The push to reform New York City’s property tax system is a zero sum game that has various types of home owners, developers, investors, and even renters jostling with each other for a leg up.

The commission formed to update the city’s complicated tax structure for the first time in more than 20 years is instructed to make any proposals “revenue neutral.” That means tax cuts for one group have to be balanced with increases for another group—places in Staten Island pitted against Manhattan; condo owners versus investors; even a state assemblymember against Mayor Bill de Blasio over whose cuts get offset with increases.

“If you’re going to keep the revenue the same, roughly half the people are going to be winners and half are going to be losers,” Mark Willis, a policy fellow at New York University’s Furman Center for Real Estate and Urban Policy, told Bloomberg Tax. “Potential losers tend to be more motivated to object to the change, making for a difficult political fight.”

The system has also generated significant differences in tax bills within classes, as a maze of caps and exemptions limit increases and favor owners in neighborhoods where property values are surging. That has owners in places like Staten Island and the Bronx complaining that their effective tax rates are a much larger percentage of their property’s value than for homes and commercial space in Manhattan and Brooklyn that could fetch a bigger price tag on the open market.

“That makes it incredibly challenging,” Ana Champeny, a researcher at the nonprofit Citizens Budget Commission and former city Finance Department tax analyst, told Bloomberg Tax of the disparities. “We say the owner-occupied properties should have the lowest tax burden overall, but if you were to reduce some of the differentials you’re likely going to need to increase the share of the levy for some of those owners.”

Should people making more than $200,000 be subsidized by their landlords? That is a question facing state legislators, Gov. Andrew Cuomo and Mayor Bill de Blasio as they accelerate their crusade to expand rent regulation in the city.

A new report by the Citizens Budget Commission focuses on the benefits rent regulation offers for some lucky high earners. The 28,377 households with incomes of at least $200,000 save $271 million a year on rent—an average of $13,754 apiece.

Another 70,403 households with substantial incomes (at least $125,606 for a single person and $161,495 for a family of three) also received significant subsidies from their landlords thanks to state law.

These statistics illustrate the most fundamental flaw in rent regulation: It is not based on need. While many low-income families live in rent-regulated units, so do lots of well-off people, especially in Manhattan.

These numbers are important because the major item on the Albany agenda is ending vacancy decontrol of high-rent units, a move that would benefit affluent New Yorkers. The CBC notes that just about two-thirds of people moving into units costing $2,000 or more a month were upper-and middle-income families. Helping them will do nothing for affordability or those New Yorkers who need help the most.

(The CBC's analysis includes only units built before 1974, which represent 90% of rent-regulated units and would be the ones affected by ending vacancy decontrol. The other 10% probably include about 6,400 more households with incomes of $200,000 or more.)

Rent reforms that Gov. Andrew Cuomo and state lawmakers have vowed to take up this legislative session will do little for New York's most vulnerable tenants, according to a new report from the Citizens Budget Commission.

The fiscally conservative think tank argues in a new policy brief that the state's rent-regulation system benefits thousands of upper-income households that don't need tenant protections. Reforms favored to pass this year would largely benefit those households, the organization says, rather than improving housing affordability for the most rent-burdened tenants.

The state rent laws that govern nearly one million rent-regulated apartments in the city are up for renewal this June. Housing advocates and left-leaning politicians have long called for changes to provisions that permit rent hikes and allow rent-stabilized apartments to leave the system once they reach a certain rent threshold, a practice called vacancy decontrol.

New York Mayor Bill de Blasio says he’s turning the city into a model for how the nation can provide health care to all, including the poor, the uninsured and undocumented immigrants.

In doing so, he boasts he’s saved the city’s public hospitals from bankruptcy and can provide universal care for just $100 million by steering New Yorkers away from emergency rooms and into managed-care clinics. Yet he may have promised more than he can deliver.

The system of 11 hospitals – which already provide free care to the uninsured – costs taxpayers more than $2 billion a year, while scheduled federal Medicaid cuts threaten another $1 billion or more in the next year. Those pressures may far outstrip the savings he expects to reap from his proposal, according to private and government analysts familiar with the agency known as NYC Health + Hospitals.
De Blasio and other administration officials have declined to discuss the hospital system’s finances ahead of his fiscal 2020 budget proposal next month. Since 2013, when de Blasio took office, the city’s total funding for the hospital system has grown to about $2.1 billion from $1.3 billion, and is projected to reach $2.2 billion by 2020.

Its finances could also be worsened by an economic downturn reducing New York’s tax revenue, said Charles Brecher, research director at the Citizens Budget Commission, a business-supported fiscal watchdog. “Society has a stake in this not just because we are humane, but because this safety net is crucial to our public health,” he said.
Another goal: increasing enrollment in a health insurance plan called MetroPlus owned by the city’s public-hospital system, which de Blasio is seeking to expand to 300,000 uninsured New Yorkers.

Katz’s gambit may fail as the public hospitals operate with insured patients choosing private hospitals. H+H’s North Central Bronx Hospital had a 54 percent average occupancy in 2017. Berger and Brecher say any plan to save the system should include closing such underused hospitals, a proposal that has a history of inciting so much neighborhood and union outrage, mayors, including De Blasio, have ruled out this option.

Rivers Casino & Resort in Schenectady could offer sports betting under preliminary rules approved by the state Gaming Commission.

The Gaming Commission on Monday approved the draft rules for sports betting. Under the rules, bets would have to be placed in person at one of the state's four licensed privately-owned casinos upstate.

New York state could see between $170.4 million and $591.3 million in total fiscal impact and 3,200 to 12,000 jobs created from making sports betting legal, depending on the availability of sports gambling and the tax rate, according to an estimate in a 2017 Oxford Economics study.

Researcher Tim Sullivan has cautioned the state may not see that much revenue off sports betting, though. Sullivan is a senior research adviser at the nonprofit, nonpartisan Citizens Budget Commission.

While the illegal sports betting market in the U.S. is estimated to be $150 billion annually, Sullivan said the state would likely see far less revenue than that.

"What would come to governments locally and throughout the country is significantly lower than that," Sullivan said.

Mayor Bill de Blasio announced a plan to improve capital project delivery at the Department of Design and Construction, New York City’s leading construction management agency.

According to de Blasio, the plan could trim construction costs and project timelines to deliver essential public works projects faster and within budget.

The center's report in 2017, "Slow Build," said infrastructure projects for libraries and cultural institutions that DDC manages take much longer to complete and cost much more than similar capital projects that the institutions themselves or other governmental agencies manage.

Within the report, an analysis of 144 DDC-managed capital projects by watchdog Citizens Budget Commission showed the median capital project took more than four years to complete and 17 lasted more than seven years.

Gov. Cuomo’s move to shore up the rent laws is terrible news for city housing.

Cuomo is calling for the end of vacancy decontrol — i.e., laws that let landlords turn regulated “luxury” apartments into market-rate units. He also wants to limit how much they can legally tack on to regulated rents to cover the cost of improvements. And he’d limit security deposits to no more than one month’s rent.

This lets the gov pose as a champion of the little guy, but it’ll just hasten the decline of buildings whose owners struggle to make ends meet. It’ll also further tighten the city’s already squeezed-to-the-gills housing market and drive up unregulated rents.

As Citizens Budget Commission research has found, “rent regulation leads to housing that is less well maintained.” Building owners who can’t pass on costs (for maintenance, insurance, taxes, upgrades, etc.) will have a harder time paying their bills. So they’ll cut back on fixes and improvements, or worse, abandon buildings altogether. In the 1960s, rent laws led city landlords to abandon more than 100,000 units.

Under Mayor de Blasio, the city’s Rent Guidelines Board has been keeping rents flat, cutting into landlords’ margins. Now Cuomo wants to prevent more owners from escaping the rent caps — so more of them will become financially jammed.

Fact is, few policies have been as destructive to the city as rent regulation. Not only has it spurred the decline of some buildings; it also prompts tenants to stay in units they no longer need. And it’s deprived the city of property-tax revenue to the tune of hundreds of millions a year, the CBC says, by depressing the value of buildings.

Most pathetic: Regulated units aren’t even reserved for the poor; stories of rich celebs paying obscenely low rents are common. So what’s the point?

Count this as one more way Cuomo is playing politics at the city’s expense.

New York state’s millionaires tax, which is about to expire, presents a complicated mix of policy, fiscal and political choices.

While progressives want sharply higher taxes on the rich, New York has become excessively reliant on their taxes. As the Citizens Budget Commission spotlighted in its analysis of Gov. Andrew Cuomo’s latest budget proposal, which calls for a five-year extension, the top 0.6% of taxpayers pay 40% of the income tax (about $20 billion). These very rich people's income is largely capital gains, which makes it volatile, and they are now paying much more in federal taxes because of the cap imposed last year on state and local tax (SALT) deductions.

"Extending the higher rates would make New York less competitive and make its personal income tax revenues more susceptible to economic downturns," the analysis argued. By "less competitive" the budget watchdog meant encouraging wealthy people to move to other states.

But the state clearly needs the money. The tax generates about $4 billion a year by levying an 8.82% rate on single filers earning more than $1 million and married couples earning more than $2.1 million.

Voters want it extended. A Quinnipiac poll released Wednesday found 56% of voters—and more than two-thirds of Democrats—want it extended.
It is a shame Quinnipiac didn’t ask how many voters want the tax increased because that is what the fight is likely to be about as the state adopts a new budget in the next two months.

Wealthy people living in New York City pay a top marginal tax rate of 12.7% when city and state income taxes are combined. Among state and local tax rates in the U.S., only California’s 13% on incomes over $2 million is higher.

CBC Vice President Maria Doulis suggested on a podcast that the best approach would be to renew the tax at a somewhat lower rate. Politically, that may just be wishful thinking.

Cuomo previewed the $150 billion infrastructure portion of his plan in June 2018, stating that the initiative would lead to the creation of 675,000 jobs.

At the time, he also provided more details on how the money would be allocated. Transportation systems including highways, bridges, tunnels and the New York City subway would receive $66 billion for improvements and upgrades while environmental and green energy projects would get $32 billion. Schools ($19 billion), affordable housing ($9 billion) and other state assets like universities and health care facilities ($13 billion) are also in line to benefit from substantial construction spending, if approved.

The fiscal year 2019 budget also allowed New York City officials to use design-build on the $1.9 billion Brooklyn-Queens Expressway rehabilitation, The Brooklyn Paper reported, after representatives from the city's DOT and other agencies claimed the method could save the project as much as $300 million. In 2016, the nonprofit group Citizens Budget Commission estimated that the city could save as much as $2 billion in 10 years by using design-build for bridge work alone.

In presenting his ninth executive budget, Gov. Cuomo toed the line he laid down in his first eight, namely keeping spending growth under 2%. Cuomo calculates a rise of 1.9% for the fiscal year starting on April 1. Of course, it’s his budget office and he makes the rules about moving money around into different pots. The Citizens Budget Commission sees state operating funds growing by 3.1%.

Still, Cuomo’s been admirable in controlling Albany outlays, something that his predecessors, including his own father, never did.

An essential part of Cuomo’s formula has been a 2% cap on local property tax hikes all across the state, absent New York City. He is proposing to make that cap permanent in law, bolting it into the statute books. There is no reason not to. Disciplining local spending is central to taming state spending.

There are two major political changes that will buffet the budget this year. One from Washington, as we feel the full effects of getting whacked by the distortions of the federal tax code President Trump and the Republicans foisted on the country, especially harming states like New York. The dagger, as Cuomo properly called it, was limiting the deductibility of state and local taxes, meaning income taxes and property levies, to just $10,000.

The other big difference is in Albany itself, where Democrats took over the Senate with a huge majority. There will be pressure to spend and spend and increase the existing millionaire’s tax. With income tax receipts already starting to dip, Cuomo should resist.

Thankfully, here the state Constitution gives him the upper hand. Lawmakers can approve or reduce his budget submissions. They cannot increase them.

Governor Andrew Cuomo’s State of the State speech and accompanying $175.2 billion state budget proposal for fiscal year 2020 had something for everything. The 354-page policy book lays out proposals, big and small, on everything from criminal justice reform, transit and infrastructure funding, workforce protections to rent regulations, voting and ethics reform, farmer benefits, legalizing marijuana, women’s rights and reproductive health, LGBTQ protections, and environmental regulation, to name just a few.

The budget proposal, with its long list of policy priorities, has several measures that will have significant consequences for New York City and its own budget, the first draft of which Mayor Bill de Blasio will soon present. The state fiscal year begins April 1, the city’s begins July 1. Citizens Budget Commission, a nonpartisan fiscal watchdog, noted in its assessment that the governor’s budget proposal cuts nearly $100 million in reimbursements and aid to the city.

There have been numerous reactions to many of the policy items in Gov. Andrew Cuomo’s state budget. But how did the governor’s budgeting skills measure up? Two budget watchdog organizations are giving him mixed reviews.

Citizens Budget Commission has been analyzing New York state and New York City budgets since the Great Depression. Its president, Andrew Rein, gives Cuomo and his budget office high marks for not overestimating how much revenue the state might receive from authorizing the sale of recreational cannabis for adults in New York, and for not anticipating any tax money from sales until the following fiscal year.

“The governor did the right thing,” Rein said. “Other states have gotten burned when they’ve tried to recognize marijuana revenues too quickly.”

Cuomo, in his budget, estimated that when the program is fully up and running, it will generate $300 million a year from three separate taxes on wholesalers, distributors and retailers.

Rein said the governor deserves credit for pushing a congestion pricing plan for Manhattan that will help fund needed fixes to mass transportation, and for agreeing to some reform in the procurement of economic development contracts, which has led to scandal in the past.