Smart Veto For A Tax Cap Gimmick

Posted on July 17th, 2011

Published 12:21 a.m., Monday, July 18, 2011

Leave it to the New York Legislature to get all tough and put schools on a diet, and then sneak them cream puffs on the side.

That’s essentially what lawmakers tried to pull in a session that saw passage of both property tax cap legislation and a bill to let school districts play fiscal games with pensions costs.

Gov. Andrew Cuomo was absolutely right to veto the pension bill. It was a cynical attempt by the Legislature to appear as though it’s helping taxpayers as it’s setting them up for even bigger tax bills down the road.

The bill, sponsored by Assemblyman Peter Abbate, D-Brooklyn, and Sen. Martin Golden, R-Brooklyn, would have allowed districts to borrow up to 125 percent of their pension costs over the next two years. The bonds could be paid back over 15 years. Voter approval would not be required.

The measure passed on the last day of session — the same day lawmakers approved a tax cap that requires school districts and governments to hold increases in property tax levies to two percent or the rate of inflation, whichever is less.

The tax cap law includes several exemptions. One allows districts to exceed the cap if pension contributions increase by more than two percent over the previous year.

We can appreciate the concern here. Pension costs are expected to rise significantly over the next several years to cover investment losses that public retirement systems sustained in the recession.

But pension bills aren’t a one-time expense like, say, a new school. They come every year.

Borrowing to pay for them is nothing less than borrowing to cover the cost of operating expenses, one of the worst fiscal practices governments can commit. The money still has to be paid back, with interest. At best, it only makes things feel better for a while — which is, perhaps, one of the reasons we have so much public debt today.

This bill also smacked of an attempt by the Legislature to mask some of the tax cap’s limitations. The exemption for pension costs means that voters will almost certainly be presented with larger tax increases than the tax cap’s hype would lead them to expect.

Will the tax cap make things harder for school districts? Yes. Will it stop taxes from rising? Almost certainly not. Are there smart ways to stabilize pension payments? You bet there are, and they’re not much more complicated than, say, a budget plan for home heating oil. But they require discipline — particularly the will to pay more sometimes when you could pay less.

Whether the tax cap lives up to New Yorkers’ expectations for both their wallets and their schools remains to be seen. But we won’t be able to have an honest discussion about the law -if lawmakers hide the flaws behind fiscal gimmickry.


The governor vetoes a bill to let school districts borrow for rising pension costs.


Pushing today’s challenges to the future does nothing to solve them.

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