August 1, 2011 – After months of debate, New York State now has a property tax cap. The cap, which was adopted by the Legislature at the end of June, seeks to limit the annual increase in the tax levies of local governments and school districts.
The legislation also included a number of items that are expected to offer mandate relief, or relief from costs that are derived as a result of state laws or regulations, to local governments and schools. In addition, the cap will allow for some exemptions.
“We are still trying to determine exactly what the tax cap will mean for our schools in Stillwater,” said Superintendent of Schools Stanley Maziejka. “While we are still working to understand the law and precisely how it will affect our schools, we do know that we will continue to be open and transparent during our school budget process and encourage our residents to ask questions and participate.”
Though much-publicized, the “lesser of 2 percent or the rate of inflation” is only one factor contributing to a district’s tax levy limit. In fact, there are eight different steps to the calculation outlined in the legislation. As such, many districts may propose tax levy increases above the 2 percent threshold and still be within the “cap.”
Yes, voters will still decide on school budgets. If a district proposes a budget that would increase the tax levy by more than allowed by its cap, a supermajority (60 percent) of voters will be required for passage. If a district is within the limit of its tax cap, a simple majority is needed to pass the budget.
As it has been historically, if a district’s budget is defeated
twice, a district must go straight to a contingency budget. All the same
contingent budget rules will still apply, plus the district will be
prohibited from raising the tax levy at all
(a 0 percent increase).
The tax cap is calculated considering a school district’s levy, not its rate. The tax levy is the total amount of taxes a district collects. Tax rate is the amount per $1,000 of assessed value that an individual must pay in taxes. Tax rate increases can vary from town to town within the same school. The tax cap does not prevent the tax rate or an individual tax bill from increasing more than 2 percent.
One of the nuances of the tax cap that particularly concerns
Stillwater district leaders relates to the building of Global Foundries.
The tax cap accounts for tax base growth, if, for example, a new
subdivision is built with 40 new homes.
However, the Global Foundries development will not be considered tax
base growth because the company is making payments in lieu of taxes
(PILOT).
“This could be challenging for us as a school district,” said Maziejka. “As we understand it now, the impact of a PILOT in calculating our levy cap, could mean that we’d need a supermajority (60 percent of voters) to approve any proposed budget, even if our tax levy decreased.”
The district will continue to keep residents informed as the tax cap is clarified.
