Editorial

City Can't Afford RE Tax Hike

Among the possible courses of action to address the city's looming $6 billion budget deficit is raising property taxes on just about every conceivable form of dwelling unit extant. The prospective hikes would increase property taxes on rental, co-op or condominium buildings with 11 or more units and on one-, two- and three-family homes by between 10 and 25 percent.

We're well aware that New York City faces its most severe financial crisis since the 1970s, and possibly in its history. As New Yorkers, we know belt-tightening on the part of us all is called for. We know we can expect service cutbacks and increases in fees for a number of things such as various licenses and permits. We're willing to do our part because this is our home and we like it here. We can't imagine living anywhere else. In many cases, we came here from somewhere else because we thought New York City offered more of what we were looking for in a city to call home than anywhere else.

We still think so. Most of us like it here and want to stay. We don't deny that the city has problems--so does every other metropolitan area on the face of the earth. For us the advantages of being able to call ourselves New Yorkers far outweigh the few deficiencies attendant on living here. But a property tax hike, especially the one being bruited about, is guaranteed to do more to reduce the population of the metropolitan area than just about anything else.

The borough of Queens alone has more single-, two and three-family homes than rental, co-op and condo buildings. Most of the people who own these properties are working long, hard hours to keep up with their mortgage and tax payments and utility bills as it is. Condo and co-op owners are facing the same hurdles. For many renters, it's as much as they can do to pay their rent and utility bills as well. Our readers can do the arithmetic for themselves. Before they even consider buying food and furniture, they mete out a sizeable proportion of their monthly income just to be able to put a key in the door to wherever they call home.

New York City's strength has always been its middle class—people whose biggest asset is usually a home. Most of this group works at jobs within the city limits, sends children to local schools, shops at stores managed or owned by their neighbors or fellow city-dwellers, attends local houses of worship and, significantly, pays taxes for police and fire fighters, sanitation workers, operable traffic lights, free-flowing sewers, street trees and other amenities. They accept the tax structure as part of the price they pay for the privilege of living here. Given the state of the region's economy, this is a cohort of people already bearing most of the financial burden of life within the city's environs.

There is no surer way to radically diminish the middle class base on which this city stands than to raise the price of their occupying their homes and apartments, be they rentals, co-ops or condos. If the middle class finds living here unaffordable, they will leave—and New York City will be the poorer for their leaving, not only in the consequent loss of revenues.

Most New York City residents who have risen to fame and prominence in a number of different occupational endeavors have solid middle-class roots. They grasped the advantages the city offered—a good educational system, cultural and artistic offerings and the schooling in life that comes from living in the most diverse and exciting municipality in America, if not the world—to make this city a better place and enrich the lives of their fellow citizens in immeasurable and infinitely varied ways. A substantially reduced middle class will leave this city poorer, not only monetarily. Every citizen of New York City has something to contribute to the city where he or she lives. The loss of most of this group will cause lasting damage to the city's rich commercial, educational, cultural and artistic resources for years to come.

There are measures the city can take to close the budget gap that will not infringe on an already strapped middle class. The one that first comes to mind is reinstatement of the commuter tax, in which residents of surrounding counties and states pay a relatively small fee for working in New York City while living elsewhere. The people who come into the city to make a living here use such city facilities as sanitation, police, fire and transportation. It seems to us reasonable to ask that they pay a nominal fee for these services.

Other possibilities are also suggested. A combination of fines and improvements in the classification of real property could capture more than $1 billion in real estate tax revenue now lost. Budget surpluses could be used to reduce existing debt and fund some capital projects on a pay-as-you-go basis. A strategic review of each year's annual spending could ensure such spending is justified. The annual executive expense budget can be reshaped to deliver services based on each borough's varying needs, and capital priorities can be set by community needs. A strategic capital program to identify the city's real debt needs based on real ability to advance projects can be outlined. Federal and state funding commitments based on regional benefits of the proposed capital program can be sought. Legislative and executive oversight of the management of the city capital plan and projects can be improved and a professional contracting law barring bid fee cuts pending in the city council between 1998 and 2001 passed. All these possibilities should be considered.

In order to continue to stand as the capital city of the world, New York City must keep its middle class tax base. The city will not solve its financial problems by driving out its middle class through a real estate tax hike that makes living here too expensive to be practical. Another solution exists and must be found and acted upon as soon as possible.