In proposing a $400 property tax rebate for homeowners, Mayor Bloomberg hopes to mend fences with the kind of middle-class, outer-borough voters whose support he needs to win reelection next year.
But while the rebate may be good politics for an embattled incumbent, it will do very little to spur sustained growth in the city's heavily taxed economy. In fact, it could easily pave the way to even higher property taxes in the future, driving up the city's already sky-high costs and chasing away more jobs.
About three-quarters of last year's $1.8 billion property tax hike was paid by businesses, utilities and apartment building owners who won't collect a penny from the mayor's plan. Even those who qualify won't be treated fairly. Four hundred bucks is an arbitrary figure reflecting last year's average increase for owner-occupied homes, not what the vast majority of homeowners actually paid.
Worse yet, Bloomberg's plan will invite further manipulation, because he wants to make the rebate a permanent feature of the property tax, which the City Council could increase or decrease at will.
If that is okayed by the Legislature, city politicians will have a new way to shield themselves from homeowner backlashes like the one that followed the 2002-03 property tax hike. The mayor and Council could raise the property tax rate a little bit every year, jack up the rebate enough to keep homeowners from squawkingâ€”and leave other property owners saddled with higher bills.
In a political role reversal, Council Speaker Gifford Miller has been the voice of reason in this debate. Miller is backing an across-the-board property tax rate cut that would benefit every class of taxpayer.
The billionaire mayor has been promoting his plan with the sort of class-warfare rhetoric more typically heard from Miller's Council colleagues. The speaker, for once, has been making more sense. "We shouldn't leave businesses and renters to shoulder the burden of higher property taxes by themselves," he told a corporate audience.
Too bad Miller isn't putting more money where his mouth is. His across-the-board cut would shave just 2 points off last year's 18.5% rate hike.
It's clear the city could and should be doing much more to reduce property tax rates across the board. But the mayor is predicting a huge, $3.8 billion gap for the fiscal year that begins just over a year from now. Unless he and Miller work harder to reduce the growth in spending, taxes in the near future will be heading up, not down.
Bloomberg deserves credit for putting the tax cut issue front and center, moving at least a small amount of money off the spending side of the ledger. But in stubbornly insisting on a tax giveback gimmick instead of a real tax rate rollback, he is putting his own short-term political interest ahead of the city's long-term economic growth.