Priority for 2018 Budget Should be Simple: Cut Property Taxes

Our property taxes are among the highest in the nation. New York state government needs to make structural changes if there is any hope for reducing tax bills for property owners. Legislation has been introduced that would help alleviate some of this burden for upstate New York residents and stimulate economic growth.

For starters, the state needs to take over the full cost of Medicaid. It is a joint federal and state program largely administered by states and is paid for with federal, state, and local funds. Medicaid provides health insurance for low-income families and individuals, including children, parents, pregnant women, seniors, and people with disabilities. Currently, about one-third of New York residents are insured through Medicaid.

States have the flexibility to design their Medicaid programs and therefore, eligibility and benefits under Medicaid vary widely from state to state. For example, after the federal government enacted Obamacare, New York chose to expand the program to allow more low-income non-elderly people to qualify for Medicaid. Not only do states have the authority to expand benefits and those who qualify, but they also have the authority to tax county property taxpayers for this public benefit. New York is one of 18 states that requires counties to cover some of the non-federal costs associated with Medicaid. Mandated local contributions in New York are the highest in the country — $8.2 billion annually. Local property taxpayers need relief from this behemoth.

With the state takeover, the legislation requires the state to make structural changes to the program over a multi-year period that would reduce the overall cost of Medicaid without sacrificing services. Something needs to be done. In 2017-18 the cost of the program reached $72.1 billion which is unsustainable. In the 2012-13 fiscal year, taxpayers saw some relief from Medicaid when the state agreed to take over the growth of the local share of Medicaid. This was a victory for local property taxpayers; however, it is time to remove this burden from the counties altogether. 

In tandem with the Medicaid takeover, the state should also freeze property taxes at the 2018 level then assume the property tax growth of local governments or school districts that stay within the 2 percent tax cap. In addition to this takeover, the legislation specifies that the state create a real property tax redesign team. The redesign team would then be tasked with reducing mandates and finding at least $500 million in annual recurring savings. A similar team called the Medicaid redesign team — comprised of representatives of health-care workers, Medicaid recipients, and hospitals — was created in 2011 that recommended more than 70 solutions the state used to help keep Medicaid costs from spiraling further out of control. The first year alone, it saved taxpayers an estimated $2.3 billion.

The legislation, if enacted, would force the state to look at unfunded mandates, which largely determine a locality’s total budget. For example, in Oswego County, 80 percent of the county’s budget goes toward paying for state and federal mandates. This is similar for all counties throughout the state. It is not fair for Gov. Cuomo to say, as he did again during this year’s State of the State address, that localities need to do more to cut costs when such a substantial portion of their budgets are dictated by state and federal mandates. Many localities have already cut their spending and staffing needs to stay within the state’s 2 percent property tax cap.

The bottom line is rising property taxes make it difficult for businesses and residents to afford owning a home or business in New York. Another report out late last year confirms once again that high tax states like New York and New Jersey are losing residents to states that do not have these high taxes. This outward migration impacts everything from job opportunities, to education, to public safety. If this governor is serious about helping the upstate economy and creating jobs, New York needs to make these structural changes, so we can turn this outward migration around and help make our state more attractive and affordable for young professionals, businesses, and homeowners.                           

William (Will) A. Barclay is the Republican representative of the 120th New York Assembly District, which encompasses most of Oswego County, including the cities of Oswego and Fulton, as well as the town of Lysander in Onondaga County and town of Ellisburg in Jefferson County. Contact him at barclaw@assembly.state.ny.us, or (315) 598-5185.