June 12, 2006

Spitzer seeks property tax cut for homeowners

ALBANY (Reuters) - Eliot Spitzer, the Democratic candidate
for governor of New York, on Monday proposed giving
middle-class homeowners an average property tax cut of $565 and
paying for it by slashing billions of dollars of spending.

"My property tax relief plan is grounded in the fair
delivery of relief -- giving immediate relief to those
middle-class New Yorkers who are most burdened by high property
taxes," said Spitzer, who is currently the state's attorney

Also on Monday, the state Senate approved a new income tax
credit as a substitute for the $400-per-homeowner property tax
rebate that Republican Gov. George Pataki vetoed this spring.
Pataki had said the rebate was unconstitutional and too costly.

But Pataki, currently in his last year in office, is
pleased that the legislature's new plan appears to be a
constitutionally sound proposal, according to a budget division

"We look forward to working with the legislature over the
next 10 days to see how this proposal would fit within the
context of the state's overall financial plan," spokesman Scott
Reif added.

Democratic Speaker Sheldon Silver said homeowners who live
outside New York City would save about $250 a year under the
new plan. Married New York City residents would get a $105
break, he added.

Silver spokeswoman Eileen Larrabee said the speaker
believed the legislature was within its rights to enact the new
tax credit and the previous rebate -- despite Pataki's veto.

The state Senate and Assembly adjourn by month's end and
the Assembly plans to soon vote on the property tax cut.

Spitzer, who leads in opinion polls, largely excluded
homeowners who earn at least $235,000 a year from his plan.

Instead, he would focus on those who earn $60,000 to
$90,000 a year to boost their average tax cut by $565. This
would cost the state $960 million in the first year.

Some 465,000 residents would get an extra $210 a year and
630,000 senior citizens would get a $360 boost as they could
exempt another 30 percent of their home's value from local
property taxes, Spitzer added. This would cost $290 million in
the first year.

Many counties, cities and towns use property taxes to pay
for schools and Medicaid, which provides health benefits for
the impoverished, elderly and disabled.

But New York City dwellers mainly pay for schools with city
income taxes instead of property taxes, and they would get an
extra $250 million of tax relief under Spitzer's plan.

A spokesman for the Republican gubernatorial candidate,
John Faso, a former legislator, was not available.

The state's budget totals nearly $113 billion, and Spitzer
wants to tackle what he characterizes as the root causes of
high property taxes by reforming Medicaid, consolidating
services, and curbing costly programs that the state imposes on
counties, cities and towns.

Spitzer proposed cutting the state budget by $11 billion
over three years, more than enough to pay for the $6 billion of
property tax cuts during that same period.

His plan would save $300 million by closing corporate tax
loopholes, such as the use of so-called captive insurers, and
banks' use of real estate investment trusts, according to Paul
Francis, Spitzer's policy director.

Spitzer also would give the comptroller more authority.
Agencies and authorities have $5 billion of cash, which Spitzer
wants Democratic Comptroller Alan Hevesi to manage -- and boost
returns by 2 percent or $100 million, Francis said.

Hevesi, who says New York's property taxes topped the
national average by 49 percent in 2002, would help slash the
use of consultants, reform procurement, and conduct more audits
to root out waste and abuse at the authorities, Francis said.

Medicaid would save money by using more generic drugs and
bulk purchasing under Spitzer's plan.

Reimbursement rates for pharmacies would be reviewed, the
policy director said, adding that some public hospitals might
be closed.