"Unshackle Upstate": A Petition to the Local Warden Might Be More Effective

"Unshackle Upstate” is a coalition of business groups that are interested in changing the business climate of Upstate New York, specifically in lowering the cost of doing business. Their motto, “we want our economy moving; not our people,” is a message we can all agree with.

But their most recent lobbying effort, in favor of a property tax rebate for businesses, might not achieve the reform they seek. Similar to New York State’s school tax rebate program, known as STAR (read more about it here), the Unshackle Upstate plan would partially reimburse businesses for their property taxes.

That would simply shift the burden from local taxpayers to state tax payers. It uses state funds, derived from state tax dollars, to offset a portion of local tax dollars. It’s all tax money. As we have said in previous posts, these abatement or refund programs are okay, but the real break will come from lower tax rates in the first place! (See "Not All Property Tax Relief is Created Equal" and "A Tax Exemption Would Be Good, but a Lower Tax Rate Would be Better").

According to a recent Rochester Business Journal article (read it here), the coalition is looking to reduce energy prices and eliminate franchise taxes. They are also looking for better economic development policies related to brown fields redevelopment and workforce investment efforts. These are all laudable goals. However, if you remember the economic development discussion hosted by Dan Gundersen on public television stations across the state (read "Does Gundersen Have the Prescription for Geneva?") members of Unshackle Upstate and related groups all spoke first and foremost about the chilling effect of high property taxes on growth of existing businesses and attraction of new ones.

So that makes us ask, if Unshackle Upstate is looking for state government to fix the problem, and if the biggest part of that problem is local property taxes, couldn’t state and local government work together on significant and sustainable property tax reform?

For instance, the largest expenditures in city budgets across upstate New York are for road work, public safety, and personnel expenses. Take the Rte. 14 road reconstruction projects as local examples of these costs. Both the South end (South Main Street) and the about-to-be-completed North end (North Exchange Street) are designated NYS truck routes. Wear and tear on the road is, arguably, due more to thru-traffic than to local travel. However, while the City of Geneva is required to bring them up to State standards, the City is not reimbursed 100% for the costs of upgrading those roads. It’s a classic unfunded mandate: they say do it and make us pay for it. They even require State DOT engineers to design the project for us.

Instead of tax abatement programs that benefit only a few businesses, lobbying efforts should focus on higher state reimbursement for State road work, the arteries that move commerce (literally). By reducing those costs for local municipalities, the State would be reducing the amount needed to be raised through local property tax, again benefitting businesses and residents alike.

We believe that the NYS Commission on Local Governments has done a lot of good work in identifying the factors that contribute to high property taxes in Upstate cities. Efforts to lower taxes would not only lower the cost of doing business but it would also build more consumer wealth, as residents would also feel relief and hopefully increase their disposable income. Making cities viable places to work and live is a long term strategy for reinvigorating the upstate economy