Posted: 09 Jan 2011 07:27 PM PST

Gov. Andrew Cuomo has made a property tax cap a centerpiece of his agenda, but the controversial measure continues to face questions in the Democratic-led Assembly, where members are voicing concern over its impact on schools and local governments.

The debate over Cuomo's proposal to limit the growth in property taxes to 2 percent a year comes as he is pushing hard for the cap early in his administration, saying that New Yorkers can no longer deal with taxes that are among the highest in the nation.

The measure has wide support in the Republican-controlled Senate, which under the GOP and Democratic control has passed a 4 percent tax cap several times in recent years. But it faces a more uncertain fate in the Assembly, which is heavily supported by teacher unions that oppose the cap.

Some Assembly members said that a hard cap would be crippling to schools, which account for about 60 percent of a homeowner's property tax bill. Schools and local governments say they would be unable to abide by Cuomo's cap -- which would be 2 percent a year or the rate of inflation, whichever is lower -- without significant mandate relief from the state, such as lower pension and health care costs.

"A lot of people are very concerned about it. They know a straight cap will be extremely harmful to public schools," said Assemblywoman Barbara Lifton, D-Ithaca.

Others say a tax cap would increase the disparity between wealthy and poor school districts. Cuomo's plan would allow communities to override a tax cap with 60 percent of the vote in a referendum, which would be more likely in richer places.

"What we are doing is condemning every district that is considered needy right now to be needy forever," said Assemblyman Gary Pretlow, D-Mount Vernon, Westchester County.

It takes 76 votes to pass a bill in the 150-member Assembly.

A tax cap "will be an important first test for the new administration," said Assemblyman Joseph Morelle, D-Irondequoit, Monroe County, a Cuomo ally and tax cap supporter. "I think there's a lot of movement to getting it done -- public support in both houses, support by the governor. The timing seems right."

(2 of 3)

The property tax cap, which polls show is popular among voters, is also apparently becoming tied to another issue: rent control regulations in New York City.

Assembly Speaker Sheldon Silver, D-Manhattan, and other Democratic lawmakers indicated in recent days that a tax cap needs to be part of a larger discussion about affordable housing for all New Yorkers, including in New York City where rent costs are generally a more pressing issue than property taxes. Rent regulations expire this year.

"I think we're all hopeful that in addition to addressing property tax relief, which is a necessary and pressing concern, we will also be able to have a broader conversation about preserving and creating affordable housing in the city of New York," said Assemblyman Hakeem Jeffries, D-Brooklyn.

Silver indicated in his remarks Wednesday at Cuomo's State of the State address that he will work with the Democratic governor to cap taxes. But his responses since then have been less emphatic.

"I believe that property taxes are too high in this state and they should be reduced," Silver told reporters after the speech. "There are a number of ways that has been proposed and I believe that we can come to an agreement with this governor and the Senate."

Another battle looms over what costs should be exempt from a tax cap. For example, pension and health care costs in New Jersey are exempt from the 2 percent cap it passed last year.

Cuomo's proposal would not exempt those mushrooming expenses. As a result, governments said they would unable to live under a cap without the state picking up additional costs or offering relief from state-imposed mandates, such as Medicaid and social services.

A report last month from the Empire Center for New York State Policy found that pension costs alone in the coming years would equate to a yearly property-tax increase of about 3.5 percent.

"If his main item, the 2 percent property tax cap, is put in place without some mandate relief, we're in real trouble," said Binghamton Mayor Matthew Ryan.

(3 of 3)

Cuomo has pledged that a tax cap would be coupled with mandate relief. To drive home that point, he has formed a Mandate Relief Redesign Team, made up of government, business and union leaders.

The group, which held its first conference call on Friday, includes Monroe County Executive Maggie Brooks; Sen. Andrea Stewart-Cousins, D-Yonkers; Assemblyman Marcus Molinaro, R-Tivoli, Dutchess County; and Westchester County Association president William Mooney.

"The enormous burden of unfunded and underfunded mandates is breaking the backs of taxpayers, counties and municipalities across the state," Cuomo said Friday in a statement. "These mandates are throwing budgets out of balance and sending local property taxes through the roof."

But that group isn't expected to report its findings until at least March 1, perhaps after Cuomo would want a tax cap adopted in the Legislature. That has drawn the concern of some lawmakers as well, saying it would be difficult to vote for a tax cap without knowing if it's tied to larger cost savings.

"If it's not coupled with some means by which our districts can actually save (money), it doesn't seem like an entirely responsible approach," said Assemblyman Kevin Cahill, D-Kingston.

Some Assembly members and unions prefer a circuit-breaker program, which would tie property taxes to household incomes. But that proposal comes with at least a $1 billion price tag at a time when the state faces a roughly $10 billion budget gap next fiscal year, which starts April 1.

In another approach, Cahill introduced a bill Thursday that would allow BOCES to expand its regional services to lower costs for schools. His plan also includes moving away from property taxes as the major source of revenue for schools to an income-tax-based model.

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Emerging Markets Report: China cities plan new luxury-property tax: report

Posted: 09 Jan 2011 10:05 PM PST

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) — A new luxury-property tax will soon be imposed in one of China's largest cities, according to a state-media report over the weekend, a move which other municipalities may follow, as the nation grapples with a steep climb in property prices.

Authorities in the southwest Chinese city of Chongqing will likely approve the new tax on "high-end houses" before April, the official Xinhua news agency reported Sunday, though further details weren't available.

The central government is backing the new tariff, the first of its kind since China's return to a market economy, but Beijing will leave it to local authorities to fine-tune how the tax should work, Xinhua reported.

South Korean won, India prices

South Korean authorities are moving toward restricting capital flows in and out of the country, while India's government will need to tackle rising food prices.

Hastened efforts are underway to draft legislation for the new tax, Xinhua reported, citing unnamed sources within Chongqing's municipal government.

Shanghai is working on a similar measures which will target selected second homes and is which is likely to be implemented sometime in the first quarter, according to local reports.

Beijing's municipal authorities are also deliberating whether to impose a property tax to rein in surging housing prices, the report said.

Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.

China may launch first-ever property tax in Q1

Posted: 09 Jan 2011 06:38 PM PST

SHANGHAI/BEIJING (Reuters) – China is set to further clamp down on the country's buoyant housing market by imposing a long-debated property tax for the first time in the southwestern city of Chongqing, domestic media reported on Monday.

Chongqing has "in principle" won approval from the Ministry of Finance and may introduce the property tax as early as this quarter, the China Securities Journal cited the city's government as saying.

Analysts expect the tax to be about 1 percent, the Journal said.

China has debated for many years about having a property tax but held back out of fears it may seriously harm the market.

Domestic media reports in recent months suggest, however, that China's government is finally warming to the idea and may impose a property tax on a trial basis in several cities including Chongqing, Shanghai, Beijing and Shenzhen.

The China Business News said on Monday that Chongqing is likely to only tax high-end properties, in contrast to Shanghai, which reportedly will only tax selected second homes.

China has taken a slew of measures to cool its red-hot property market since late 2009 as part of efforts to fight speculative "hot money" flowing into the country.

Despite the measures, house prices in China's major cities soared by more than a fifth last year.

Analysts welcomed the tax as a way to restrain the market.

"Conditions are now right to start levying a property tax and China should launch it as soon as possible," the China Securities Journal quoted the State Information Center, a government think tank, as saying.

The center forecast China's home prices may ease this year, and predicted the government will jack up down payment requirements and mortgage rates if property prices rebound.

The official People's Daily, a mouthpiece of the Communist Party, said likewise.

"Overall, property policies in 2011 will remain tight," the paper said. "If economic conditions improve, property policies could even tighten."

Underlining the property market's buoyancy, the State Information Center predicted property investment will grow over 20 percent this year, driven by robust demand and big profit margins in the industry.

Property investment jumped nearly 37 percent in the first 11 months of 2010 from a year ago.

(Reporting by Lu Jianxin, Langi Chiang and Kazunori Takada; Editing by Koh Gui Qing and Ken Wills)

Property Tax

Monday, January 10, 2011

“Property tax cap faces fight in State Assembly” plus 2 more

“Property tax cap faces fight in State Assembly” plus 2 more

South Korean won, India prices

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