February 2014
February 03, 2014

NY must meet obligations before using budget surplus for tax cuts

Author: By Ned Hoskin
Source: NYSUT United
NYSUT President Dick Iannuzzi is interviewed by a television reporter about the union’s reaction to Gov. Cuomo’s property tax cut proposal. Photo by El-Wise Noisette.
Caption: NYSUT President Dick Iannuzzi is interviewed by a television reporter about the union’s reaction to Gov. Cuomo’s property tax cut proposal. Photo by El-Wise Noisette.

New York state claims to have a budget surplus of more than $2 billion, and Gov. Andrew Cuomo proposes using that money to balance a tax cut plan that would provide minimal relief to middle-class taxpayers and big benefits to millionaires, banks and corporations.

NYSUT leaders strongly maintain that Cuomo needs to meet his obligation to equitably fund public schools, colleges, health care and human services before he gives out election-year tax cuts.

"Providing $2.2 billion in tax relief would help relieve the tax burden primarily for wealthy New Yorkers and corporations," said NYSUT President Dick Iannuzzi. "But schools need $1.9 billion in additional aid this year, distributed in an equitable formula, to overcome the devastating cuts of prior years and to make a good faith effort to begin to fulfill the promise of the CFE decision. Public higher education has been cut $2 billion over five years, and lower-wage workers in human services face layoffs. This tax cut plan is a luxury we can't afford."

The Campaign for Fiscal Equity court decision in 2007 ruled that the state is obligated to provide a sound, basic education to all students, but was not paying enough to do so. That holds true today.

The state has fallen $5.3 billion behind in its commitment to students. And, since the economic crisis of 2008, the state has skimmed $1.6 billion from school aid (Gap Elimination Adjustment) to help balance the state budget.

Public higher education has endured billions in cuts, and NYSUT and its affiliates at SUNY, CUNY and community colleges have launched the Public Higher Education Quality Initiative to ensure quality, opportunity and access. They are seeking significant commitments to fully fund colleges and stop boosting tuition to fund operations. "Make sure all the politicians know you think they should use that surplus for education," NYSUT Executive Vice President Andy Pallotta told 1,500 students and parents at a recent Alliance for Quality Education rally as they prepared to meet with legislators.

The residential property tax relief plan would require localities to stay under the property tax cap, which is 1.46 percent next year. The proposal would further erode local autonomy and would create yet another incentive to cut programs and services without regard to education and local needs, Pallotta said.

Of the eight provisions in the governor's tax plan, two — the changes to the estate tax and the cuts in business taxes for Wall Street banks — account for half of the benefits, $1.1 billion, and would solely benefit millionaires. Those tax cuts do nothing to restore programs and services, NYSUT leaders said.

Governor's tax cut plan

• Two-year "freeze" on property taxes. In year one, the state would provide tax rebates to homeowners who live in a jurisdiction that stays within the 2 percent property tax cap. In year two, the locality must stay under the cap and agree to implement a shared services or administrative consolidation plan. Estimated lost revenue: $1 billion.

• Property tax "circuit breaker." After year two, the proposal would provide an income tax credit for households earning up to $200,000, with a maximum benefit of $1,000, only if the locality stays under the property tax cap. Estimated lost revenue: $1 billion.

• Renters tax credit. Would provide tax relief for renters with incomes below $100,000 by offering a refundable personal income tax credit. Estimated lost revenue: $400 million.

• Estate tax changes. Would increase the threshold for state's estate tax from $1 million to $5.25 million and lower the top rate from 16 percent to 10 percent over four years. Estimated lost revenue: $750 million.

• Cut business taxes. Would merge the bank tax into the corporate franchise tax and lower the rate from 7.1 percent to 6.5 percent. Estimated lost revenue: $346 million annually.

• Real property tax credit for manufacturers. Would create a credit against corporate and personal income taxes worth 20 percent of new and existing manufacturers' annual real property taxes. Estimated lost revenue: $136 million.

• Eliminate tax rate on upstate manufacturers. Would eliminate the corporate income tax rate outside the MTA region. Estimated lost revenue: $25 million.

• Accelerate phase-out of the 18-A surcharge. Would eliminate the 2 percent assessment levied on commercial electric, gas, water and steam utility bills for industrial customers and accelerate the phase-out for remaining customers. Estimated lost revenue: $600 million over next three years.