The proposed property tax cap, which must be approved by the Legislature, is aimed at reversing the economic decline in many parts of the state outside of New York City. It also seeks to curb soaring property tax bills in areas like Long Island, Westchester County and pockets of upstate New York, where residents are facing among the highest property taxes in the nation.
Some residents, particularly those who are older and live on fixed incomes, are being forced out of their homes by rising property taxes.
“It is going to be a game changer, and it’s going to change the trajectory of this state,” Mr. Cuomo said.
New York has long had some of the highest property taxes in the nation, and those taxes increased by 5.5 percent, on average, each year from 1999 to 2009, according to statistics provided by the Cuomo administration.
The Tax Foundation, a nonpartisan research group, said this month that three of the five highest-taxed counties in the nation were in New York: Nassau, Westchester and Rockland Counties. In Nassau and Westchester, the median annual property tax bill exceeds $8,000.
The tax-cap agreement was welcomed by business and farm groups, but teachers’ unions reacted with dismay, saying the move would cause cuts to money for education and would diminish the quality of public schools. The unions pointed to California as an example, saying a property tax cap and broader budget woes have had a harmful effect on schools in that state.
“New York would be devastated by the toughest cap in the nation at a time when its public schools have suffered three years of the toughest cuts to education,” said Richard C. Iannuzzi, president of New York State United Teachers. “There’s no question this strikes at the heart of the educational needs of the most vulnerable students, especially children of color and children who live in poverty.”
The agreement gives the Democratic governor, who made limiting property tax increases a cornerstone of his campaign, his biggest political victory since the Legislature approved an on-time and relatively austere budget in March, and it further establishes Mr. Cuomo’s record of fiscal conservatism.
The agreement, which would take effect next year, would limit the annual increase in the overall amount of property taxes collected by a local government or a school district. Property tax increases for individual homeowners could vary as properties are reassessed.
“This issue is probably the most powerful and pervasive issue across this state,” the governor said at an appearance with legislative leaders on Tuesday. “People in New York City don’t feel it, but I can’t tell you how many times somebody has come up to me and said, ‘You have to do something about property taxes; I just can’t afford to stay in my home anymore.’ ”
The Assembly speaker, Sheldon Silver, a Manhattan Democrat, has said the tax cap should be approved only in concert with the renewal, and the strengthening, of rent-stabilization regulations in New York City. But Mr. Cuomo, who supports strengthening rent stabilization, and the Senate majority leader, Dean G. Skelos, a Republican from Long Island who does not, said they did not believe the rent issue would jeopardize the passage of a property tax cap before the scheduled end of the legislative session, June 20.
Forty-three other states have some limits on property taxes. But New York is unusual because property taxes are the main source of support for schools outside of the city, where the schools are primarily financed by a municipal income tax.
While some details remain to be worked out, particularly the length of time before the legislation expires, legislative leaders in both parties said they were confident that a final agreement was at hand.
“This is a great day,” said Mr. Skelos, adding, “New York State once again can be competitive in creating jobs, and rather than exporting people, bringing people to the state.”
Mr. Silver said, “With this legislation, we are finally able to bring property taxes under control and still provide critical services.”