@SSFC_NYS

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1 #NYSchoolsinPeril State Aid & New York State Public School Districts You call this Tax Relief? What should we call it? The Old Bait and Switch? Robin Hood in Reverse? An Analysis of Data Dr. Rick Timbs Executive Director Statewide School Finance Consortium March 24, 2014 R. G. Timbs Advisory Group, Inc. 2014

2 Governor Cuomo Announces Plan to Provide More Than $2 Billion in Tax Relief to New York's Families and Businesses State Transformed from $10 Billion Deficit to Projected $2 Billion Surplus Package Continues to Increase Economic Opportunity by Reducing Taxes and Attracting Businesses Albany, NY (January 6, 2014) SSFC comments in RED 2-Year Freeze on Property Taxes Governor Cuomo s proposal will freeze property taxes for two years, subject to two important conditions. In year one, the State will only provide tax rebates to homeowners who live in a jurisdiction that stays within the 2% property tax cap. How can that be done if the State Still owes school districts $1.639 billion? In year two, the State will only provide tax rebates to homeowners who live in a locality that stays within the cap and also agrees to implement a shared services or administrative consolidation plan. School districts we have been consolidating services for years and laying off staff. Can that continue unabatedly? The freeze will not apply to New York City, which does not have a property tax cap. How convenient. Once fully implemented, this tax relief proposal will provide nearly $1 billion in relief with an average benefit of approximately $350 for nearly 2.8 million homeowners. Do you know what the definition of average is? Property Tax Circuit Breaker Under the property tax circuit breaker proposal, 1.9 million low- and middle-income taxpayers pay an effective real property tax rate relative to income that exceeds their income tax rate. To help these individuals and families, Governor Cuomo proposes that the State provide tax relief based on a taxpayer s ability to pay. Households earning up to $200,000 would be eligible and the benefit would be administered as a refundable tax credit against the personal income tax with an average benefit of approximately $500. While the credit would be available statewide, in areas outside of New York City, only residents of jurisdictions that adhere to the property tax cap would qualify. This credit would be worth $1 billion in tax relief when fully phased in. Source: But who will really get most of this this money? Easy, the wealthiest New Yorkers!

3 Here s how it works- For purposes of this Levy Rebate Model the tax levy has been used from the Property Tax Report Card submitted in the Spring of 2013 and multiplied by the tax levy limit of 1.46% for the to secure a hypothetical but realistic distribution of the tax rebate amount and the benefit to the School District Community when compared to the current GEA. Conclusion- If the Tax Rebate is based on a Tax Cap % of Tax Levies : The residents of every average and below average wealth school district in NYS will get less than their WEALTHIER counterparts, and Wealthier school district residents will receive a tax rebate IN EXCESS of their school district s Gap Elimination Adjustment (GEA or state aid cut) Simultaneously, Average and Lower Wealth school districts residents will receive LESS per student and still have their significant GEA to contend with into the foreseeable future. In this model, each of the wealthier school districts above would see a Total Local Net Loss or Gain per Student and a Total Net Loss or Gain per Student in the positive that is the Tax Rebate would exceed their GEA based on a percent of Tax Levy calculation. The same would be true for all High Wealth and Low Poverty school districts in NYS. All with money from the state coffers. It s Robin Hood In Reverse!

4 By contrast In this model, here s the Lowest wealth school districts in NYS. It is clear how badly they would lose in the Tax Rebate proposal under consideration now The loss indicated here is based on the Total Local Net Loss or Gain per student column. The same condition could be said for all low wealth and average wealth school districts as well as all high poverty to average poverty school districts. This is just plain WRONG! The Tax Rebate proposal is UNACCEPTABLE!

5 How come every time State Government comes up with a way to lower taxes, save money or help people out Lower and Average wealth school districts are always left holding the bag? Don t the kids in these school districts matter? This Tax Rebate proposal creates a bigger inequity problem the Tax Rebate proposal takes $400 million (or $800 million) out of the state budget that should be used to improve school finance equity and distribute it in a way that sends the largest per pupil amounts to the neediest districts. CWR Decile 1=Poorest 10=Wealthiest FRPL Decile 1=Poorest 10=Wealthiest

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8 FRPL (Free and Reduced Price Lunch) Measure of Poverty 1=Poorest 10=Wealthiest FRPL AVERAGE PER DECILE

9 FRPL AVERAGE PER DECILE FRPL (Free and Reduced Price Lunch) Measure of of Poverty 1=Poorest 10=Wealthiest