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NYCOM’s Mayoral Task Force Advocates Reforms on Mandate and Property Tax Relief

‘You can’t cap what you can’t control,’ was the mantra of a delegation of mayors from across New York State, who recently descended upon Garden City’s Village Hall to discuss recommendations of New York State Conference of Mayors and Municipal Officials (NYCOM) Mayors’ Task Force on Mandate and Property Tax Relief.

Earlier this year, NYCOM formed a working task force of 20 mayors to come up with a set of mandate relief proposals that they say must be adopted by the state legislature prior to considering any form of a property tax cap. During a press conference, Sam Teresi, NYCOM president and mayor of the city of Jamestown, NY, explained that the task force’s recommendations focus on first reforming the cost drivers that lead to high property taxes in New York, in particular the many mandates on local governments pertaining to collective bargaining and managing workforce costs.

Teresi stated that the report entitled, You Can’t Cap What You Can’t Control, was built on a series of fundamental and simple foundations; namely, that property taxes in the State of New York are too costly. “Whether it is in the 62 cities, the 555 villages, the 900 towns, the several hundred school districts, special taxing jurisdictions, property taxes are simply too high in New York State and are one of the leading causes for taking what I believe is the greatest state and the greatest country in this world and making us unattractive and uncompetitive for business development,” Teresi said.

According to Teresi, members of the NYCOM task force wanted to take action on the issue. “We needed to become an advocate, a voice of change, particularly with the message that was put out during the past election. On both sides of the aisle, we need to do something about this. The same old remedies aren’t going to pertain anymore. Property taxes are simply too high in the state. They are punishing; they’re punitive in nature,” Teresi remarked.

Teresi stated further that just talking about solutions or wishing it away was no longer an effective way to solve the problem. “That may do you some good for a short period of time, but ultimately it’s going to be the same old, same old. We need fundamental change. We need to identify the reasons why property taxes are so high in New York State and why they are so punishing,” Teresi explained, adding that the report is completely consistent with what Governor-Elect Andrew Cuomo talked about during the campaign.

NYCOM Executive Director Peter Baynes explained the report emphasizes that New York State residents not only want property tax relief but they also want to continue to receive essential services from their local governments. While NYCOM has put out mandate relief packages previously, Baynes pointed out that the task force has never put out recommendations with so much compelling data behind them.

“The governor-elect’s campaign talks about controlling property taxes, talks about mandate relief. We’ve given him a road map here to achieve sustainable property tax relief without decimating public work forces and public services,” Baynes said.

The report contains two graph charts that illustrate how the annual growth in city employee benefits far exceeds the 2 percent property tax cap. The chart shows that over the next two years, city pension and health insurance costs will rise by a combined $206 million, compared to a $39 million increase in property tax levies allowed under a 2 percent property tax cap.

The second chart in the report measures how city employee benefit costs alone would consume every single dollar of capped property taxes in four years. “There’s no way our communities could survive and our state survive with that kind of a road to fiscal ruin in front of them…We knew that this was true and all of you know this but to get the data and look at it and see it, it’s so stark and that was kind of the motivating factor behind the task force and the proposals they put together,” Baynes said.

Some of the state mandate reforms proposed include a temporary freeze for one year on public sector wages both at the state and local government level, which Baynes said would mean unionized and non-unionized salaries would freeze for one year. “If there’s a contract for unionized employees, it would just be suspended for one year and at the end of that year, it would pick up where it left off. It would not be a retroactive element to it. We think this is necessary to give time local government and state to begin to get their fiscal stability back. Also it gives time for these other proposals in our report to be implemented and to take effect at the local level,” Baynes commented.

Baynes indicated that two of the most expensive cost drivers are pensions and health insurance. He explained under the Taylor Law, it is difficult to get a required health insurance contribution from employees.

“Some municipalities have been able to do it but often times at a great cost. What we are recommending is that there be a minimum required contribution from all employees in local government towards their health insurance, 10 percent toward individual coverage, 25 percent toward family and 25 percent would cover retirees,” he said.

While Baynes said the plan might not be popular among those affected, it would be fair to those working in the private sector who may be struggling or unemployed. He added that the requirement for health insurance contributions would be phased in over three years.

The second proposal deals with the pension costs. “I imagine every single one of your villages, just the increase in the pension bill next year would exceed what a property tax cap would allow you to raise in additional property taxes. That has to be tackled, that problem of pension costs. The challenge there is that the constitution protect to a certain degree pension benefits for public employees,” Baynes said.

According to the report, to address the issue in the near-term, the recommendations propose that the state must immediately reinstate the 3 percent employee pension contribution that was eliminated in the year 2000 for Tier 3 and Tier 4 members of the State Employee’s Retirement System upon completion of 10 years service.

The second proposal in the pension area is to offer new employees the option of a defined contribution pension rather than a defined benefit plan that is currently in place. “A defined contribution plan is more like a 401K, where the municipality knows every year what percentage of the payroll they would have to put in toward that retirement and the employee would know that if they leave or wherever they go would take that pension with them,” Baynes commented.

Marvin Natiss, Nassau County Village Officials president and mayor of North Hills, told the audience that the report covers everything that municipalities need. “We know where the waste is. I always have said that villages and local governments are the most efficient in delivering services at the most economical way and mostly so you cannot cap on property tax. My village, in particular for example, which is of the 64 villages in Nassau County, has the lowest tax rate. A 2 percent cap gives us nothing because we have the lowest rate so we would not be able to generate. If I had any kind of budget deficit I could not generate enough funds with that 2 percent cap to cover anything,” Natiss said.

Natiss stated some of the villages have much larger tax rates and even they won’t be able to cover because of the mandated costs that are imposed upon us by the state legislature. “Hopefully we’ll have some success in the coming year or two and we’ll see some of these mandated changes implemented,” he said.

Suffolk County Village Officials Association Board Member and Babylon Mayor Ralph Scordino said he is a great proponent of the basic idea that residents want services for their tax dollars. “We go out of our way to give them the services. It’s almost like smoke and mirrors sometimes that we come up with a budget to keep everybody’s job and to keep the services, especially in an average-size village like Babylon... I hope that the governor listens to us and the more people that are out there that say ‘you can’t cap what you can’t control,’ I think we’ll be in better shape for next year,” he said.

Former Mineola Mayor and State Senator-Elect Jack Martins said if the voters affirmed one thing throughout this past election, it was for the need for commonsense to prevail in Albany. “Although everyone is concerned about property taxes, and I don’t know anyone who is not in favor of a property tax cap and the need for a property tax cap, I think it would be our responsibility to include in that discussion those cost drivers that are going to impact the effectiveness of a property tax cap,” Martins said.

Martins also pointed out that if the cost drivers are going to take up the entire tax levy within four years, then the question becomes who is going to provide basic services like water, fire and ambulance services that communities rely on. In his future position as state senator, Martins was confident he would offer his colleagues in the senate a unique perspective on local government.

“We as local officials, mayors and trustees, councilmen and legislators on a local level, we’re at the ground level… We’re literally at the point where rubber hits the road. We provide those basic services and we know what it takes to provide those services,” he said.

Baynes announced that NYCOM’s task force’s report has been recently delivered electronically to state legislators and has been discussed with the incoming administration. To view and download a copy of NYCOM’s report, visit www.nycom.org.