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Tax Cap Recap
How the new tax levy cap changes the school budget landscape in
New York
How is the cap calculated?
• Though much-publicized, the “lesser of 2 percent or the rate
of inflation” is only one factor contributing to a district’s
cap, or "tax levy limit." In fact, there are eight different
steps to the calculation outlined in the legislation, plus
certain costs that are exempt from the limit. As such, many
districts may propose tax levy increases above the 2 percent
threshold and still be within their “cap.”
What does it mean to be considered ‘within the cap’? Aren’t
voters still going to decide on school budgets either way?
• Yes, voters will still decide on budgets. Therefore, the cap
itself might be more accurately described as the figure that
determines what level of voter support is needed for a budget to
pass. If the budget carries a tax levy above the figure
resulting from the cap calculation as described above, a
supermajority (60 percent) of voters are required for budget
passage. If the tax levy included with a proposed budget is
within the calculated figure, a simple majority is needed to
pass the budget.
• Note: Districts are not required to propose budgets that carry
tax levy increases at the maximum allowed under the calculation.
This calculated figure simply represents the maximum tax levy
increase that districts can propose without triggering the need
for supermajority support.
What other elements of the law will affect school budgets and
taxpayers?
• School districts may “bank” unused portions of their cap for
subsequent years. Again, this really refers to what might be
added to the tax levy without requiring a supermajority for
passage.
• Similar to current law, school districts can hold up to two
budget votes under the tax cap law. If two budget votes were
defeated, districts would be restricted to the same tax levy
amount
as the previous year.
• Voter-approved, capital construction projects are exempted
from the cap on a dollar-for-dollar basis.
• As a final note, the tax cap applies to a district’s tax levy,
which is different from tax rates. Tax rate increases can be
different from the tax levy increase due to changing assessment
levels as determined by the state. Therefore, the establishment
of this tax cap does not mean that individual property owners’
tax bills will necessarily be capped in the same way as the tax
levy. Districts do not control this.
Mandate relief measures
The tax cap legislation was approved with a package of changes
intended to help school districts and local governments control
costs. These included the creation of a Mandate Relief Council
to curb some of the laws and regulations that lead to escalating
expenses for school districts and local government.
HFM BOCES District Superintendent Dr. Patrick Michel said that
it was not immediately clear which elements of this relief, if
any, might help HFM’s component districts bring down costs.
“I hope we can read this as a sign that the state is serious
about helping our districts control expenses, and by extension,
taxes,” Dr. Michel said.
In a press release, the New York State Senate Majority said that
the package of mandate relief would save the state’s districts
$34.6 million. These savings are just a fraction of the $1.3
billion loss of state aid New York’s districts will see next
year under the enacted state budget.
The mandate relief items approved recently that apply to schools
include:
Mandate Relief Council
This 11-member council will determine if a statute or regulation
is unsound, unduly burdensome, or costly; establish procedures
for repealing unfunded mandates in both statute and regulation;
provide a procedure for direct appeals from school districts and
other local governments on mandates; and require the state
Comptroller to issue a detailed report on the cost and effect of
unfunded mandates.
Student Transportation
Student Transportation: The new law allows districts to base bus
routes on patterns of ridership instead of having a seat for
every potential rider.
Cooperative Purchasing
Cooperative purchasing: The new law allows school districts
greater flexibility in cooperative purchasing with other
districts, and in state and federal contracts. While this may
lead to better deals on some goods and services, HFM BOCES
already does as much competitive/joint purchasing as possible.
Pension Borrowing
This gives districts the ability to finance up to 125 percent of
their pension contribution increases incurred during the next
three years. Because pension costs are an ongoing obligation,
many district officials said that in most ordinary cases it
would be imprudent to take on debt to fund them. Stretching
these payments out over a period of years, and paying financing
charges on top of them, would cost more in the long run. The
Governor is expected to veto this provision of the legislation.
The new law also allows up to three districts with less than
1,000 students to share a superintendent. Dr. Michel said that
scenario creates the potential for a couple of HFM BOCES
districts to consider the option.
“However, from a superintendent’s perspective, working for two
school boards and two different systems would be a difficult
situation,” Dr. Michel said. “It might be more feasible to
change the governance structure for school districts. For
example, it might make better sense to allow a single school
board to oversee two or more districts.” |
