In order to promote fiscal reform, the Citizens Budget Commission (CBC) is convened three separate agenda-setting conferences for key stakeholders in the state budget process. Each session focused on one aspect of fiscal reform with a goal of identifying specific changes that are assigned high priority for the upcoming fiscal year 2008-09 budget cycle. The first session was held on September 20 at the Rockefeller Institute of Government in Albany; the second was held on October 17 at Milano The New School for Management and Urban Policy in New York City. The third was held at the Rockefeller Institute on December 6.

The three dimensions of fiscal reform considered:

1. Greater accountability and transparency in fiscal decision making.
2. More effective use of state fiscal resources.
3. More equitable and affordable local tax burdens.

This background paper focuses on the third issue, and is organized into four sections. The first describes state and local taxes in New York and compares the burden to competitor locations in the nation. This section highlights differences between New York City and the rest of the State, as well as changes in the tax burden since the mid-1990s. The second section focuses on local government taxation, with an emphasis on the property tax burden outside of New York City. This portion of the paper describes four problems facing these local governments. The third section describes recent state actions taken to lower the local tax burden and offers a critique of the School Tax Relief (STAR) program.

The last section presents options for the State to address the local tax burden. It distinguishes among options meant to:

1. Limit local taxation;
2. More equitably distribute the local tax burden; and
3. Address the factors driving up the cost of local services.