Local and state officials have come out strongly against a federal tax bill that has passed the Senate and is now in committee in the House of Representatives, which has its own version of the bill.
As now envisioned, and if enacted into law, the bill would eliminate the deduction for state and local income taxes and would cap the deduction for property taxes at $10,000. For residents in high-tax states such as New York and, in particular, very high property tax regions like Long Island, this change will result in many residents paying a great deal more in taxes.
Suffolk County Executive Steve Bellone has called the tax bill a “potential catastrophe” for the region. In a phone call with local reporters, he said: “There are various reports and studies, but one thing that seems very consistent is that we’re looking at what could amount to a massive tax increase on Long Islanders.”
Long Island is a bastion of the highly compensated public official, which is one component of our property taxes. Both political parties on Long Island have long been skilled at providing their followers with top-dollar patronage jobs with expensive benefits. Beyond the political parties, some up-west school superintendents have salaries in the mid to high six figures. Throw in pensions and lifetime health care costs paid for by the taxpayers, and those officials cost taxpayers millions of dollars a year.
High-ranking police officials in both Suffolk and Nassau counties receive similarly extravagant salaries, and some up-west school districts have teachers in the elementary grades making six-figure salaries. Whether many of these public officials are worth their price tags is not the subject of this editorial, but an answer to that question is long overdue.
The tax bill that seems almost certain to become law won’t result in lower public salaries, but analysts say it could result in lower home prices and a drop in sales across the region and the East End. In addition, and more ominously, it will almost certainly make life more difficult for working families just getting by and senior citizens on fixed incomes.
The impact of lower prices would mean less is collected by each of the five East End towns’ Community Preservation Funds, which over the years have generated millions of dollars used directly for environmental purposes. In November 2016, voters across the East End overwhelmingly approved an extension of the fund.
The fund is fueled by a 2 percent real estate transfer tax paid by the buyer. The extension approved a year ago allows up to 20 percent of the revenues generated by the transfer tax to be used for water quality initiatives. That is a huge, and critically important, development.
Since its inception in 1999, the transfer tax has generated more than $1.1 billion that has been used for open space preservation. The North Fork and Shelter Island have collected $145 million in CPF revenues since 1999. With the 2016 extension, the fund will continue until 2050. In 2015, the individual towns on eastern Long Island combined to generate just over $100 million, and the extension is expected to generate a whopping $680 million toward vital water quality initiatives.
Southold Town has a strong record on open space acquisition, and the CPF is part of our lifeline to preserving what we have. Thankfully, there is little daylight on critical environmental issues between the political parties. The fund has worked miracles on eastern Long Island, which by anyone’s definition is the best part of a region plagued by problems the proposed tax bill will only make worse.