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Tax cap guide
attempts to clarify complex subject
Two percent tax cap does not in fact restrict any property tax
levy increase to 2 percent
 A
publication released today seeks to clearly explain the newly
enacted property tax levy cap. In its first year, details about
the law’s provisions and implementation continue to evolve.
Understanding New York’s Property Tax Levy Cap as it relates
to public schools answers some questions that parents,
taxpayers and school staff members may have, based on what is
known right now.
(Download report here)
The publication was developed cooperatively by the Capital
Region BOCES Communications Service and Questar III’s State Aid
Planning and Communications Services.
Designed in a Q&A format, the report answers such questions as:
• Does the public still vote on school district budgets?
• What happens if the budget is not approved by voters?
• What will the property tax cap law mean for MY tax bill?
According to the report, New Yorkers have paid some of the
highest property taxes in the country for many years, “spurring
individuals and business owners to increasingly clamor for tax
relief.” In June 2011, state leaders responded by enacting a law
that places new restrictions on how school districts (and
municipalities) may increase their tax levies.
Although the new law has been referred to as a “2 percent tax
cap,” it does not in fact restrict any proposed tax levy
increase to 2 percent. However, the law does require at least 60
percent voter approval for a school budget if the proposed levy
increase exceeds a certain limit. The publication explains the
"tax levy limit" without going into the complicated formula
outlined in the law that districts will use to calculate their
individual limit.
The formula does take into account that some expenses are
currently outside a district’s control. Taxes that school
districts levy to pay for certain expenses are “exempt” from the
“tax levy limit” calculation.
“In other words," the report said, "after a school district
calculates its 'tax levy limit,' it then adds these exemptions
to that amount, allowing the district to propose a tax levy
greater than the amount set by the 'limit' without triggering
the need for approval by 60 percent of voters.”
Far from being “loopholes,” these exemptions seem to indicate an
acknowledgement among lawmakers that schools have no ability to
simply limit cost increases in these areas to the rate of
inflation.
As a result—the report
concludes—a district’s final
tax levy (after the levies for these exemptions are added in)
could be greater than its published “tax levy limit” and yet
still be considered, under the law, within that limit.
If the new law does not actually cap tax levy increases at 2
percent, how will it provide property tax relief?
The law seeks to control increases in school tax levies (a
source of revenue), not to help curb escalating expenses. Except
for a few modest mandate-relief measures, the law does nothing
to help schools rein in costs.
At the same time, New York State’s public schools have lost more
than $1 billion in state education funding in recent years,
putting even greater pressure on local taxes to fund school
programs.
The law may result in some measure of tax relief for residents.
However, the report states that the “extent to which the law
will also result in the loss of educational programs will depend
on levels of state education funding and whether state leaders
offer any meaningful mandate-relief measures to help control
rising costs.”
HFM BOCES District Superintendent Dr. Patrick Michel agrees with
the report’s assessment that “particularly for poor and/or rural
school districts with low property wealth and declining tax
bases, staying within their ‘tax levy limits’ will severely
restrict their ability to generate revenues needed to sustain
core educational programs.”
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