Big things are happening in Albany. After passing a timely budget, Gov. Andrew Cuomo has come to an agreement in principle with state Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver to pass a 2-percent property tax cap in New York State, the most aggressive cap of its kind in the nation. Gov. Cuomo Part Deux is making the most of his fresh political capital by making good on his campaign promises to restore fiscal stability to the Empire State.
The economic recovery on Long Island, as it is everywhere, is tenuous. Though I’m told the recession ended some time ago, the only apparent indication is the continuing progress of the stock market, which seems to march to its own beat irrespective of reality. Here on the ground things seem to be pretty much the same, save for a few glimmering lights at the end of the tunnel that may still be flashes from an oncoming train.
One such glimmer is the movement on the core project inside the Nassau Hub in Uniondale. The proposed redevelopment of the Nassau Veterans Memorial Coliseum is beyond the talking stages and coming up for a vote. It’s the ultimate “put up or shut up” moment being sold to taxpayers by the strangest of bedfellows. Hempstead Town Supervisor Kate Murray, Nassau County Executive Ed Mangano and New York Islanders owner Charles Wang have put forth a proposal to Nassau residents to redevelop the Coliseum through taxpayer-financed bonds in a referendum tentatively set for Aug. 1. No casino, no mass transit, no retail and no backsies. Just a straight-up, publicly financed deal to take a financial leap of faith on Long Island’s only professional sports franchise.
Enter Albany. The only things standing in the way of this proposal, at long last, are a jaded electorate and the Nassau Interim Finance Authority (NIFA), a decade-old creature of the state Legislature created to save us from ourselves. The proposed bond is tentatively pegged at around $400 million to finance the Coliseum and an adjacent parcel for a minor league baseball team. Regardless of the outcome on Aug. 1, ultimately NIFA will have final say on whether the county can pull the trigger.
Conservative pundit and NIFA board member, George Marlin, may have already tipped NIFA’s hand in a recent Newsday op-ed, by saying this type of publicly financed stadium deal is in large measure lousy for the taxpayer.
There is a striking parallel between the property tax cap issue and the proposed Coliseum plan. In theory, both are good ideas. We taxpayers need extraordinary relief and future economic security. We need movement on the Hub to put the trades to work and at least begin reimagining the geographic focal point of Nassau County. When taken at face value, both propositions seem fairly obvious, and the political machinations to make progress on both appear to be nothing less than Herculean given the staggering inertia that has weighed them down for so long. But like everything in life, it’s more complicated than passing a bill or staging a referendum.
Too often we look to find the solution for symptoms instead of examining and treating the root causes of an illness. In the cases of property tax cap and the Coliseum development, the prescribed reforms are merely masking the diseases that plague both patients.
There are two sides of the property tax coin in Nassau County: schools and local government. School districts are understandably perturbed by the proposed tax cap as it eliminates their ability to levy tax increases according to an individual district’s needs. Many argue that it also places an undo burden on poorer districts that at times require greater tax increases due to a significantly lower tax base than their wealthier neighbors. With rising health care and pension costs for the teachers and staff, and little in the way of wage reform on Long Island, school districts will indeed be under the gun to do business differently. Taxpayers with children in the district will be caught in the crossfire for several years should the cap pass the Legislature as proposed because many districts will be loath to make systematic changes at first, instead they’ll impose drastic cuts to school programs in order to prove a point.
The smaller, but more pernicious aspect of the tax system in Nassau County, however, is the largely misunderstood local government levy. The tax certiorari issue, the process of grieving your property tax assessment to reduce your payment, is frequently employed in large part by commercial property owners. It’s a standard process replicated in municipalities across the nation but Nassau County still has an antiquated ruling on the books, referred to as the “county guarantee” dating back to 1948, whereby the county is required to cover whatever portion of the reduction is allocated to the schools.
The Mangano administration pushed legislation through the Nassau Legislature last October to eliminate the guarantee by 2012; predictably the ruling is being challenged in court by 41 districts. The school districts contend that more than $50 million annually would be shifted toward the school districts from the county budget, a move that would provide relief to the county but not the local taxpayer who would still be on the hook for the refunds through the school tax levy. The introduction of the tax cap adds yet another wrinkle to the equation if schools are required to take on this burden without the ability to raise taxes in accordance with the amount of the refunds.
To fix this problem, Nassau County and NIFA need to act boldly and enact a variance clause to the tax certiorari process whereby any assessment within a margin of error of 10 percent results in no change to the assessment. The county has estimated that 90 percent or more of all challenges fall within this range. This one simple ruling, in conjunction with the courts upholding the legislation to reform the county guarantee, would not only properly allocate payments of tax refunds to the original beneficiaries of the funds, but it would finally reform a broken system and eliminate the need to continually cover the refunds through bonding that has no offsetting future revenue stream.
Absent this type of reform, every project that might be aided by or require government borrowing and assistance such as the Coliseum project will always be viewed in a negative light because taxpayers are overburdened as it is. As residents we should be able to make an emotional decision to keep our only professional sports franchise on Long Island and the practical decision of redeveloping the Hub without the prevailing sense that somehow the other shoe is about to drop. The “other shoe,” by the way, is called reassessment. Understand that there are two parts to the property tax equation: rate and assessment. Just because we are moving toward capping the rates doesn’t mean the county can’t simply reassess your property at a higher value to raise your taxes.
So while Albany seems to have found its rhythm for the moment, we need our state legislators to take the next difficult step of fixing the underlying structural imbalances we face in order to let us make the right decisions for our future.