In Race for Republican Gubernatorial Nomination, Faso Proposes Doubling Relief on School Tax

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The New York Sun

ALBANY – John Faso, an upstate Republican who is vying for the party’s nomination for governor, is proposing to double the size of one of Governor Pataki’s pet programs, a property tax exemption that shifts school costs to the state income tax base.


Mr. Faso’s plan, which the candidate announced yesterday, is heavily influenced by Mr. Pataki’s multi-billion-dollar strategy to reduce school property taxes. Mr. Faso said he would double the tax exemptions under Mr. Pataki’s STAR program, short for school tax relief, under which the state pays a part of homeowners’ property taxes. He would also give New York City an additional $700 million, shaving a little off of the tax bills of city residents.


In most counties, the state offers at least a $30,000 exemption from the full value of a home. Mr. Faso, over a period of four years, would lift the basic exemption to $60,000. The plan would also apply to wealthier suburban counties that have larger STAR exemptions, like Nassau, Westchester, and Rockland. Mr. Faso would also double the higher exemptions given to senior citizens earning less than $66,051.


School property taxes are a hot issue in the governor’s race. Democratic can didate Thomas Suozzi, the executive of Nassau County, is telling voters that he will cut their property taxes by reducing Medicaid spending. Republican William Weld, a former governor of Massachusetts who is running neck and neck in the polls with Mr. Faso, wants to limit school property taxes to 2.5% of total valuation and limit growth in the tax to 2.5% a year.


Attorney General Eliot Spitzer, the Democratic frontrunner in the race, has yet to outline a plan. A campaign spokeswoman, Christine Anderson, said Mr. Spitzer would unveil specific tax proposals in coming weeks and months. She said: “Eliot believes property taxes have become a crisis for homeowners.”


She also said Mr.Spitzer supports giving parents tax credits to help them “expand their children’s school choice or to supplement their children’s education via tutoring or after-school programs.”


Lawmakers and the governor are debating whether to give parents such an education tax credit. Mr. Pataki wants a tax credit plan that is targeted at educational expenses, like tuition and tutoring. The Democratic speaker of the Assembly, Sheldon Silver, opposes linking tax credits to tuition. The Republican Senate majority leader, Joseph Bruno, who met yesterday with the bishop of Brooklyn, Nicholas DiMarzio, told the Associated Press that he might be willing to support the governor’s position. “We want the dollars to be used for education, and that’s where we are,” he said.


Mr. Faso, a former minority leader in the Assembly who left office in 2002, is the first candidate to link relief to an expansion of Mr. Pataki’s STAR program, which the governor started in 1997 and which will likely cost the state more than $4 billion this fiscal year.


By year four of Mr. Faso’s plan, the state would be spending almost $7 billion on the program. He said he expected that economic growth in the state would pay for most of the added costs. “Historic revenue growth over the next number of years will more than accommodate the anticipated increases in the STAR exemption,” he said. In a separate interview, he added: “You don’t have a crystal ball, but we do have historical trends.”


The similarities to Mr.Pataki’s policies go deeper than just the STAR proposal.


The candidate would put a cap on school property taxes at 4% or the rate of inflation, whichever is lower. There are exceptions to the cap: Voters could override it with a two-thirds majority, and districts could tax more if their student enrollment increases.


The cap is much like the one Mr. Pataki called for in his 2006-2007 executive budget. The governor proposed giving $400 school tax rebates to residents in school districts – excluding New York City – that limit spending increases to 4%. The Legislature in the budget passed last week rejected the spending cap.


Mr. Faso said the tax limits he would impose on school districts would be accompanied by changes to statutes that would reduce labor and construction costs. For instance, he would repeal the Wicks Law, a decades-old statute that forces public agencies to award separate construction contracts for electrical, plumbing, and heating, ventilating, and air conditioning. Critics say the law drives up costs by creating inefficiencies.


A repeal of the Wicks Law is a perennial feature of Mr. Pataki’s annual budgets. Every year, lawmakers decide against touching the law, which is strongly backed by labor unions. Mr. Faso said he would be able to persuade lawmakers to eliminate the law.


He said he would also give school districts more leverage in labor negotiations by allowing them to change the terms of collective bargaining agreements after they have expired.


Mr.Faso’s school tax plan got a mixed reaction from budget watchdog groups.


A conservative budget analyst, E.J. McMahon, director of the Empire Center for New York State Policy, an Albany-based branch of the Manhattan Institute think tank, said he supported the school spending caps and the efforts to reduce costs for districts, but questioned the wisdom of expanding Mr. Pataki’s program.


He said STAR “does nothing” for commercial property owners. And he disputed the notion that the program is a tax cut because, he argues, it simply shifts school tax burden away from the local property tax base to the state income tax base. “STAR does not cut taxes,” he said. “STAR cuts checks.”


The executive director of the liberal Fiscal Policy Institute, Frank Mauro, said Mr. Faso’s would widen the perpupil spending gaps that exist among counties. Residents living in wealthier districts benefit more from the program than others. Also, he said, the spending cap wrongly “assumes that the current spending by school districts makes sense.” The cap, he said, would not only prevent the poorer districts from catching up with richer ones, it would leave them further behind.


In response to the criticism, Mr. Faso told The New York Sun: “There certainly is a valid point about STAR being an imperfect device when it comes to the equity question.But I think that is overcome by the rather large need to reduce school taxes broadly speaking.”


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