In 2013 the State imposed a “Tax Cap” on Allegany County (and all other NYS municipalities). At the time Governor Cuomo declared that local governments must learn to “live within their means.’ The Governor’s comments represent extreme hypocrisy. Most local officials don’t want to raise taxes or spend more money. The problem is that they don’t have control of their budgets. NYS controls almost every aspect of local government operations. NYS dictates what we must spend money on, and also dictates how much we must spend. Of course, the Governor ignores those “insignificant” details.

The hypocrisy regarding “tax caps” is explicit, but is usually missed or ignored. The state-mandated “tax cap” that applies to local municipalities is a cap on how much revenue each county, town, village, and school district can raise from real property taxes each year. That “cap” was supposed to increase by 2.0% each year. However, the formula that NYS established has never actually been that large. The allowable rate of increase has been significantly lower. The annual increases have been 1.7% in 2014, 1.6% in 2015, 0.7% in 2016, and will be 0.4% in 2017.

The State has boasted that it must live within its own “tax cap.” The hypocrisy is that NYS has established a totally different type of “cap” for itself. It has established a “State spending cap.” That cap has existed since 2013. However, the State’s spending cap works very differently. For example, the State uses a 2.0% growth factor regardless of the actual rate of inflation. The State also uses its “operating funds budget” as the threshold for applying the 2.0% limit. This allows actual growth to occur at a 6.5% annual rate. The State “Spending Cap” excludes capital project expenditures. The municipal “Tax Cap” doesn’t contain any similar exclusion. Finally, the State “Cap” excludes anything that it defines as “extraordinary costs.” The County isn’t permitted to do that.

Perhaps the biggest difference is that the State “Spending Cap” is entirely voluntary. It simply represents what the State intends to do. As noted above, the State can (and does) exceed that Spending Cap annually for extraordinary expenses. There needs to be flexibility in the system to permit the State to respond to truly unexpected circumstances. However, local municipalities also have emergencies and unanticipated expenses. The hypocrisy is that the State operates on a double standard.

The hypocrisy only grows when you consider that NYS requires local governments to contribute to “State” programs that every other state fully funds. For example, last year counties and NYC contributed more than $12 Billion to support Medicaid and public assistance social welfare programs. School Districts raised another $35 Billion in local school taxes for public education costs.

Local governments are facing increased costs, many of which are imposed by NYS or the federal government. Obamacare now requires employers (including local governments) to insure dependents of employees up to age 26, rather than until they turned 18 or were emancipated. This has driven up healthcare costs. Mandated contributions to the State Retirement System have increased. This year NYS significantly raised the minimum wage rate. This will result in higher personnel costs. Last January (2106) Governor Cuomo issued an Executive Order requiring all counties to provide shelters for the homeless if temperatures drop below freezing. Of course, NYS didn’t provide any funding to help pay for this new mandate.

Since 2008 the federal government has dramatically increased its payments to the states to help them pay for increased costs for federally mandated social programs. This money helped NYS balance its budget and stay within its “Spending Cap.” That extra money could have been passed down to the counties that are actually paying for many of these programs. That hasn’t happened. Last year 86% of the counties (including Allegany County) kept under the “Tax Cap.” If NYS continues to operate on its double standard this will become harder and harder to achieve.


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