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LAWSUIT CHALLENGING NEW YORK TAX CAP REACHES COURT

January 6, 2014

Arguments over the constitutionality of New York’s local property tax cap have reached an Albany courtroom. Lawyers for the parents and taxpayers, who are protesting the harm caused to schools by the tax cap, faced off against the New York State Attorney General on December 19. The outcome of this case, to be decided by Judge Kimberly A. O’Connor, will have a major impact on how schools are funded in New York, particularly in the state's poorest districts.

The Campaign for Fiscal Equity Project at Education Law Center filed a brief in support of the plaintiff parents and taxpayers on behalf of the Alliance for Quality Education. AQE is the leading advocate for fair and equitable funding for all New York schoolchildren.   

In 2011, New York passed a law limiting local property tax increases to support schools to 2% per year. This limitation compounds the harm caused by the State’s ongoing failure to adequately fund its Foundation Aid Formula, which was enacted in 2007 in response to the landmark Campaign for Fiscal Equity (CFE) rulings. Instead of funding the Formula, the State has shortchanged New York schools by over $7 billion. Districts have lost core teachers and cut essential programs, including extra help for at-risk children, science courses, Advanced Placement classes, sports, and the arts.

The 2% tax cap not only prevents districts from mitigating the deficiencies caused by the State’s underfunding of the 2007 Formula, it also disproportionately harms low-wealth school districts. A 2% tax increase in these communities generates far less money for schools than the same percent increase in wealthier districts with high property values. The only way for a district to raise additional local funds is to override the cap by a 60% vote, or a super-majority. Since the cap went into effect, only a tiny fraction of districts has succeeded in passing an override.

Assistant Attorney General Stephen Kerwin defended the cap as a response to the “explosion” of property taxes in the state, but did not address the damaging effects the cap has on school districts across the state.

The plaintiffs’ lawyer, Richard Casagrande, highlighted the regressive impact of the cap. In a wealthy district, 2% yields on average a $713 increase per student, while in a poorer district 2% yields only $124 per student. As Casagrande noted, allowing wealthy districts to raise more local funds while limiting poor districts to miniscule increases is akin to telling the hungriest children they get the least food.

“The 2% cap adds insult to injury,” said Billy Easton, AQE Executive Director. “Districts that have not received the funding they are entitled to under the Foundation Formula have been cut off from the only other option available to them to obtain the resources they so desperately need. The harm this is causing to students, especially those most at risk, is enormous.”

Governor Cuomo recently embraced the recommendations of his Tax Relief Commission, headed by former Governor and CFE defendant, George Pataki, to increase the cap’s penalties. The Commission proposed a tax rebate to homeowners – which would cost the state a total of $1 billion – as long as their jurisdiction does not override the 2% tax cap.

Under the Commission's proposal, if a district’s voters decided they must override the cap in order to stem the loss of basic and essential educational resources, the new tax “benefit” would punish them.

“In the context of the gaping $7 billion state aid shortfall, punishing those districts trying to close the funding gap they face is unconscionable,” said Wendy Lecker, Senior Attorney for the CFE Project. “Instead of even more devastating funding cuts, New York's schoolchildren need Governor Cuomo to change course and do two things: make a firm commitment in the FY15 state budget to restart a multi-year phase-in of state school aid under the 2007 Formula and propose, at a minimum, to relax the property tax cap in those districts spending below the levels necessary for a sound basic education.”

The Campaign for Fiscal Equity Project will continue to work with AQE and community partners across the state and New York City to ensure that the mandate of adequate and equitable school funding at the levels set by the State in the 2007 Formula becomes a reality for all children across the state.

 

Related Stories:

NY SCHOOL REVENUE CAP ADDS TO FUNDING INEQUITIES

 

Press Contact:

Sharon Krengel
Policy and Outreach Director
skrengel@edlawcenter.org
973-624-1815, x 24