Dobbs Ferry. June 5, 2008
Rumor has it that David Paterson, the Governor of New York
State, will descend on Dobbs Ferry tomorrow to hold a press conference on his proposed 4% cap on real estate tax increases. It is not clear why Dobbs Ferry was picked as the venue for this media event given the fact that most of the Village residents that I spoke to today oppose the idea.
Arbitrary caps on real estate taxes — like Proposition 13th California — are examples of good politics and bad policy. They make for great sound bits but result in lots of nasty unintended consequences. Arbitrary caps address the symptoms of escalating taxes, not the underlying causes.
The causes of real estate tax inflation are quite simple and pretty much beyond the control of local governments.
First, the teachers union has been too successful negotiating good contracts for its dues-paying members. Teachers are now well paid relative to other members of the community — except baseball players, corporate executives and hedge fund managers. If the tax cap is a mechanism to force a fiscal crisis that will help school boards to reign in the teachers union and take back some compensation, then it is a very bunt and cowardly policy instrument. It would be more courageous to go after the problems in the current union contracts at the State level from the Governor’s bully pulpit: a) the ‘steps’ which grant automatic pay increases based on service, not performance; 2) early retirement with the ability to ‘double dip’ in another school district or job,; 3) the lack of adequate health care co-pays for current teachers and retirees and4) unpredictable and escalating defined benefit pension plan costs. But these are really tough issues and would invaribly result in strikes — and could inhibit reelection.
Second, people are simply living too long. When pension plans and early retirement schemes were introduced, no one foresaw life expectancy exceeding 80 years. With early retirement possible at 55 years old, local governments are being asked to pay pensions for 25+ years. Compounding the issue is that old people use up a lot more health care resources than younger people, so as the octogenarian population increases at double digit rates, health care costs rise for the entire insurance pool at high single digit rates.
Third, tax increases are currently over stated because the Assessment Rolls are declining. This weird and mathematically obtuse issue has to do with the way the Assessment Roll is calculated and is another unintended consequence of ‘Easy Al" Greenspan’s real estate bubble. Distortions in how real estate assessments are measured has caused the number of certioraris to explode causing the Assessment Rolls to decline as much as 1% per year.
Fourth, unfunded mandates passed by well meaning Albany legislators has forced local government to spend money that has not been budgeted. For example, just this month, the Honorable Richard Brodsky sponsored a bill to give teachers one-half day off each year for colonoscopies and mammograms. This is in addition to another unfunded mandate giving teachers one-half day off every sixty days to give blood. These half days off are in addition to the 2.5 sick days teachers are entitled to every month during the school year. This results in a lot of extra cost for substitute teachers, not to mention frequent disruptions in the classroom . None of which Mr. Brodsky has offered to pay for.
It will be interesting to see how Mr. Patterson’s media event plays out. I think I will leave work early tomorrow and try to get interviewed by the media. But my sound byte will not be the one that Mr. Paterson wants on the evening news.
"Another dumb idea from Albany".
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