Local officials eye fit of lower tax cap
Local government and school officials are weighing a recent decision by the state to slightly lower the state-imposed base 2 percent base property tax levy cap for 2014, as they consider crafting future budgets.
The state is lowering the tax cap from 2 percent to 1.66 percent, due to inflation, for 2014. Although the caps vary because of the formulas, overall, the caps will be lower. The cap is set by the office of state Comptroller Thomas P. DiNapoli.
“I have heard there’s some changes,” said Fulton County Budget Director Alice Kuntzsch.
For the third consecutive year, municipal governments and school districts are dealing with the state tax levy cap, which was enacted into law. Under the 2011 law, the increase in the property tax levy – the total amount to be raised through property taxes charged on the municipality’s taxable assessed value of property – is capped at 2 percent or the rate of inflation, whichever is less, with some exceptions.
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Certain exemptions related to the final calculation can be considered by the state. Local communities have the ability to override the cap.
The 2 percent was actually a base that a number of exemptions and other considerations were calculated into, so most municipalities had a tax cap that was above or below that number. The same will happen with the 1.66 percent.
For a municipality, the tax cap can be overridden with a two-thirds vote of the board, but school districts have had a harder time overriding. It would take a supermajority, or 60 percent, of district voters to approve a school budget that exceeded the cap.
“It makes it a little more challenging,” Greater Johnstown School District Superintendent Robert DeLilli said of the lowered tax cap. “I think we’ll be able to handle what they’re throwing at us.”
But DeLilli said his district needs more details on the cap reduction.
Fulton County Treasurer Terry Blodgett said he recently received word of the changes through an email from Dave Lucas, director of finance and intergovernmental affairs for the New York State Association of Counties.
In the email, Lucas stated that the inflation factor “came in at 1.66 percent,” He said NYSAC expects the average county cap growth to be about 1.17 percent.
“This means a typical county will experience their tightest property tax growth cap since the inception of the state-mandated cap in 2012,” Lucas wrote.
DiNapoli’s office last week issued a press release explaining why the state feels the tax cap needs to be lowered.
The release notes local governments in New York state have operated for two years under a property tax cap in which the growth in the property tax levy is limited to 2 percent or the rate of inflation, whichever is less, with some exceptions.
“Up until recently, most local governments have had their levy growth limited to the 2 percent, but now as inflation lags, this component of the formula is falling below 2 percent for many local governments,” the release stated.
Local governments with a fiscal year ending July 31 were the first to see their levy growth factor drop below 2 percent when it fell to 1.96 for 2013, the release said. This affected only a small number of localities – two cities and six villages. Similarly, a handful of entities having a Sept. 30 fiscal year end were limited to only 1.79 percent growth.
“As inflation continues to lag, local governments that operate on a calendar fiscal year will also be facing a levy growth factor of less than 2 percent – 1.66 percent,” state officials said.
Fulton County Board of Supervisors Chairman William Waldron said he was somewhat surprised, but not alarmed, by the news the comptroller is lowering the base cap.
“Really, in the original bill they passed, the tax cap was a maximum of 2 percent,” he said. “But depending on the [Consumer Price Index], it could be lower than 2 percent. I think it’s especially going to hurt the towns.”
County Administrative Officer Jon Stead last week made public an email he received from the New York State Association of Counties about the tax cap situation. NYSAC reported the allowable property tax cap growth in an average county will be about 2.2 percent, not allowing adjustments for court judgments, Payment In Lieu of Taxes agreements, and any available carryover funds.
“This means 2014 will impose the tightest tax cap for counties, on average, since enactment in 2012,” NYSAC said.
Stead, not a fan of the tax cap, stated: “Certainly, the tax cap is an artificial approach to government.”
He said the cap “constrains things a bit.”
But Stead said the there is “not a tremendously significant difference” between a 2 percent base tax cap and 1.66 percent. He noted Fulton County has voted to give the Board of Supervisors the option of overriding the tax cap for 2014, anyway, if it wants to.
Michael Anich covers Johnstown and Fulton County news. He can be reached at email@example.com.