Cuomo proposes $1.7B property-tax credit





ALBANY – Gov. Andrew Cuomo proposed a $1.7 billion plan Wednesday to provide property-tax credits by tying taxes to household income.

The program would be phased in over four years and provide credits to more than 1 million middle-class homeowners and more than 1 million renters. Homeowners would be eligible if they earn less than $250,000 a year in adjusted gross income and if their communities stay under the property-tax cap. Also, a homeowner's property taxes would have to exceed 6 percent of income in order to be eligible.

Cuomo said his proposal would be another way to cut down on New York's property taxes, which are among the nation's highest. The plan will be part of his proposed 2015-16 budget and State of the State address Jan. 21.

"You have no long-term future if you are the tax capital of the nation. People are smart, businesses are smart. It's not the old days where they're rooted into the ground," Cuomo said at Hofstra University on Long Island.

Homeowners and renters would get a maximum credit of $2,000 when the program would be fully implemented, Cuomo's office said. Cuomo blamed taxes for hurting the state's competitiveness. He enacted a property-tax cap in 2011 and a property-tax rebate program last year.

The credit is valued at up to 50 percent of the amount by which property taxes exceed the 6 percent burden threshold. It would appear on filers' income-tax returns. So if a household earned $100,000 and their property taxes were $7,000, they would get a credit of $400 to $500. The state expects to fund the program, which would reach the $1.7 billion cost by the fourth year, through an expected $2 billion surplus that Cuomo anticipates if the state limits its spending.

The state estimated it would benefit 1.3 million taxpayers who would get an average credit of $950 by the time it's fully implemented. It would be permanent.

In the Lower Hudson Valley, which has among the nation's highest property taxes, Cuomo's office estimated an average $1,119 property-tax savings. The savings would average $781 upstate, which has among the nation's highest property taxes compared with household income, his office said.

The plan received mixed reaction, and it would need approval by the Legislature. Supporters have long called for a so-called circuit breaker, which ties property taxes to household income. Critics said the proposal is another gimmick that doesn't address the underlying reasons for New York's high taxes, such as unfunded mandates. The state already spends $3.4 billion yearly on the STAR rebate program, which provides a break on school taxes.

"A property-tax circuit breaker only shifts the property-tax burden to all taxpayers. It also fails to deliver property-tax relief to businesses across the state," said Greg Biryla, executive director of Unshackle Upstate, a Rochester-based business group.

Still, proponents said the measure would aid homeowners who pay a disproportionate amount of income toward property taxes. The Fiscal Policy Institute, a labor-backed think tank, has estimated that more than 700,000 New York households pay more than 10 percent of their income toward property taxes.

"This is moving us in absolutely the right direction to be able to deliver property-tax relief to the most overburdened residents of the state," said Ronald Deutsch, the group's executive director.

The renters' credit would be based on an estimate that 13.75 percent of annual gross rent is attributed to property taxes. The credit would be available to renters with incomes up to $150,000 and when the portion of rent designated for property taxes exceeds 6 percent of their income. It mainly would benefit renters in New York City and those upstate with high rents. Upstate, renters would see a maximum tax break of about $300 a year, state officials said.

Some groups and state lawmakers said they would need more details about the plan. Comptroller Thomas DiNapoli has questioned whether the state would have a $2 billion surplus in the coming years.

"If it's paid for by closing corporate tax loopholes and a modest tax on the super-rich, we're making real progress towards ending New York's inequality crisis," said Bill Lipton, director of the union-led Working Families Party. "If it's paid for with more cuts to schools and services, then it's a step backwards."

It's also unclear how the plan would affect various regions of the state, such as suburban towns that have high taxes but upper-middle-class incomes.

"It is essential that any enacted property-tax relief plan ensures all middle-income families in every region of the state receive property-tax relief," said Senate Majority Leader Dean Skelos, R-Nassau County.

The proposal is another way to put pressure on local governments and schools. The tax cap this year limits the growth in property taxes to 1.56 percent. Cuomo and the Legislature last year installed a "property-tax freeze" that keeps taxes flat through a rebate check in communities that stay under the cap, which can be overridden by local boards or school-budget voters.

While schools and local governments stress they've limited tax increases and spending, Cuomo said they need to do more. He has held state spending to no more than a 2 percent increase since he took office in 2011.

"I'm basically saying you have to find efficiencies and economies of scale, and you have to stop spending the way you have been spending," Cuomo said. "They use the taxpayers as a piggy bank."

Stephen Acquario, executive director of the state Association of Counties, said local governments need state reforms in order to lower local taxes.

"To keep reducing the tax burden, we need to control costs at all levels of government," Acquario said.

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What's the proposal

Gov. Andrew Cuomo proposed a $1.7 billion property-tax-credit program Wednesday that would apply to more than 1 million middle-class homeowners and more than 1 million renters. Homeowners would be eligible if they earn less than $250,000 a year in adjusted gross income and if their communities stay under the property-tax cap. Also, a homeowner's property taxes would have to exceed 6 percent of income in order to be eligible.

The plan would need state legislative approval. Homeowners and renters would receive a maximum credit of $2,000 when the program would be fully implemented. The credit, which would be part of a person's income-tax return, is valued at up to 50 percent of the amount by which property taxes exceed the 6 percent burden threshold.