From the Mayor: Two Percent Tax Cap--Clever but Hypocritical
Written by Mary C. Marvin
Sep. 24, 2014: The mantra from Albany the past few years has been the 2% tax cap. Very, very clever as a political tool, it proved to be the height of hypocrisy. There isn't a single municipality that is expanding its services anywhere near the rate of 2% annually. Rather, we are laying off staffers and decreasing services to cope with the ever-increasing state unfunded mandates that annually exceed the tax cap limit.
Added to the tax cap narrative is now a property tax freeze credit enacted by the state legislature and supported by the governor as part of the 2015 state budget.
The new law encourages local governments and school districts to implement tax relief by consolidating or merging and/or sharing services.
Again, at first blush it sounds eminently logical. However, in a clever game of smoke and mirrors, it cast the blame for our incredibly high taxes on local government. In fact, the real spending drivers are state laws that inflate costs such as the Wicks Law and the Triborough Amendment and legislatively crafted mandated pension systems and Medicaid.
Local taxes are so high because, more than any other state in the Union, New York pushes down the financial responsibility for service delivery to local government. In a nutshell, other states pay for what Albany shifts locally.
Understanding the backdrop, the concepts of consolidation/mergers and/or sharing services have merit and require a full vetting. On the subject of consolidation, Governor Cuomo repeatedly states that there are 10,500 government units in New York State. The state comptroller's office sets the number at 4,200. Included in both calculations are all of the off-track betting operations and industrial development authorities, which have no taxing authority.
In his stump speeches, the governor states, "I support consolidations. I think if you said to the taxpayers of most districts in this state, I know you like to have your name and identity. Is it worth $2,000 a year [the supposed, though undocumented, savings from consolidation] to have your name and identity, they would say, change my name."
The statistics don't seem to bear this out. Since the most recent revision of the Consolidation Law was enacted in 2007, one community in the state, Altmar, population 407, has consolidated with its neighbor.
Based on the federal census of local governments per capita, there is not a correlation between the number of governmental layers and a person's relative tax load.
Two of the most intensely governed states are New Hampshire and Oklahoma, yet they are two of the lowest taxed.
New York and New Jersey are near the bottom in governmental units, yet near the top in tax burden. This goes back to the New York "trickle down" policy of making local governments shoulder the taxing burden shifted from Albany.
If consolidation proves not the answer, sharing of services merits a closer look. However, the most significant cost drivers in local governments include workers' compensation services and health insurance premiums, and New York State regulations prohibit the sharing of these services. Can you imagine the savings we could reap if we procured insurance with our school district, let alone all of the entities in the Town of Eastchester?
The concept of shared services includes collaborating with other communities or allowing another community to do the services for you.
I think there is great merit in sharing some services. Joint purchasing is a great example. We now bid our road resurfacing costs with Tuckahoe and Eastchester and have benefitted from economies of scale. I think we can do more, especially in the areas of specialized equipment such as sewer cleaners that are not needed on a daily basis versus snowplows, which cannot be shared, as each community expects prompt and safe snow removal.
Before sharing of services, each government must ask many questions:
Does it really save money?
Does it maintain or improve the current levels of quality service and efficiency?
Where is the liability shared?
Who is ultimately accountable?
Is local autonomy valued and/or lost?
Do you share the same goals as your new partner?
Our village government continues to look for opportunities to collaborate with our school district and our town to save money, mindful of the above caveats.
Though the major cost drivers cannot be shared, any savings, even at the margins, will translate into some tax relief.
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