Like New York, the Garden State also suffers from extremely high property taxes. Governor Christie noted that since 2001, spending at the local levels in New Jersey rose 69 percent (hmm, sounds familiar). Had a hard property tax cap been in place since that time, the average New Jersey family’s property tax bill would be more than $2,000 lower than the current average of approximately $7,200.

Christie has been advocating for a property tax cap at 2.5 percent with very little exemptions.  Earlier this year, Unshackle Upstate put forth a plan that would do the same for New York. Both plans model Massachusetts Prop 2.5,  which has the distinction of bringing Massachusetts as the state with the 3rd highest property taxes nationally – to the 33rd.

The New Jersey legislature offered a plan that would cap property taxes at 2.9 percent and included a list of exemptions. Last week, Christie said he would not sign a 2.9 percent “Swiss cheese” cap bill the Legislature sent him last week because it had “too many holes in it” (referring to the fourteen exemptions the bill included). However, given the importance of the issue, Christie offered a compromise, bringing New Jersey one step closer to real property tax relief.

Christie offered a conditional veto modifying the Senate bill to include a cap on future property taxes at 2 percent while including four exemptions for debt service, pension and health care costs and states of emergency. A key element of this plan, like Unshackle Upstate’s, relies on participation of the taxpayer in the process. Voters will  have to approve an override of the cap with a majority vote.

Should both houses approve the governor’s modifications, New Jersey will  have accomplished what will New York seemingly refuses to do – offer real reform to its taxpayers. Christie lauded the bipartisan effort to take “decisive action on a decades long problem that has become a full blown crisis to the people of our state.”

Meanwhile, in New York, the Senate and Assembly budget plan rejected the inclusion of a property tax cap – Governor Paterson’s proposal included a cap on local governments and school districts at 4 percent. Instead, they have put forth a plan to offer property tax “relief” in the form of rebate checks. Bear in mind – they will be increasing taxes and fees by about $1 billion (on top of $8 billion last year) to pay for the checks to go back to the taxpayer – doesn’t make much sense, does it?  But this is what we have grown accustomed to, and this is what we need to change this year.

So while New Jersey moves forward in a bi-partisan effort to offer much needed tax relief to their residents, New York continues politics as usual. The opportunity for real relief for New Yorkers is there, but the political will is still missing. There is a saying, “to get something done right, do it yourself.” The Unshackle Army will send a message this year – we will change Albany ourselves. The  tool that we will use to do this is our vote in November.

Send a message that New Yorkers deserve real property tax relief - now.

So, for the past 3 months, what has been going on? What are we still waiting for? What state are we in?  Let’s take a look at the good, the bad and the UGLY!

The Good

• The Governor has stated publicly to support no borrowing in the budget plan
• UU social media campaign experienced record growth to over 19,000 fans – indicative of significant voter dismay.
• UU developed and pushed $12 billion in acceptable, recurring spending cuts
• 2 dozen business groups traveled to Albany to opposition against Dirty Dozen
• Unshackle Upstate has submitted a REAL property tax cap legislation similar to Massachusetts Proposition 2.5

The Bad

• Governor – had to issue a drop dead date for the budget (not necessarily a good one) to be passed by June 28^th
• Upstate NY continues to be the home of the 10 highest taxed counties in the country as percentage of home value.
• Legislators have yet to enact the $12 billion dollar proposed budget cuts
• NY’s Medicaid budget stays greater than the entire budget of more than 43 states.
• A property tax cap has still not been put in place to offer ALL residents of NY some tax relief
• The Senate passed the prevailing wage mandate for service workers which will extend wage mandate requirements to private businesses with a focus on energy companies (more taxes for us!)

The UGLY

• The budget has YET to be passed (Are we even shocked?)
• Paterson’s budget proposal includes $2 billion added to the budget, $1.4 billion in new taxes
• Spending levels would increase about 4% over the current budget
• Legislators want to control growth instead of cutting spending… (Hello! It’s still growing!)

What does all of this mean?

It means you’ve got to speak up, you’ve got to get your voice heard…and you have 137 days left to make it happen!  Send a letter, send an e-mail, make a phone call and tell your legislator that you are not happy! http://bit.ly/8ZFjCp

The Judgment Day Scorecard (click here for sample) will be frequently updated to provide New Yorkers with information on how each of the 212 legislators vote on various pro-taxpayer and job creator legislation, as well as on this year’s state budget. So by the time November 2, 2010 rolls around…you’ll know exactly what to do!

Judgment Day is coming…let them know that we’re watching!

In June of 2008, Governor Paterson issued a report on the effects of property taxes in New York.  In that report he states the following, “The growth rate of property taxes in this state is unsustainable, especially for the elderly, working families and small businesses just starting out. All of us understand that the cap is a blunt instrument, but it is needed to force hard choices and to address the fact that New York’s local tax burden is the highest in the nation. No matter what else happens, the choice of raising property taxes above a capped amount without voter approval is not an option.”

One option that has been advanced is a circuit-breaker.  We have not endorsed this process over a hard property tax cap for three key reasons.  They are:

1. A circuit-breaker reduces property taxes that exceed a certain percentage of a particular taxpayer’s income. Circuit-breakers identify the individual taxpayers for whom property taxes are most burdensome and reduce their tax to a manageable level.
2. New York has 4 million property taxpayers outside of New York City. Depending on how the circuit-breaker was structured, it may only benefit one quarter of those taxpayers, whereas the cap would benefit all of them.
3. This process simply moves the money around.  It’s a shell game and does nothing to get to the root causes of what drives up property taxes.

Unshackle Upstate has recommended a REAL property tax cap proposal that has a proven track record in Massachusetts.  You remember that joke from a decade or so ago when we referred to them as “Taxachusetts”?  Well, when it comes to property taxes we can no longer say that.  Here’s why:

• New York State has the highest local taxes in the United States – 79% above the national average.
• Property taxes are rising at more than twice the rate of inflation and salary growth.
• When property tax rates are calculated as a percentage of home value, the top ten counties with the highest rates in the country are in New York State. In addition, Nassau, Westchester and Rockland Counties are in the nation’s top ten in terms of total household taxes.
  • Outside of New York City, 62% of property taxes are school property taxes. (The remaining 38% is divided among counties, cities, towns and special districts.) Despite record increases in State Aid for Education and funding for the School Tax Relief (STAR) Program, school property taxes continue to rise beyond what many property owners can afford.

We need you to help us get property tax reform enacted in this legislative session.  It’s time to take action and demand that our elected officials enact a tax cap at no more than 2.5 percent NOW! Click here to send a message to your state representatives. We don’t have time to wait for their political gamesmanship to end.

Judgment Day for the legislature is coming… and we are watching.

In my opinion, he has advanced a plan that would certainly stop the bleeding in New Jersey and at least get them pointed in the right direction. He understands that when spending far outpaces revenues you need to cut your spending – not arbitrarily increase taxes and fees. So he continues to ignore taxing recommendations from the public employee unions, such as raising the tax on millionaires. Side note: Remember NY did this in last year’s budget – but millionaires were deemed to be people making more than $200,000 as well as businesses with profits of over $250,000.

In addition to his fiscal controls, Gov. Christie has also embraced a plan put forward by Unshackle Upstate. He believes that all public employees, those that get their pay and benefits from the taxes collected by state and local governments and schools, should be moved out of their current defined benefit plan (fully guaranteed by taxpayers) into a defined contribution plan (a 401K, if you will) for their pensions.

By doing so, you remove a great deal of liability on taxpayers that exists when the investment market (Wall Street) falters, as it has happened regularly over the past 18-24 months. He believes, as we do, that taxpayers can no longer foot the bill for a pension system that is simply not affordable and cannot be sustained.

Now, Christie has advanced one more idea: Having N.J. adopt the same property tax plan that was used in Massachusetts and which dropped their property tax rates from 3rd highest in the country to 33rd.

You’ve heard me talk about this before. It is the same plan that we at Unshackle Upstate have been talking about for months. This plan caps school and property taxes at no more than 2.5 percent annually, allows voters to override the cap if needed or underride it if they feel it is too high, and it prohibits the state from passing on unfunded mandates to local governments and schools. If the state wants a new law in place, state officials have to figure out how to pay for it. It is the plan we in New York state need passed so that we can begin to control property taxes that are 60-70 percent higher than the national average.

Take a moment to click this link and listen to the debate. Listen to what they are saying and ask yourself why they aren’t talking about NY.

Regardless of whether you like him or not, you have to acknowledge that Christie is talking the right game. And not only is he talking, but he is taking action. Upon taking office, he declared a state of emergency and froze all spending. He recently introduced a $29.3B budget that eliminates a projected $11B deficit. In N.Y., the recently lapsed state budget was $131.8B and the projected deficit is $9.2B.

When Unshackle Upstate proposed more than $12B in cuts, we were told that wasn’t possible. We were told that it was too much too soon. Maybe it is, but why can’t we try?

Christie recently told the Wall Street Journal, “You just have to stand and grit your teeth and know your poll numbers are going to go down — and mine have — but you gotta grit through it because the alternative is unacceptable.”

N.Y. will be electing a new governor this fall. Will our new governor grit his/her teeth or simply rollover as others have done? In the coming days, Unshackle Upstate will be asking you what you want our next Governor to do for NY. We’ll take your thoughts and share them with the candidates.

Let’s start telling them now that we need them to grit their teeth and make the tough calls.

As we shared with you this week, Upstate NY is home not to just nine, but now the 10 highest-taxed counties in the country as a percentage of home value. What does that mean? Those of us in Upstate NY now pay more in taxes for the same priced home than most of the rest of the country. Isn’t that a great distinction to have?

People wonder why are our taxes so much higher? We don’t have enough time to cover all of the reasons, but here are a few:
• Education: we pay more per capita than any other state, yet our results are not commensurate.
• Medicaid: at roughly $51 billion, NY’s Medicaid budget is larger than the entire budget of more than 40 states.
• Labor: NY has far too many public employees who have an expensive pension system supported by taxpayers.

The three areas listed above account for roughly 66 percent of state-controlled spending. And they all deal with people and services. So the concept of cutting into those services makes some elected officials very nervous. That often leads to other “solutions” that entail giving something back to taxpayers, while failing to fix the real core issue of what is driving up our taxes.

In this instance, the property tax “reform” that is holding up the budget in the Senate is a rebate program they propose to give to a very small segment of the population. Not one that is given to all of us…just a few of us. And that simply won’t work for us. We need concrete changes to alter the course of property tax rate increases.

Unshackle Upstate has advanced a bill that will do just that. We have presented a plan that will not only make our property taxes predictable, but will also lead to long-term reductions in spending, and thus a decrease in our property tax burden.

What is the plan? It includes:
• An annual property tax cap that will not exceed 2.5 percent.
• An annual school tax cap that will not exceed 2.5 percent.
• Mandate relief so the state cannot adopt new laws that pass cost down to local governments and schools.
• The ability for voters to override the cap for one year to allow special projects, emergency needs, etc.
• An underride provision that will allow voters to offer a cap lower than 2.5 percent.

The plan mirrors one that was passed in Massachusetts several years ago. And what happened in Massachusetts? The state we used to call Taxachusetts? They went from 3rd to 33rd in property taxes and it did not affect their school performance, with their students scoring well on national tests.

Better options exist then simply applying a Band-Aid to the gaping wound of property taxes. It is time for our elected officials to look at what other state governments have done to fix their ills.

We need real leadership on this issue. Who will come to rescue?

The Governor introduced a program bill that would both cap state spending and put in a property tax cap.  That sounds like a great idea, but there are two flaws.  The first: the Governor has proposed a cap on current spending, which we would argue is already far too high.  That’s why we proposed that state spending be reduced to $109B by 2015.  The second issue is that his property tax cap is based at 4% or 120% of the consumer price index (CPI).  While 4% is predictable, it is, like the state spending cap, simply too high.  We cannot continue to keep spending and taxes high.

The other was a bill introduced by Sen. Klein that offered a few things.  First, it reinstated the STAR rebate program.  Now many will see that as a good thing, as something that they are getting back from a state that otherwise takes so much.  Problem is, the rebate was tied to a circuit-breaker process.  What is that?  Essentially it means that you’d pay property taxes equivalent to your earnings.  Again, that isn’t a solution. All it does is move the total property tax bill around, so ultimately some of us will end up paying more.  Not everyone will get the rebate check, and those that don’t could face higher property taxes overall.

So what is the solution?  We need to simply look to the East at what Massachusetts did just a few years ago.  At the time, that state was ranked 3rd in the country for property tax rates and facing serious issues.  What did they do?  Their government passed a program called Massachusetts 2.5.  It capped both school and property taxes at a maximum of 2.5% annually, removed some mandated expenses, and allowed for referendums should a community or school need a one-year increase for special projects, etc.

What happened?  Massachusetts now ranks 33rd in property taxes.  At the time, many that said such a plan would hurt schools and hurt the kids.  In fact, graduation rates have increased.

We at Unshackle Upstate appreciate elected officials taking on the critical issue of property taxes.  But if we are going to do it, let’s do it the right way.  Let’s look to the East and follow Massachusetts’ plan.