That much is clear. Faced with rising costs like fuel and healthcare, many communities around the state have voted to tax themselves at rates above the would-be cap to ensure their children's education when state aid for schools has faltered. With a cap in place, cities and towns could be trapped - unable to raise their own taxes, stuck with rising costs, but left out to dry by Albany. That's how the cap threatens our schools.

A little more explanation from Andrew Reschovsky, from the Robert M. La Follette School of Public Affairs at the University of Wisconsin at Madison, who writes in Saturday’s Times Union:

"A tax cap will tie the hands of local school officials the next time state aid is reduced. They will have no choice but to reduce education spending. And now, with New York state facing a budget deficit of more than $6 billion, Paterson has indicated that he may be forced to recommend cuts in state education spending.

"While tight budgets might at first produce some efficiencies, evidence from other states that have lived under property tax caps suggests that the long-term consequence of restraining school spending in a world of rising costs is a marked decline in student performance. The research suggests passage of revenue limits can lead to larger class sizes, a lessened ability to hire the best qualified teachers and lower test scores."

Elsewhere, legislative leaders move toward a deal on spending cuts (see also here and here).

High on the list of good ideas for prudent spending cuts, the Times reminds us, is reform of the state’s Industrial Development Agencies (IDAs), which give away millions in tax breaks to companies that fail to produce the new jobs they’ve promised.

Last word to Reschovsky:

"The final irony is that the property tax caps will provide very little tax relief to those New York homeowners facing the heaviest burdens.… If the goal of the New York Legislature is to provide property tax relief to those homeowners whose property taxes exceed their ability to pay, a much better policy would be a so-called circuit breaker or homestead exemption that that targets property tax relief to those individuals most in need."

Friday, August 15, 2008

Editorial Pages Unite for Common Sense; Post Ignores History, Facts

The Schenectady Star-Gazette added itself to the ranks of editorial pages calling for a balanced approached to solving the budget gap:

Tax hikes aren’t pleasant, but what does the governor think is going to happen in municipalities like Schenectady if aid is cut (creating a $700,000 deficit in the city’s case)? Eventually, local jobs will be lost or property taxes will have to be raised — and on people who have far more modest incomes than millionaires.

The state needs to act fast to head off a financial crisis, but it needs to act fairly. The best way is to cut a little in a lot places, while raising taxes on the very rich.

That call for reason adds the paper to the ranks of the New York Times, the Albany Times Union, and the Syracuse Post-Standard, all of whose editorial pages have proposed a combination of prudent spending cuts and modest tax hikes on the rich to balance the budget.

The New York Post (surprise, surprise) broke that consensus today, boldly ignore facts and (very) recent history:

Mayor Bloomberg couldn't have said it better this week when he called an Assembly plan to slap "millionaires" with stiff new taxes "crazy."

Unless, of course, the goal is to chase every last one 'em out of state - leaving them paying Albany exactly . . . nothing.

As profoundly unfair as the argument is (“Lets only tax people who can’t afford to move!”) it’s also not based in reality.

The last time New York asked its wealthiest citizens to contribute a little more to the costs of keeping civilization going, they didn’t go anywhere. In 2003 (who can fault the Post for not being able to remember so far back?), New York avoided deep cuts to critical public services with a temporary surcharge on high-income New Yorkers. The result? The number of tax filers with incomes of over $200,000 a year increased through 2005, the year the surcharge was lifted.

It’s not hard to understand why Henry Kravis and his ilk didn’t flee. A dozen states have high-end income tax rates higher than New York’s. New Jersey’s (an obvious destination) is 30% higher.

The Post continues:

After all, these men and women are the ones who are able to spend and invest the most - and thus keep the economy humming. (And the ones who foot most of the tax bill already.)

Again, numbers are illuminating. According to the Institute for Taxation and Economic Policy, the wealthiest 1% of New Yorkers pay 17.3% of the state’s total tax burden, but they earn a whopping 25.2% of its income.

Wondering how that’s possible? In New York the top income tax rate begins at $42,000 a year, meaning a millionaire and a mechanic are paying income taxes at the same rate. Combine that with regressive property and sales taxes (which New York relies on more than any other state except Texas), and you wind up with a system that asks the least from the people who can afford to give the most.

Elsewhere, Newsday, the Times Union, and WXXI all report on Paterson’s frayed relations with his allies over his right turn on the budget and how best to solve the property tax crisis.

Whatever Tom Suozzi says, this is a principled disagreement over how to deal with the challenges New York faces. The WFP thinks we can meet them without forgetting the values of shared sacrifice and fairness, and we hope the Governor comes around to our view.

We’ll let Assemblyman Gottfried have the last word, from today’s Gannett:

"We should only consider cutting essential services like health care as a last resort. We have been cutting taxes on the wealthiest New Yorkers for years; if we undo just a little of that, we would not have to cut important programs to close the budget gap."

Thursday, August 14, 2008

Warnings from Massachusetts; Teachers Fight Back

The WFP’s joint campaign with the Alliance for Quality Education against the tax cap gimmick continues. From Gannett:

In an effort to convince the state Assembly to oppose a cap, which was adopted by the Senate last week, education-advocacy groups reissued a 2008 report first released in June on the negative results of the cap in Massachusetts. The plan calls for limiting school tax increases to 4 percent a year or 120 percent of the inflation rate, whichever is less.

Iris Lav, from the Center on Budget and Policy Priorities, and author of that report (“Hidden Consequences: Lessons from Massachusetts for States Considering a Property Tax Cap”) added:

"A cap is likely to cause a lot more damage in New York than it did in Massachusetts," Lav said, "New York lacks some of the advantages Massachusetts had when Proposition 2 1/2 was implemented."

Here’s the rub: the cap in Massachusetts led to greater disparities between wealthy and working class schools and in many cases led to laid off teachers and reduced services. Further damage was only prevented because, as Lav points out, Massachusetts increased state aid to its schools by billions. A booming economy helped pay for it.

But with New York teetering toward a recession, the question for supporters of a cap in New York is simple: where will the lost revenue our schools need to provide quality education come from?

In California, revenue lost to the tax cap was never replaced, and schools went from among the best in the nation to among the worst.

That’s the fate the WFP and education advocates are fighting to avoid.

Yesterday, the WFP announced the escalation of the campaign with mail to 200,000 New Yorkers in targeted Assembly districts, asking them to tell their Assemblymember to vote no the tax cap gimmick.

Meanwhile, the New York State United Teachers un-endorsed dozens of State Senators who voted for Gov. Paterson’s irresponsible tax cap. From the Albany Times Union:

The state's largest teachers union is withholding endorsements from 38 senators who voted earlier this month for Gov. David Paterson's proposal to place a 4 percent annual cap on the growth of school taxes.

"They've made a choice to choose political expediency," New York State United Teachers President Richard Iannuzzi said of the mostly Republican senators.

Let’s hope the Assembly considers the consequences for New York’s children before making the wrong choice too.

Monday, August 11, 2008

Parker Speaks Up, Fight Moves to Assembly

The quote of last week came from Sen. Kevin Parker, who joined a majority of his fellow Democrats in voting against the tax cap bill, telling the New York Times:

“We’re not going to be voting for political schemes today, we’re going to be standing up, speaking truth to power.”
What would the tax cap bill passed by the Senate do exactly? Richard C. Iannuzzi, president of the New York State United Teachers, summed it up perfectly:

“The Senate today chose political expediency and the illusion of property tax relief over a real, meaningful solution — a restructuring of our property tax system based on equity, income and ability to pay.”

Since the “cap” won’t lower anyone’s tax bill (but could, as experience in other states shows, do real damage to our schools) it’s hard not to see Friday’s vote as more than a political stunt. Said Blair Horner of the NYPIRG in Newsday:

"Today was set up to be a way to put pressure on the Assembly ... most of the time that kind of tactic doesn't work."

Political theatre or not, the vote may have some real consequences, as both the AFL-CIO and NYSUT may reconsider their fall Senate endorsements. Dennis Hughes, AFL-CIO President:

"What was once a certainty for endorsements of Republican incumbents is not a certainty anymore.”

The fight now moves to the Assembly, where as Times and other note, the prospects for passage are at least a bit dimmer. The Sun’s Jacob Gershman points out:

“It's hardly unusual for Mr. Silver to be the odd man out. In his 14 years as speaker, he has flourished in the role by conserving bargaining leverage and holding out for concessions.”

The politics are complicated, to say the least. But unlike the Senate Republicans, Democrats in the Assembly have rarely grasped at bad policy solutions, even when it’s the politically convenient thing to do.

Here’s hoping those voices of reason prevail again.

Thursday, August 7, 2008

Beware the Mass. Model; Skelos Confused

If New York is considering a cap on the amount property taxes can increase, it might make sense to look at the experience other states who’ve tried the idea:

Massachusetts proves that a property tax cap - while popular - is an ineffective way either to provide tax help or to protect equitable education funding. Massachusetts' three-decades-long experiment has exacerbated inequities in public school funding, reduced valuable local services ... And while the cap reined in property taxes when it was first implemented, taxes have since gone up at a rate similar to New York's.

Those words of caution come from Greg Jobin-Leeds, chairman of the Schott Foundation for Public Education in an op-ed in today’s Newsday. Why was the cap so ineffective (and even destructive)? Because, as common sense would lead one to believe, a cap doesn’t do anything to control costs or increase state aid, instead:

“a cap merely forces spending cuts. It doesn't lower energy, transportation or health care costs. It doesn't improve management skills, hire better personnel or innovate. Districts have been forced to make cuts to basic teaching staff in addition to art, music, athletic programs and other services provided by schools.

What’s worse, there’s good reason to believe a cap would be even more disastrous for New York:

Massachusetts' cap was first implemented during an economic boom - so greater state aid could compensate for the loss of property taxes - and when the student population was waning. Instituting this cap in New York now - as the state faces an economic downturn, budgetary concerns and expanding student enrollment - would have a punishing impact on public school children.

And what about equity?

Since the cap began, Massachusetts has seen dramatic growth in school inequity. This should be a red flag to New York, which already has one of the widest gaps between rich and poor in the nation. Wealthy communities in Massachusetts pass annual tax-cap overrides and continue to fully fund their schools. But the rest of the state cannot afford to do so and rely only on state aid.

Yikes! After a 15 year fight for CFE funding, fans of the ‘tax cap’ could undermine that historic victory in 15 days this August.

Contrast Jobin-Leed’s wise words with those of Senate Majority Leader Skelos in today’s New York Sun. Discussing a millionaire’s tax, he pipes:

"You are going to chase the people out of the state if you do that…Those taxes are going come down to you and me. It's not going to be millionaires, they are going to come right down. They are going to hit everybody."

Chase people out? That’s not what happened the last time New York asked the wealthy to chip in a little more in order to keep the state running, between 2003-2005. There were more high income tax filers when New York phased out the tax than when it began.

We’re not sure where Dean thinks New York’s millionaire’s would move to, anyway. Certainly not New Jersey, where taxes on the rich are 30% higher than New York’s. (A fact which hasn’t pushed New Jersey’s rich out of the garden state either).

Dean’s fears about a millionaire’s tax “trickling down” to “everybody,” seem more than a little misplaced, since no one anywhere is proposing that. Dean must be getting worried that once New Yorkers realize the consequences of his slash and burn plan for cutting our way out of the budget gap, they’ll be even more keen on asking the most wealthy to pay their fair share (an idea they already support 4 -1 ).

The last word today goes to Senator Libous:

“Hard working tax payers here in the Southern Tier and around the state are paying too much for school taxes. That's a fact, it comes through loud and clear in every poll. At the same time, we have to be fair and equitable to the school districts, you can't just cap something and not allow them to be able to pay the bills, because fuel energy costs go up, transportation costs go up.”

Wednesday, August 6, 2008

Lancman Calls for Sanity, New Yorkers Call for Millionaires Tax

“Why is it so important that we acknowledge that there is no crisis, but merely a serious challenge?

Because crises produce bad policies, while serious challenges produce serious, thoughtful responses.”

Those wise words come today from Assemblyman Rory Lancman (D-Queens) in an op-ed in the Albany Times Union. He continues:

“Witness the rush to judgment of our state's editorialists and political commentators, crying out for cuts, cuts and more cuts to education, health care and our work force; and no new taxes, even for those earning over a million dollars a year. Have the fiscal and social consequences been thought out of our consigning another generation of New York City schools kids to an inadequate education after we finally got them their fair share of state education money; of denying access to health care for the working poor or elderly; of ignoring the gross inequities in our tax policies that leave middle class families paying a far higher share of their resources in state taxes than our wealthiest citizens?”

The “cuts, cuts and more cuts” crowd simply refuses to consider asking the wealthiest New Yorkers to pay their fair share. Not that it’s such a popular crowd - according to a new Quinnipiac University Poll released today, New Yorkers want to rollback irresponsible tax giveaways to rich by a 4 – 1 margin.

Meanwhile, Senate Republicans blasted Assembly Democrats for putting much needed help for New Yorkers who’ll be struggling with record increases in the price of home heating oil this winter ahead of a tax cap:

"If people can't afford to pay their property taxes, then they are not going to have a home to worry about heating," said Senate Majority spokesman Mark Hansen.

Speaker Silver must find that line of criticism a little ironic. His proposal to give people a break on their heating bills actually lowers the cost of living. The Senate Republicans’ proposed “tax cap” actually does not. The tax cap doesn’t lower your taxes. Only the circuit breaker does that. Period.

The Assembly Democrats are in a bind, caught between Republicans who are willing to be irresponsible and a Governor who has conflated the budget deficit and the tax cap in perplexing ways. Who better to explain the options the Assembly faces than Assemblyman Richard Brodsky (D-Westchester). From today’s Daily News:

"If you have a $600 million gap, there are three ways to fill it: You can fill it entirely with spending cuts or entirely with revenue-raisers or a combination, the Legislature is going to try to add values and a social perspective to what is otherwise a pure exercise in numbers."

We’ll let Lancman have the last word:

“Let's all take a deep breath, take stock of what is undoubtedly the serious financial situation we have known of for some time, and act resolutely but deliberately to keep our financial house in order in a manner consistent with our values and our long-term goals as the family of New York.”