Governor-elect Andrew Cuomo has been talking tough about solving the state's fiscal woes and providing relief to tax-weary New Yorkers since his landslide victory in last month's election.

One of the cornerstones of Cuomo's agenda is the implementation of a cap on annual increases in local property taxes. The proposal favored by Cuomo would limit increases to 2 percent or the rate of inflation, whichever is lower, and provide few exemptions for municipalities and school districts to maneuver around the cap.

New York has the highest property taxes in the nation, and the burden borne by Westchester residents is the highest in the state. In 2009, the median property tax bill for county homeowners was $8,422 - close to 8 percent of the average homeowner's income, according to the Tax Foundation, a nonpartisan research group.

Proponents of the cap say the measure would provide residents with peace of mind and stem the slow but steady exodus of wealthy homeowners to more tax-friendly locales. But as the cap, which once was the provence of conservative Republicans, begins to gain momentum in Albany, an array of interest groups have sounded alarms about the potential implications of limiting the amount of money that cities, towns and school districts can drum up from their residents.

Those groups, which include municipal and school officials, say that the genesis of the annual tax increases are onerous mandates passed down by the state and federal government and packaged with little or no funding to ease the burden, including pension and health care contributions and state laws that give labor unions the upper hand during contract negotiations.

Earlier this month two influential groups issued reports warning of the consequences of the cap. The state School Boards Association (NYSSBA) says that school districts statewide will face an $815 million shortfall next year if the cap goes through; it would limit property tax revenue to $229 million as schools face a $1 billion increase in salaries, pension contributions and health insurance costs. At the same time, state aid to schools has decreased for two straight years and millions of dollars in federal aid is set to expire.

Meanwhile, the state Conference of Mayors (NYCOM) says that municipalities can no longer cut costs without those cuts having a disastrous effect on local residents. 

The recession has already forced a considerable amount of belt-tightening in Harrison. The town has axed 52 jobs over the last three years; most of those were the result of employees retiring, and the spots not being filled.

Mayor Joan Walsh said that a property tax cap - at least, the one envisioned by Cuomo - would lead to further reductions in staff. The town recently passed a budget that raises taxes by 5.4 percent, which, Walsh said, is a direct result of increases in pension and health insurance costs.

"There was a time when every employee contributed 3 percent" of his salary to the pension fund, Walsh said, "but the state stopped that. The town cannot impose that again, and because of the state's own funding problems we're being forced to pay an additional $2.2 million."

She added, "if it weren't for those state mandates we would have had no increase [in taxes] this year, and that was possible only because of the diligence of everyone who works in the town."

Walsh noted that California's oft-criticized property tax cap, which was passed in 1978, had the effect of turning the state's schools from some of the best in the country to some of the worst. Controlling taxes, she said, is more a question of controlling spending at the local level.

"In my three years as mayor we have totally turned around the town's finances, and I don't believe that we need a cap."

Harrison Schools Superintendent Louis Wool did not return requests for comment, but school board of education member David Singer said the cap would not address the cost drivers that have forced the school district and the town into tight spots. 

The cap "is basically a cop-out by our political leaders in Albany; if you peel the onion back as to what really drives up the property taxes, much of it is controlled by what goes on in Albany," said Singer, who is an attorney and political journalist. 

"Some form of a cap is inevitable, and I just hope they look at this more holistically and they address what really drives the taxes," including retirement and health care costs as well as more arcane laws that regulate how contracts for things such as construction work are drawn up, he said. "Having a new governor represents a fresh start, and an opportunity for the management and labor to work through what appears to be a fairly attenuated, depressed economic cycle."

State Sen. Suzi Oppenheimer (D-Port Chester) said that she supports the idea of a cap, but recognizes that it's only viable when packaged with comprehensive changes to state mandates. 

"Clearly, the concerns of school districts and municipalities will need to be addressed as part of any agreement to cap property taxes," Oppenheimer said. "A cap must be accompanied by mandate relief measures to lower the cost of providing services. We must go further to lower costs for school districts and municipalities and to shift funding for many services away from the property tax."

Some lawmakers - mainly Democrats - have floated the idea of a so-called "circuit-breaker," which would cap taxes on a sliding scale based on a homeowner's income. Advocates of the idea say it would provide relief to the neediest homeowners without having a drastic impact on schools and municipalities. But such a program would cost at least $1 billion a year in the short-term, according to the lawmakers who have sponsored similar proposals in recent years. The state is facing more than $40 billion in budget gaps over the next three years, so such a proposal would likely be politically untenable. 

If a cap is passed, it will likely include a provision that would allow individual school districts, towns or cities to override the cap if at least 60 percent of residents support a higher tax hike. That would apply to annual votes on school budgets, and would probably involve special referendums on municipal ballots. 

But Harrison is known for its contentious school budget votes, and Walsh and Singer both acknowledged that garnering 60 percent support would be hard to do. 

While a bevy of officials have assailed the proposed cap, the business community has come out to support it. Businesses pay a hefty portion of property tax levies; according to the state Business Council, businesses in 2009 paid 40 percent of the $46 billion in property tax revenue collected statewide.

"Employers in New York, especially upstate, will not be able to add new jobs and create growth in our economy if they are saddled by unaffordable property tax bills for local government spending that continues to increase," said Kenneth Adams, the council's executive director. "Failing to enact a property tax cap and implement mandate relief to let local governments and school districts control and reduce their spending levels would be a disaster for New York's economy."

But NYCOM, an advocacy group for mayors and other municipal officials, says that capping what they can't control is a recipe for disaster that will make the last few years of belt-tightening look like flush times. 

"While it may provide political appeal in its simplicity, a property tax cap without specific exclusions and relief from state mandates will result in destructive local budget deficits, decimated municipal work forces and a dangerous reduction in the essential services provided by local governments," the NYCOM report reads. 

It continues, "What has become readily apparent to local officials all across the state is that their residents do in fact want the essential services that municipalities provide, they just want them provided more cost-effectively."