Tax Cap

NYSUT: Tax Cap ‘Crippling’ School Districts

commoncoreThe zero percent growth in the state’s tax cap this year is “severely crippling” school districts and their ability to raise revenue, the New York State United Teachers union said on Wednesday in its prepared testimony to state lawmakers.

The labor umbrella group is calling for a $2.6 billion increase in state aid for schools as well as modifications to how the tax cap impacts districts.

The funding request i more than twice the $963 million proposed by Gov. Andrew Cuomo in his $154 billion budget proposal made earlier this month.

“We are making progress on many fronts but there is still work to do,” said NYSUT President Karen Magee. “This is the year the state should significantly increase the Foundation Formula, eliminate the Gap Elimination Adjustment and make good on its commitment that, no matter where students live or go to school, they have the opportunity for the sound, basic education the New York Constitution requires.”

Calls for altering the cap are back again this year as school districts face the prospect of setting budgets that allow for less than a 1 percent increase in the levy, or the amount collected in taxes. A supermajority of voters can choose to approve budgets that override the cap.

NYSUT, along with education officials that represent school districts, want a “true” 2 percent cap on taxes that eliminates linking the rate of inflation to the measure that’s been in place since its approval in 2011.

It’s unlikely Cuomo would go along with alterations to the cap, even as state lawmakers last year approved modest changes to the measure that allow for some growth in certain instances.

No-Growth Tax Cap For School Districts

School districts in the 2016-17 budget year will have a record-low cap on property tax increases, a report from the New York State Association of School Business Officials found.

The report released on Wednesday found the allowable growth rate in the tax levy, or the amount collected in taxes, will be 0.12 percent, the lowest the cap has been since it has taken effect in 2012.

The low cap is due to record-low inflation and is reviving a push from education advocates the Legislature considering altering the measure so that the limit is at 2 percent, not tied to the consumer price index.

“We urge the Legislature and concerned citizens to contact the Governor’s Office or the Commissioner of Tax and Finance and request they fulfill their obligation to implement these changes to the tax cap that the Legislature passed. These changes will each benefit about 75 percent of school districts throughout the state, which is particularly important in a zero percent tax cap year,” stated Michael J. Borges, NYSASBO Executive Director.

Comptroller Tom DiNapoli, too, raised concerns with the tax cap being under 1 percent in the new budget season.

“The nearly zero growth in the tax cap will limit budget options for school and municipal officials as they plan for next year,” said DiNapoli. “Although some local governments can rely on available reserve funds to bridge the gap, others may need to take a hard look at operations to find ways to cut costs to stay under the cap.”

School districts may still override budgets that call for tax increase above the cap, but that requires a 60 percent majority to do so.

Gov. Andrew Cuomo’s budget this year increases education aid by about $990 million, with $2.1 billion being spent over the next two years and also ends the education cuts known as the gap elimination adjustment. State lawmakers have called for a $2.9 billion increase in school aid.

Comptroller: Flat Growth For The Tax Cap

Villages and library districts next year will be limited to raising tax levies by a mere 0.12 percent while counties and towns will be limited to 0.73 percent, according to Comptroller Tom DiNapoli’s office.

The cap on property tax increases limits growth in levies to 2 percent or the rate of inflation, whichever is lower.

Inflation in the years since the cap has been in place, approved in 2011, has been largely flat.

And the limit local governments can raise taxes has steadily declined in recent years to nearly zero allowable growth in 2016.

Local governments can submit budgets that override the cap with 60 percent of its voting members approving of the spending plan.

School districts, too, are expecting flat growth in the tax cap after a year in which they were limited to a 1.62 percent cap. On the school district level, 60 percent of voters must approve a budget that overrides the cap. Budgets for school districts are typically approved in May.

Local government advocates and education officials in New York have urged state lawmakers to make changes to the cap to allow for more levy growth and discard the provision that limits increases to the rate of inflation.

State lawmakers and Gov. Andrew Cuomo did agree to modest changes to the cap that allows for some growth such as in payment-lieu-of-taxes, but not the broad-based changes some local governments were seeking. taxcap

Lawmakers Assess A Zero-Growth Tax Cap

State lawmakers return to Albany next month with a looming concern for local government and school officials back home: A zero-percent growth in the state’s cap on property taxes.

“That’s good for us taxpayers, but local governments are struggling,” said Democratic Assemblyman John McDonald of Cohoes. “Local governments are going to have to start making some serious decisions about withdrawing services to the taxpayer.”

Both McDonald and Westchester County Assemblywoman Sandra Galef were the lone lawmakers at a brief and sparsely attended Assembly hearing on property taxes on Wednesday, which last less than an hour.

The tax cap itself was altered, albeit slightly, during the previous legislative session’s broader negotiations on rent control in the New York City area. Ultimately, lawmakers agreed to modest changes that allowed for growth in areas like payments in lieu of taxes.

But school districts have in recent weeks raised concerns about a tax cap that will allow for increases of less than 1 percent heading into the next budget season. The tax cap allows for a 2 percent cap on property taxes or limits growth to the rate of inflation, whichever is lower. Inflation has typically been under 2 percent since the cap was approved in June 2011.

What this could mean: Lawmakers in an election year will almost certainly be spurred to push for more money in the state budget that would flow to schools and their local municipalities.

“They’re going to be looking to the state for that revenue,” McDonald said of local governments and schools. “Let’s face it: Pension costs are still increasing, the personel costs are increasing. Utility costs are still going up. It’s going to be very challenging for the community to see under the tax cap.”

Galef, meanwhile, pointed to the potential impact on local infrastructure projects suffering from the narrow levy growth. Gov. Andrew Cuomo, who has made local property taxes a key economic issue for his administration – has generally been opposed to broad-based tax cap changes. But that hasn’t stopped lawmakers from proposing changes.

“If you wait too long, specifically with the roads, you may end up spending more money at the end of the day,” Galef said. “So, we really have to look at the capital. I’m a real strong believer in the tax cap, but you don’t want to happen for so long that people aren’t looking at certain things for infrastructure. That might be on the table next year.”

Poll: 38 Percent Of School Board Members Would Consider Cap Override

commoncoreA poll of school board members around the state found 38 percent would consider seeking overrides of the state’s cap on property tax increases, the New York State School Boards Association found.

The result comes as school districts next year will have to submit budgets with a cap that is virtually at zero, due to the low rate of inflation.

The survey found 68 percent of school districts polled plan to have their budget submitted with a tax cap at or near a zero percent increase.

“With no growth allowed in their tax levies, we expect more school boards to attempt a tax cap override in order to meet their rising expenses,” said Timothy G. Kremer, NYSSBA’s executive director. “We’ll know more in 2016 when school boards begin the budgeting process in earnest and share various budgeting scenarios with their communities.”

Sixty percent of voters must approve a budget that allows for a cap override.

The cap has been in place since 2012, with an average of about 30 districts a year seeking to override the cap, or 4.4 percent of all districts.

In the last year, the number of school districts seeking cap overrides was below that average — 18 in total, or 2.7 percent of all districts.

A coalition of education groups — including the school boards association, the Council of School Superintendents and the state’s teachers union — are calling for changes to the cap that would eliminate tying the cap to the rate of inflation, making the limit a 2 percent cap on levy increases.

Cuomo: Tax Cap Is Flexible Enough

cuomouticaAfter the state’s tax cap was re-approved for another four years in June, Gov. Andrew Cuomo indicated on Thursday he has little desire to see it tinkered with further — especially when it comes to the ability to override tax increases.

Local government and school board officials, along with labor groups, unsuccessfully this legislative session pushed for changes to the cap, such as making it a straight majority to approve a proposed budget that blows through the limit on levy increases.

The cap requires 60 percent of voters to approve a budget that seeks to raise taxes above the limit and a supermajority to do so among an elected board.

“Any locality can have as many taxes as they want,” Cuomo said in Utica on Thursday. “We say we have a 2 percent cap unless the locality overrides it and any locality can override the cap.” More >

Counties: Tax Cap Rate ‘Good News And Bad News’

The coming 0.73 percent growth rate for the state’s cap on property taxes is good news for taxpayers, but potentially a damaging development for revenue that funds vital services, the New York State Association of Counties said in a statement.

Comptroller Tom DiNapoli’s office on Monday released a report showing the growth rate for the limit on local government property tax increases will be 0.73 percent in 2016.

The state’s cap on property taxes — in place since 2012 — limits levy increases to 2 percent or the rate of inflation, whichever is lower.

“This is good news and bad news. Good news that property taxes will remain low, but bad news in that quality of life services, such as police protection and road maintenance, are likely to see cuts in the coming year,” said Stephen Acquario, the NYSAC executive director. “The property taxpayers of New York deserve tax relief. New York property owners have been taxed too high for too long. Local governments have done their part to lower this burden. Sadly, the state imposed tax cap carries with it no assumption of the costs of state services delivered locally.”

The cap’s being so relatively low this time around will likely increase calls for both relief from mandated services imposed by the state as well as increased calls for local government assistance, which have not been hiked since Gov. Andrew Cuomo has taken office.

Cuomo has sought reforms to Medicaid spending as well as pension costs, but local government leaders have said the adjustments need to go further at the state level.

“The end result is clear: our communities will continue to see a sacrifice of local services to meet the state’s goals. As we enter the 2016 budget year, county leaders renew their call for the state to pay for its public assistance programs,” Acquario said.

Oneida County Executive Anthony Picente agreed, saying revenue is “shrinking” once again on the county level.

“County governments have made cuts where we can, and we are committed to continuing to serve our residents,” said Picente, a Republican. “It’s time for the state to partner with counties to give New Yorkers real, permanent tax relief.”

Counties Overriding Tax Cap Cut In Half, Report Finds

Approved county budgets that overrode the state’s limit on property tax levy increases has dropped by more than half in the last four years, a report from Comptroller Tom DiNapoli’s office released on Tuesday found.

In 2012, the first year local governments and school districts were required to adhered to the cap approved in June 2011, 15 counties overrode the limit. This year, only six chose to do so.

The cap, which impacts the 57 counties outside of New York City, limits property tax increases to 2 percent or the rate of inflation, whichever is lower. In the last four years, the tax cap is essentially been under 2 percent given the relatively flat inflation growth.

The slow growth has limited county revenue and could make future budgeting difficult, DiNapoli said.

“Counties are holding the line on property taxes,” said DiNapoli. “If inflation continues its downward trend, however, counties will need to tighten their budgets even more to stay within the tax cap and deliver services that homeowners expect. I believe the financial decisions for county leaders next year will be especially difficult.”

County government levies have increased overall between 2012 and 2015, from $5.1 billion to $5.4 billion.

The tax cap was re-approved this month for an additional four years with modifications that were not as sweeping as some local government and school district leaders had sought, such as making the cap easier to override and ending the linkage to the rate of inflation.

Instead, lawmakers and Gov. Andrew Cuomo approved new exemptions for PILOTs and capital spending for BOCES programs.

County Tax Cap 0615 by Nick Reisman

Business Groups Applaud Tax Cap Extension

Business groups are getting behind the legislature’s four-year extension of the state’s property tax cap.

Business Council President Heather Briccetti said in a statement Friday morning that overall, “this was a good session for [their] members.”

The two-percent tax cap was ultimately extended four years and coupled with a rebate program based on income and property values.

“The cap remains a tremendous success, having saved businesses and homeowners more than $7.5 billion,” Briccetti said in a statement. “The cap’s extension was our top priority for the end of session. While we would like to have seen a permanent extension, we are pleased the leaders passed changes that will help incentivize business investments, while rejecting cap-busting exemptions.”

That seems to be the consensus across the business community, though some would have liked to see more done in the final bill – mandate relief for localities, for example.

“While we are disappointed that taxpayers have been denied a permanent cap, we are pleased that it will be extended through 2020,” said Greg Biryla, Unshackle Upstate’s Executive Director in a statement. “In addition, we remind lawmakers of the need to address the problem of New York’s sky high property taxes by enacting meaningful mandate relief. It seems that the effort to provide real relief to local governments, school districts, businesses – and ultimately taxpayers – has stalled.”

Others have pointed to a few significant reforms to the cap, including the exclusion of BOCES and PILOTs.

“We appreciate the important reforms lawmakers made to the property tax cap, such as excluding some BOCES capital costs and including PILOTs in the tax base growth factor,” The New York State School Boards Association said in a statement Friday. “We encourage the Department of Taxation and Finance to implement these changes in such a way that the legislative intent is fully realized.”

Tax Cap Changes Will Be Done Administratively

State lawmakers and Gov. Andrew Cuomo agreed on modest changes to the state’s cap on property tax increases, with two exemptions in a deal that will be carried out administratively.

The changes include exemptions for capital expenses of BOCES programs. School districts were previously exempt under the cap from capital expenses, but BOCES costs were not at the time included when the measure was first approved.

The second exemption to the cap includes payments in lieu of taxes from local developments.

The PILOT exemption is due to be carried out administratively by the Department of Taxation and Finance.

School districts, local government advocates and the state’s teachers unions had sought more sweeping changes to the tax cap, including making the limit easier to override as well as eliminating the provision that has essentially limited levy increases to the rate of inflation.

Cuomo and state lawmakers agreed to a $1.3 billion property tax rebate program, though the details of that proposal are yet to be formally ironed out. Some lawmakers on Tuesday night indicated the rebate program would be carried out on a similar basis as the STAR rebate program. Checks from the new proposal are expected to be sent out by the fall of 2016 should the package be approved.

Cuomo had called for the tax cap, first approved in 2011, to be made permanent as had Senate Republicans. In the end, the measure is extended until 2020 and will expire alongside rent control laws for New York City and the surrounding area.

The cap was initially due to sunset next year if lawmakers did not act on rent control.