A 2 percent cap on annual property tax increases in New York state may be reasonable under certain conditions, according to some local officials whose entities depend on property tax revenue.

The cap, being considered by the state Senate, Assembly and Gov. Andrew Cuomo, could take effect in 2012.

Duncan Davie, the chief of staff for state Sen. James Seward, R-Milford, said Tuesday his boss hopes to see agreement on a 2 percent tax cap by June 20, when the Legislature is scheduled to take recess.

"It's at the top of his agenda," Davie said.

Property taxes in New York are among the nation's highest, and there is near consensus that something must be done to stem the rise, he said.

However, there are differences in the Assembly and Senate proposals to be worked out, Davie said. Among these are provisions to allow the cap to be exceeded to pay for state retirement plans or to cope with unanticipated expenses.

Otsego County Treasurer Daniel Crowell said Otsego County could operate with a 2 percent cap on property taxes.

"My goal is to continue to provide services without raising taxes at all," he said. "Otsego County would have little or no need for property tax if it weren't for state mandates."

The county, home to large retailers and the National Baseball Hall of Fame, generates more than twice as much revenue from sales tax as a property tax levy of less than $12 million.

The cost of just one state-mandated program, Medicaid, "tracks pretty close to our levy," Crowell noted.

"Now, I want to be clear," he said. "We need Medicaid and it's a valuable program, but our costs are much higher than those in most states," he said.

Elsewhere, state governments dictate how Medicaid will be administered and also pay for the program, Crowell said.

In New York, state government prescribes how the program will run, but counties must pay for about 25 percent of its costs, he said. So, if the state changes rules and drives up costs, counties face higher bills mandated by state government.

"We'd be better off if the state operated and funded it, because right now it's too easy to pass on costs," Crowell said.

Still, if the state plays fair, Otsego County can live within the cap, he said.

Richfield Springs Central School superintendent Robert Barraco also spoke of powers in Albany when asked how a 2 percent cap would affect his rural school.

"That depends on state mandates, and declining state aid," he said.

For years, the state was funding about 70 percent of the school's budget, but the percentage has dropped to about 64 percent, putting more pressure on the property tax levy, he said.

"The mandates for special education are very expensive, and I think the state should look at that," Barraco said.

Some school district expenses, like health insurance, rise far more than 2 percent a year, he added.

Cooperstown Central School superintendent C.J. Hebert concurred.

"I would encourage the legislature to be careful," Hebert said. "I think they need to consider costs that school districts can't control, such as an increase in pension costs. These could easily be over the 2 percent cap.

"And I know there have been discussions about contingencies that allow a district to exceed the cap for extraordinary expenses, legal expenses and emergency projects, like replacing a boiler," he said.

If the cap were flexible in emergencies, "that would make it more palatable," Hebert said.

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