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Talking about Taxes in Tea Party Times Ron Deutsch Executive Director New Yorkers for Fiscal Fairness December 14, 2010

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Where we are today...

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We must lower the heavy tax burden that prevents businesses from investing in facilities and payrolls and instead forces them to consider relocating to taxfriendly states like South Dakota or Texas. Repealing jobkilling tax increases will unleash our employers to hire new workers. We must lower the tax burden for all individuals and job creators. Scott Walker Incoming Governor, Wisconsin

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At a time when America is facing economic crisis, Congress should be looking for ways to stimulate our economy through sound, responsible economic development policies. Allowing these tax rates to increase will only hurt our ailing economy by taking more money out of our families wallets. -- Excerpted from Extend tax cuts to all Americans Rep. Phil Roe

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Recent Polls tells us that Americans distrust government. think its too big and doing too many things. dont see how it benefits their lives (even when it has) believe state government could spend less and still provide the same level of services.

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But,.. they (still) ....... are split on whether they prefer more services/higher taxes. .believe programs are important. And, they are worried about consequences And, they are willing to pay more taxes to maintain funding for public schools and health and human services. (Source: Pew, Oct 2010)

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Most recent Sienna Poll found:

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The Government Reform Knot: were all tied up! Government/Economy/Taxes/Budget

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NYS Revenues and Expenditures Where Does the Money Come From and Where Does It Go?

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Taxes in NYS: Inequities in our Tax Structure From Fiscal Policy Institute Report:

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Current Personal Income Tax Rate Structure - with temporary top rates (joint filers): 2009-2011 4% on income under $16K 4.5% on income between $16K and $22K 5.25% on income between $22K and $26K 5.9% on income between $26K and $40K 6.85% on income between $40K and $300K 7.85% on income between $300K and $500K 8.97% on income over $500K

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65 For example, State aid is LESS THAN 43% of the total $46 billion dollar education budget. 65 Source: Fiscal Profiles 2005-06, New York State Education Department

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66 New York ranks 31 st among the 50 states in terms of the states share of funding for public elementary and secondary education. 66 Source: US Census Bureau, Public Education Finances, April 2007, Table 1; Ranking by Fiscal Policy Institute

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67 School tax levies are not alone in driving the property taxes higher. Since 2000, tax levies have grown for all taxing jurisdictions, not just school districts. 67 Source: OSC, Overlapping Real Property Tax Rates.

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68 For many upstate counties, school taxes represent less than half of total property taxes. Source: OSC, Overlapping Real Property Tax Rates. School tax levies (excluding STAR) as a percent of total levies: 2005

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69 New York is one of the few states that asks local governments to pay a share of Medicaid costs. The property tax "burden" related to Medicaid spending varies greatly across counties and the Medicaid cap institutionalizes these disparities.

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70 Property tax issue in New York is complex and often misunderstood. School taxes make up 60 percent of the levy on average but in some counties other costs are driving increases. STAR Exemptions do not reduce school districts levies. Rather they provide for the state to pay part of the levy.

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A NEW NY AGENDA? Governor Cuomos Fiscal Policy Proposals: The DRACUOMIAN Emergency Financial Plan Freeze Taxes. Andrew Cuomo says that he will not raise and will veto any increase in personal or corporate income taxes or sales tax.

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Impose a State Spending Cap. Enact a statutory and constitutional spending cap that limits growth to the rate of inflation. Only in the event of extraordinary circumstances, may the Governor, with the agreement of a two-thirds supermajority of both houses of the Legislature, authorize spending in excess of the cap. State Spending CAPS: A Bad Choice for NYS Colorado is the birthplace of the State Spending Cap. In 1992, Colorado enacted a Taxpayers Bill of Rights (TABOR), a constitutional amendment that limits the annual growth in state revenues and expenditures. In recent years, anti-government groups have pushed spending cap proposals like Colorados in numerous other states. These proposals have gone under a variety of names, such as Tax and Spending Control (Nevada) or Stop Over Spending (Michigan) and now the State Spending Cap in New York. Unfortunately these types of caps can have very negative consequences. Colorados State Spending Cap contributed to a significant decline in public services in Colorado. It resulted in: Colorado declined from 35th to 49th in the nation in K-12 spending; higher education funding dropped by 31 percent; Colorado fell to near the bottom of national rankings in providing children with full, on- time vaccinations; and the share of low-income children in the state who lacked health insurance doubled, making Colorado the worst in the nation by this measure.

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Impose a Property Tax Cap. The Governor is proposing a cap on property taxes for all school districts and local governments, set at the lower of the inflation rate or two percent, whichever is lower, with a 60 percent majority vote needed for an override. Property tax caps have created havoc across the nation in terms of funding local services. Instituting this type of cap would be a particularly bad idea for NYS, especially at a time when the state is looking to cut the state share of spending going to school districts and municipalities. The state is already paying less than the average national share for school aid and continues to shortchange municipalities by reducing local AIM (Aid and Incentive to Municipalities) each year. To think we will be able to reduce property tax burdens by simply imposing a cap is nave and reckless. It is a sound bite solution to a complex tax problem that needs to be addressed based on need.

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Tax caps WILL NOT lower anyones taxes These are caps not cuts. Tax caps WILL NOT ensure that residents taxes wont go up more than a small amount each year Tax caps will do nothing to prevent the property tax increases due to reassessments and tax cap overrides and new fees for essential services which are common place in locales with tax caps. Tax caps WILL NOT help anyone who cant afford their current property taxes People who are unable to pay their property taxes will have no tax burden relief for their current situation. Tax caps WILL make the local revenue system more regressive Tax caps can exacerbate disparities across the state leaving lower-income communities even worse off relative to their higher-income counterparts. Tax caps WILL NOT change the main drivers behind higher property taxes Caps on property taxes do not change the rapidly rising costs facing localities Tax caps cannot slow the increase in the cost of fuel, for example, which reflects forces outside of the control of local officials. Tax caps WILL NOT change the demand or need for local services While residents continue to need all the current local services they received prior to the initiation of tax caps in many circumstances, these caps do not allow local governments to continue their current level of public services, much less make any improvements demanded by residents. State aid to localities may be promised to help localities but this promise is unlikely to be sustained over time, especially during economic downturns. Tax caps WILL impair public safety Tax caps greatly hinder localities ability to maintain the current level and quality of public safety by limiting the locals ability to pay for police and firefighters. Tax caps WILL impair the quality of K-12 public education Tax caps have shown to be the main agent in the deterioration of the public school systems in virtually every state that has imposed these property caps. Tax caps WILL lead to deteriorating streets and roads Tax caps in locales across the country have resulted in poorly maintained and often times dangerous street and road conditions. TAX CAPS WILL NOT SOLVE THE PROBLEM OF HIGH PROPERTY TAXES THEY WILL COMPROMISE THE QUALITY OF LIFE IN NYS

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NYS Budget Timeline: Important Dates and Opportunities Ron Deutsch, NYFF www.abetterchoiceforny.org

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January 2011 State of the State Address: On January 5, 2011, Governor Cuomo will give the annual State of the State address. In this speech he will detail the policies and programs that he would like to put in place to move the State forward. Advocacy opportunity: For organizations working on the budget this is a good time to weigh in on the Governors speech. It is a good time to put together comments from your organization and get them to the LCA Press reporters covering the Capital (http://lcapressroom.blogspot.com/2007/01/press-room-directory.html). Comments should relate to what the Governor was talking about in his speech and should be directed to reporters covering the area of the state that you live in.http://lcapressroom.blogspot.com/2007/01/press-room-directory.html It is also a month long opportunity to meet with the Governors Staff and Division of Budget staff that will be crafting the budget. It is a time to make your case as to why your policy issue/funding/proposals should be included in the Executive Budget Proposal.

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February 2011 Executive Budget Released: Since Andrew Cuomo is an incoming Governor he has until February 1 st to release his Executive Budget (usually it is released in January on the second Tuesday, following the first Wednesday, after the first Monday). The Executive Budget will detail exactly how Cuomo plans to close the $9+ billion budget gap the state will face for the coming fiscal year. He will release both appropriations bills and language bills with his executive budget proposal. Advocacy Opportunity: This is another opportunity to weigh in on the budget document itself. You can either contact LCA Press members with Press Releases (more explanatory and detailed) or Press Statements (statement from a notable figure with in your organizations). If we have detailed information about something objectionable in the budget it is a good time to hold a rally or action to get some press attention to the topic or cause you care about.

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Legislative Budget Hearings: Very shortly after the release of the Executive Budget, the Legislatures joint fiscal committees (Assembly Ways and Means and Senate Finance) will hold public hearings where the State Agency Commissioners and the public will have an opportunity to comment on the proposed cuts contained in the Executive Budget Proposals. Advocacy Opportunity: This is also a good time to get members of your organization to testify at these hearings. You need to register right away as soon as they are announced as speaking slots fill up quickly. If you are unable to get a speaking time this is also potentially a good time to plan an action or rally outside of the hearings. There is always a lot of press at the beginning of the hearings and then it starts to wane toward the end.

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March 2011 Revenue Forecast: Under State finance law, prior to March 1, the Director of the Division of the Budget, the Secretary of the Senate Finance Committee, and the Secretary of the Assembly Ways and Means Committee must issue a joint report containing a consensus forecast of the economy and estimates of receipts. One House Budgets/Resolutions: Sometimes the Assembly and Senate will either issue a complete one house budget (very detailed) or a budget resolution (less detailed and more of an outline). They do not always do this but it is usually useful because it identifies what the priorities of each house are. Conference Committees: While Conference Committees are supposed to occur as part of the budget process they do not always happen. I believe that Governor Cuomo is going to ask for conference committees and may in fact structure his Executive Budget proposal to correspond to the Legislatures pre-established conference committee structure.

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Advocacy Opportunity: March is a critical time for advocacy. If the legislature is preparing one house budgets/resolutions it is very important to try and get your issue/policy/funding into their budget proposals. If you are not in the Executive Budget or the Legislatures budget proposals it is very difficult to become part of the final budget (although nothing is impossible in Albany). March is usually the busiest month at the Capital. It is the time when our elected officials are cutting deals and finalizing budget negotiations. It is the most critical time to lobby/educate on your issues. You need to build a critical mass of support to move your policies issues forward.

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April Whenever? April 1 st : Start of New fiscal year The final Budget is supposed to be adopted by this date. If history is any guide, it is usually not. During this time period budget negotiations can be fast and furious. Often deals are announced multiple times before a final deal is reached. Advocacy Opportunity: If the budget does not pass on time then much of the advocacy described in the March section is still in play. Nothing is done until everything is done in Albany when it comes to budgets.

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Important websites/numbers: Division of Budget: www.budget.state.ny.uswww.budget.state.ny.us Assembly: www.assembly.state.ny.uswww.assembly.state.ny.us Assembly switchboard: 518-455-4100 Senate: www.nysenate.govwww.nysenate.gov Senate Switchboard: 518-455-2800 Fiscal Policy Institute: www.fiscalpolicy.orgwww.fiscalpolicy.org NYFF: www.abetterchoiceforny.orgwww.abetterchoiceforny.org