N.Y. Teachers Union Loses Challenge to Tax Cap

MANHATTAN (CN) — Moved by a teachers union's "novel" challenge, a dissenting appellate court judge said his colleagues should have revived a lawsuit protesting New York's tax laws exacerbating gaping disparities between wealthy and poor school districts.

Passed in 2011, the tax cap limits hikes in school and local property taxes to 2 percent a year or to the rate of inflation, whichever is less.

New York State United Teachers and eight parents of school-aged children challenged the statute in an Albany lawsuit two years later.

In 2014, New York implemented a tax freeze providing a credit to certain qualifying taxpayers when school districts and local governments adopt budgets that do not exceed the cap. State officials said the new law will encourage long-term tax relief through sharing, consolidating or merging municipal services.

The union and the parents then filed an amended complaint stating that both laws unequally and unconstitutionally affected the most financially struggling school districts.

That argument failed in the court of Albany County Supreme Court Justice Patrick McGrath, who noted that the Empire State's top court holding that schools have no right to equal funding in the 1982 ruling, Levittown v. Nyquist.

On Thursday, a decisive majority of New York's Appellate Division, Third Department agreed.

Judge Eugene Devine, writing for the four-judge majority, quoted that precedent in his opinion.

"The differences in the services offered by various school districts accordingly result from a permissible consequence of local control over schools, namely, the variable 'willingness of the taxpayers of [different] districts to pay for and to provide enriched educational services and facilities beyond what the basic per pupil expenditure figures will permit," the opinion states.

In a strongly worded dissent, Judge Michael Lynch pointed out the sharp division between New York's wealthiest school district and its poorest.

Citing the union's statistics, Lynch noted the wealthiest district rakes in more than 50 times the taxable wealth of the average one, while the poorest district has less than 19 percent of the taxable wealth of the average.

"It is this wealth-based classification that plaintiffs assert has no rational relationship to our state's education funding structure," he said.

The judge noted that the state acknowledged this profound inequity.

"With the conceded disparate funding, compounded by the fact that taxpayers within the poorer school districts end up subsidizing, at least in part, the tax credits granted to taxpayers within the wealthier districts, I find that plaintiffs have stated a viable equal protection claim," Lynch wrote.

New York Attorney General Eric Schneiderman's office declined to comment.

The teachers union did not immediately respond to a request for comment Thursday.

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