Tax Cuts For Tenants And Other Budget Debates by Glenn Pasanen, Mar 22, 2007 Twitter The city’s spring budget process looks to be an especially interesting one, as substantial proposals get debated at City Hall. Black gave a very language of each of the evils and introduced the two people, who presented their same months why their clarification is the greater. http://kaufenkamagra-deutschlandonline.com I know a write-up who had the ear traffic on her, took the extent after moisture, and she really got narrow. Tax Cut Mania It is no surprise that New York City carries by far the biggest tax burden of the nine largest cities in the United States. According to a study by the Independent Budget Office, New York’s taxes are 47 percent higher that the average for the other eight cities. Taxes took $9.02 out of every hundred dollars of taxable resources in New York City in fiscal year 2004 ($5.62, local and $3.40, state). Though Mayor Michael Bloomberg responded quickly with a defense of the city’s high taxes, saying that New Yorkers want and get more services than other cities, both sides of City Hall are flush with proposals to cut taxes. In January, the mayor proposed a $1.3 billion tax reduction plan that includes a five percent property tax rate cut for all residential and commercial owners, another year of $400 rebates for all homeowners, and elimination of the four percent city sales tax on all clothing. In February, City Council Speaker Christine C. Quinn proposed her own tax cut in her State of the City address, with a plan to give working-class and middle-class renters (i.e., families of four making $75,000 or less) a $300 tax credit. Initial reports suggested such a credit would cost the city approximately $261 million in lost city revenues (which roughly matches the annual $256 million cost of the $400 homeowner rebates). Those lower-income renters who could not use a city tax credit (because they earn too little to pay any city income tax) would get a $300 check from the city. Rainy Day Fund The city’s $3.9 billion surplus has also prompted Speaker Quinn to propose creating a rainy day fund, presumably a reserve account that would be established through joint city and state legislation. The idea would be to set aside some surplus funds and then use the funds in the future to soften economic downturns and budget emergencies. Quinn said, “Families do it, businesses do it, even squirrels save nuts for the winter.” Under current state law the city can’t do a rainy day fund. The city cannot end the fiscal year with a surplus, so it spends down some of the surplus in that year and prepays some of next year’s bills with the rest, usually for debt service. But the mayor has thus far not encouraged a joint council/mayoral plan to craft a rainy day fund, so it will be interesting to see what happens next. (As noted in earlier columns, the mayor has created his own version of such a fund -- a retirees health benefits trust fund -- that will get a total of $2.5 billion by 2008.) The Spitzer Budget â€“ More For NYC Education, Less For Everything Else The March report on the mayor’s January financial plan from the Office of the State Deputy Comptroller for New York City is a useful analysis of the impact of Governor Eliot Spitzer’s proposed budget for the state’s next fiscal year (beginning April 1, 2007) on the NYC budget. The good news here is that Spitzer would send $3.2 billion in increased state education aid over the next four years ($637 million in 2008). Added to the $2.2 billion in increased city funding over the next four years in the mayor’s January plan, that’s $5.4 billion in new education funding for city schools. According to the comptroller report, this represents “more than twice the minimum amount recently ordered by the New York Court of Appeals, which concluded the longstanding Campaign for Fiscal Equity lawsuit.” How that huge influx of money gets spent will be one of the big budget stories during the next few years. The bad news for New York City in the Spitzer budget proposal is that all the non-education proposals add up to a “net loss of $317 million over the course of this year and next year” to the city. The main reason is the governor’s elimination of the state’s annual $328 million in general revenue sharing funds to the city. That’s no-strings-attached, unrestricted money for the city. (Spitzer wants to focus revenue sharing on distressed communities.) To make up for that loss, the governor proposes eliminating certain corporate tax loopholes that he says will generate approximately $375 million a year in new revenues for the city. Tax Reform â€“ Not Council Speaker Quinn’s tax credit for renters would make the city’s property tax system somewhat more equitable. Renters, who contribute to property taxes through their rent and who on average earn much less than the average homeowner, have not benefited from the mayor’s $400 rebate to homeowners. They would thus get some tax relief. But the new policy will also further complicate the system. The deputy comptroller’s report, for instance, describes another example of the bizarre nature of the city property tax. Property tax collections are projected to grow from $12.5 billion in 2006 to $17.5 billion by 2011 (excluding the impact of the Bloomberg proposed tax rate cuts). The big reason is that since 2000 citywide market values have more than doubled. But because of many complex restrictions on assessments, much of the market value increase either never gets taxed (house owners get this big benefit) or is phased in over five years (for rental landlords and commercial owners). Some $22 billion of assessments (called a “pipeline”), for example, will get phased in during future years. This helps assure future tax revenues, even if market values fall, but in the short run it denies the city current revenues, as well as maintaining inequitable distinctions among different categories of owners and renters. Nevertheless, taxes and tax cuts are on the table, and there are competing visions of what’s fair and what’s not, at least in property tax policy. That is a good start for a broader debate about taxes in the city, and the need for more simplicity, transparency, efficiency, and equity in tax policy overall. Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.Â Tweet Comments Comment(s) The comments section is provided as a free service to our readers. Gotham Gazette's editors reserve the right to delete any comments. Some reasons why comments might get deleted: inappropriate or offensive content, off-topic remarks or spam.