Testimony of Andrew Pallotta, Executive Vice President New York State United Teachers to the Assembly Education Committee and the Assembly Real Property Tax Committee Regarding Governor's Proposed Property Tax Cap
March 1, 2011
My name is Andy Pallotta, Executive Vice President of NYSUT (New York State United Teachers). NYSUT is a statewide union representing more than 600,000 members. Our members are pre-k to 12th grade teachers, school related professionals, higher education faculty, and other professionals in education and health care.
I'd like to thank the chairs of the Assembly Education Committee and the Assembly Real Property Tax Committee for the opportunity to address you today regarding the Governor's proposed property tax cap.
I’ll begin by highlighting some data that we are releasing today regarding the combined impact of the proposed education cuts and the proposed hard property tax cap. Education is primarily funded through a combination of state and local dollars so all proposals that impact local funding, such as the tax cap, must take the availability of state funding into account as well.
Overall, if the proposed tax cap were in place this year and the proposed budget cuts were enacted, school districts outside of the “Big 5” would be left with a $2.5 billion funding gap. To get even more specific - New York state would spend $1,500 less on each public school student next year if the Executive Budget proposal’s education cuts and the hard tax cap that is being proposed were in place.
The research – based on the proposals that are on the table right now – clearly show a devastating impact on our ability to provide a first-rate education to the children of New York. We are including a district by district estimate of the funding gap produced by these proposals to demonstrate this impact. The new information shows that a bad budget coupled with a bad tax cap would be erase the progress New York students are making.
While NYSUT shares New Yorkers’ concerns about the tax burden placed on the middle-class, we also know that New Yorkers overwhelmingly support their public schools and do not favor the draconian cuts in programs and services that the loss of $2.5 billion would require.
Education cuts like this will mean the loss of vital programs, larger class sizes and significant job losses in just about every school district – and every legislative district – in New York state. It’s unwise and unacceptable.
NYSUT members are doing everything they can to provide the services students need - finding cost-savings and economies of scale and dealing with the impact of layoffs and position losses. NYSUT and our locals have made it clear we are willing to work locally and at the state level to preserve essential services, but we can't cut or cap our way to educational excellence.
New Yorkers want and need tax relief. Ill-conceived and irresponsible tax caps provide only the illusion of relief. If you have difficulty paying your property taxes or believe your taxes are too high, a tax cap will not help you. It is a gimmick and it would have a permanent, chilling effect on a community's ability to fund its schools. NYSUT supports a circuit breaker as the best mechanism to provide property tax relief to those who need it the most.
Now I’d like to respond more specifically to the tax cap that the Governor has advanced and that the Senate has passed. This bill includes a tax cap for school districts that is not the two percent that the Governor advocated for previously, but rather a zero percent tax cap. The school budget vote is eliminated and replaced with the tax levy proposition and the provisions of law relating to contingency budgets are eliminated as well.
By establishing an automatic zero when propositions are voted down, New York state would be abdicating its responsibility for ensuring a sound education for every child and would sentence thousands of children in less affluent areas to unequal access and unequal opportunity. It would make it impossible for districts to plan, to make multi-year commitments or establish economies based on multi-year contracts.
Here in New York, as negotiations between the Governor and legislative leaders continue, it is essential to learn from history and reject problematic provisions. Additionally, any potential tax cap plan must be designed as a temporary measure so that we can revisit its impact and reevaluate its necessity in better economic times.
There are many examples of damaging tax caps in California, Illinois, Indiana and Massachusetts. A hard two percent tax cap would result in thousands of layoffs, devastating cuts to programs and the loss of vital public services. If the governor's tax cap proposal had been in place last year, it would have meant a $600 million revenue loss for districts statewide. A recent report by the New York State School Boards Association estimated that a damaging tax cap could result in the loss of more than 13,000 educator jobs in New York state this year alone. This is on top of the loss of 10,000 education jobs as a result of last year's budget cuts.
In the Governor's Program Bill the only exclusion to the cap is the tax levy needed to support voter approved capital expenditures. An arbitrary cap that fails to take into consideration rising costs beyond the control of school districts is a blunt instrument that would damage education and efforts to create equity for all children. It doesn’t include exemptions for health insurance costs, pensions, special education costs or increased enrollment.
Let me use a real life example because most of us are seeing this when we visit the gas pump these days. One school transportation director we spoke to told us that last year he was paying $2.11 per gallon for diesel fuel. This year the cost is up to $2.91 per gallon – that’s a 38 percent increase over last year that is completely out of the districts control. Included costs such as these under a cap would not make the gas any cheaper – it would simply force districts to cut the educational programs they are offering.
Some have suggested that the opportunity to override offers relief from the harsh realities of living under a hard cap. But experience tells us something very different. Evidence from other states has shown that poorer districts have a harder time mustering the votes to spend more than a cap, only widening the achievement gap for children of color and for children who live in poverty. The undemocratic proposal to require a 60 percent majority to override is especially problematic. It would give people who oppose school spending more voting power than people who support it.
Lastly, I reiterate the important interaction between state aid to schools and local property taxes. Some have pointed to the tax cap in Massachusetts as an example of tax cap “success”. What people forget to mention is that Massachusetts simultaneously phased in billions of dollars in additional state support for their schools at the same time.
While in New York, billions of dollars in Foundation Aid remain unpaid to school districts. This is funding that was intended to support every child's constitutional right for a sound basic education. Evidence has shown us, when school aid is funded, property taxes are held down. During the Foundation Aid formula’s two years of operation, the poorest districts were able to propose budgets to voters with the lowest average tax increases and the largest spending increases – closing gaps in resources for their students without over-burdening their taxpayers. This should remain our collective priority.