Long Islanders pay 20 percent more of their household income on property taxes than other New Yorkers, and the business property tax burden is equally imbalanced. So, Long Islanders know the pain of high property taxes. For that reason, the property tax cap proposed by the Commission on Property Tax Relief and adopted by Governor Paterson has some immediate attraction.

However, the decision to impose a tax cap in New York could have profound long-term consequences, especially for Long Island. If Long Island’s reputation for high quality education declines, tens of thousands of households will lose property value, and an equally large number of businesses will struggle even more to find younger workers.

As the Commission’s report shows, a tax cap can negatively affect educational quality. California has lived with a tax cap since 1978 and last year its student proficiency test results were among the lowest in the nation. In Massachusetts, which has had a tax cap since 1980, a decline in student achievement has been avoided, but only because the state has significantly increased school aid every year for the last fifteen years. New York Comptroller Tom DiNapoli has said that, “Given [New York’s] current financial condition, I’m concerned about the State’s ability to keep up its end of the bargain and continue to increase education funding.”

I urge Governor Paterson and the Legislature to take time to carefully evaluate the implications of a tax cap in New York prior to acting. Rushing to act before the end of the legislative session in three weeks may lead to results that, on balance, are not in the State’s best interests. In addition, I urge the Governor and Legislature to depart from the Commission’s recommendations in one vital respect: the unfunded mandates that cause higher school taxes must be corrected before, or simultaneously with, any action on a tax cap. To enact a tax cap before resolving the causes of high property taxes would be akin to bandaging a festering wound without treating the underlying infection. The results are inevitable: the infection will get worse.

Matt Crosson

You might have to pay pretty close attention to the news to be aware of this, but there is an important controversy going on over economic development in New York. After Pat Foye left his position as Downstate Chair of the Empire State Development Corporation, the State's economic development agency, Governor Paterson appointed a group of experienced business people to search for a successor. Reportedly, that group recommended to the Governor that the upstate-downstate split of ESDC be ended. The Governor agreed. Upstate organizations and newspaper editorial boards have been raking the Governor over the coals ever since.

I think the Governor is right. Former Governor Spitzer should not have split the State's economic development effort for several reasons. Some of those reasons are explained in the following op-ed piece, which I have sent to most of the newspapers in upstate New York:


COMING TOGETHER


A state divided against itself cannot prosper.

That’s why Governor Paterson’s decision to re-unify the Empire State Development Corporation (ESDC) is the right choice. During the 2006 gubernatorial campaign, former Governor Spitzer promised to split ESDC for the purpose of affording upstate New York more attention in state economic development funding. In the end, however, that decision would have hurt the entire state, including upstate.

Here’s why. I advocate for Long Island, a region of 2.8 million people. A few years ago, we engaged the Center for Governmental Research in Rochester to answer this question: how much money do Long Island taxpayers send to the State, and how much do they get back in all forms of State aid and service? The answer, using 2001 figures, was that Long Island taxpayers sent $2.7 billion more to the State than they got back. Today, that figure surely exceeds $3 billion. Those billions of dollars help the State support upstate New York.

Well, you say, Long Islanders can afford that, they’re rich. Like most misconceptions between upstate and downstate, that is not true. Sure, there are some rich people on Long Island, but the vast majority are middle class families struggling with their high property taxes and the high cost of living. For example, almost 60 percent of the public school students in Suffolk County are in school districts that are below the statewide median wealth level.

In fact, the cost of living, especially the lack of affordable housing, is driving younger people off of Long Island. According to U.S. Census Bureau estimates through 2006, Long Island’s population of people between the ages of 25 and 44 is declining faster than any other place in the state; about 50 percent faster than upstate. Our economy is flat. And we have received little economic development aid from the State in recent years.

Long Island needs economic development support from the State. A lot of it. If the State says to Long Island that upstate and downstate effectively have to compete for the economic development funds that are available, Long Island – and the rest of downstate – will compete. And we will compete hard, using all of the political clout available to us. How could we not do that? In a competition between upstate and downstate, we have to protect the interests of the people we represent, just as upstate organizations like Unshackle Upstate have to protect the people of the upstate region.

But we don’t want to compete with upstate for funding that we know upstate needs.

Where would that competition get any of us? Ultimately, it will only be divisive and distracting; it will make New York even less competitive. We are all in the same economic boat, and that boat is getting pretty leaky. What we need, and have never had, is a statewide economic development plan that makes sense for both upstate and downstate.

The best example of a plan like that may surprise you – it’s Ireland. Using an integrated national economic development plan, Ireland reached almost 10 percent annual growth during the late 1990s, and it still hovers at about 5 percent. Their plan has been successful because it links all sectors of Irish society: all government agencies, including education, environmental protection, transportation, and labor, with the private sector to follow a common sense, agreed-upon plan that will grow all parts of that country.

New York can do that, too. Does a statewide New York plan have to treat all areas of the state the same? Of course not. On Long Island, we are losing thousands of younger people because of the lack of affordable housing; in Buffalo, thousands of vacant homes are being bulldozed. Could there be a more stark illustration of differing economic problems? A statewide economic development plan can – and must – treat differing problems differently. But it can still have statewide strategies that help the economies of upstate and downstate complement each other; in other words, to help upstate and downstate work together to mutually strengthen each other.

Unless the State’s economic development operation is unified that will not happen. In an environment of scarce public funds, a split ESDC can only promote competition, division, and eventually political paralysis. If Governor Paterson re-unifies ESDC, business and government leaders from downstate and upstate should come together to discuss the best way to make statewide economic development work for all of us.

Matt Crosson

SUNY Chancelor John Ryan announced a few days ago that he will be stepping down soon to take a position with a leadership development center in North Carolina. I have had the real pleasure of getting to know John personally and I can tell you this is a huge loss for New York. Not just for the State university system, I mean it's a huge loss for the state itself. John Ryan is a retired Navy Admiral. He was a Navy fighter pilot, and had many command positions, including Superintendent of Annapolis. He is a quintissentially common sense, no-ego-involvement kind of guy. John came to New York after retiring from the Navy to run the Maritime College. He wasn't here long before SUNY asked him to simulataneously run SUNY Albany, which had a vacancy at the top. John did such a terrific job that his next step was Chancellor of the entire system.

You don't run into many people as fine as John Ryan; at least I haven't. As well as liking him a lot personally, and enjoying playing golf with him (which we once did even in a 35 knot rainy wind one day), I liked the leadership that John brought to the SUNY system. John recognized that SUNY historically has not played a significant enough role in the state's economic development, and he was making serious progress in correcting that. That's what I mean by a loss to the entire state.

I wish John Ryan the best, he deserves it. But I wish even more that he'd change his mind and stay.

A few weeks ago, the LIA announced in a letter to the Long Island legislative delegation that we are studying Governor Spitzer's budget proposals relating to education aid and STAR property tax relief funding. Tomorrow, you're likely to see an article in Newsday about the fact that I have received a letter from the Island's eight Republican State Senators urging the LIA not to weaken its long-held posiiton that Long Island is not getting it's fair share of state aid to education.

Why is this issue important? Very simple. For every dollar your school district gets from the State for its operations, that's one dollar less it has to raise by increasing your property taxes. Want a fast way to cut your property taxes: become very, very interested in how much money the State gives your school district. It's easy to blame teachers, or the teachers union, or school administrators for high property taxes, but the bigger culprit is the State, which for year has given Long Island less than it should have gotten.

Not news, right? Right. This is not the only area in which Long Island has gotten short changed. But it is a big one when you add up all the dollars involved.

Anyway, this is a really complicated issue. State aid has been divvied up based upon a wildly complex set of over 40 formulas that few people really understand. Gov. Spitzer has proposed simplfiying it by using what's called a foundation formula, something the State Board of Regents has called for for the last few years. Spitzer also wants to combine education aid and STAR funding (that's the State program that gives homeowners money to offset their property taxes) when the State looks at how much every area gets. He says that if the State has more money for education aid it should go to school districts that need it most; if it has more money for STAR payments, it should go to places, like Long Island, that have high property taxes.

Sounds reasonable. But it's always in the details, isn't it? So we're looking in detail at how Gov. Spitzer's proposal would affect real howmowners and real businesses on Long Island. An advance tip: businesses don't get STAR payments, so if school taxes go up more because the districts get less State aid, businesses have nothing to offset the increase. And the impact on Long Island businesses looks like it will be big, very big.

Stayed tuned. The money Long Island lsoes could be yours.

Matt Crosson