The New York state legislature has finished its hearings on Governor Andrew Cuomo’s budget proposal, and will be ready to start crafting a spending plan once they return from the President’s Day break. One of the final hearings focused on the governor’s tax cutting plans, and lawmakers had plenty of questions.
Legislators at the hearing quizzed Governor Cuomo’s tax commissioner on a plan that could result in a freeze of local property taxes. Tax Commissioner Thomas Mattox admits it’s a complex plan.
“This is clearly a very complicated space,” Mattox said.
The governor’s proposal relies on local governments and school districts doing several things. First, they would need to agree to limit overall spending increases to 2 percent or less in the first year of the program. In the second year, they would also have to show that they consolidated some services. In the first two years, property tax payers would get a rebate for any tax charges that are higher than the previous year’s levy. After the first two years, the rebates would be given out based on need, in a circuit breaker type system that would reward lower income residents with more money.
Senator Liz Krueger, a Manhattan Democrat, asked Commissioner Mattox what would happen if someone lived in a town or city that adhered to the tax freeze requirements, but their school district did not comply. How would their circuit breaker tax break be calculated, she wondered.
“What happens to my eligibility?” Krueger asked.
Mattox did not have an immediate answer.
“There are several technical aspects like that ,that we will have to work through,” said Mattox. “Depending on what the final form the budget and the legislation takes.”
Matttox says the tax department is hoping to set up a web site to help homeowners through the details.
Even Commissioner Mattox seemed confused at times. He said the state would distribute the rebates to tax payers in the form of checks mailed to their homes this year, but in the future would offer the difference in an income tax rebate.
That description contradicted statements by Cuomo’s budget director, who said the rebates would always be mailed as checks to property owners.
Tax Commissioner Mattox later clarified that the rebates would indeed, cone in the mail. And he told lawmakers during his testimony that it’s a work in progress.
“We have some work to do, in terms of figuring out how to make this a simple process for homeowners,” said Mattox.
The complexities of the plan, and the difficulties in explaining them, caused Senate Finance Committee Chair John DeFrancisco to express some skepticism, saying the proposal as planned “is a nightmare.”
“An absolute nightmare, “DeFrancisco continued. “And you have to administer it.”
Senator DeFrancisco, a Republican from Syracuse, does support the concept of property tax freeze, but he says the plan, as described by Mattox, would require the auditing of millions of New Yorkers' tax returns.
Business groups were supportive. Ken Pokalsky of the Business Council says plans to cut the corporate tax rate, phase out an energy tax, and offer tax free options for upstate manufacturers will improve the business climate and the economy.
“The business tax reforms and lower business rate will produce important job, income, and economic benefits to the state,” Pokalsky said.
But some religious leaders oppose the tax plans. Around 40 ministers, rabbis and other faith leaders held a protest prayer vigil before the hearing began. The Reverend Brooke Newell, with the New York State Council of Churches, says Cuomo’s plan focuses too heavily on tax cuts that benefit the wealthy, including reductions in the estate tax, and not enough on the working poor and the needy.
“With a tax plan where the ultra-rich continue to get tax breaks, I pay a higher percentage of my salary in income taxes than the governor does and I don’t make anywhere near what he does,” Newell said. “It’s about fairness.”
Once lawmakers return from vacation, they’ll have about three weeks to agree on a tax plan, and the rest of the budget.