In early July, Governor Cuomo signed into legislation the historic “tax cap” law. The law which takes place next year will limit tax levy increases to 2 percent or the rate of inflation, whichever is less. The hallmark law will help rein in property taxes statewide. Additionally, legislators hope the cap will encourage and revitalize the state’s economy by keeping more businesses and families in New York. Somewhat similar to the tax cap law in New Jersey, residents could override the “cap” with a 60 percent vote on a school budget.
Although many understand the law to be a “2 percent” tax cap, it is not. It is 2 percent or the inflation factor of Consumer Price Index (CPI – currently 1.6 percent) – the lesser of the two. For this year, if in effect, the tax cap would be less than 2 percent, specifically 1.6 percent. In fact, if the CPI were zero percent – then the tax levy would not increase at all. At the same time, there are exemptions to the tax cap, for example, a portion of mandated pension contributions, capital construction costs, and legal judgments. Surprisingly, these factors could cause the tax levy to increase above the cap. A primer put out by New York State Associations of Counties regarding the specifics can be found at http://www.nysac.org/documents/NYSACPropertyTaxCapReport4.pdf. Please feel free to review the details of the law at your leisure.
Unfortunately, the law is likely to have a dramatic impact on our schools unless new legislation is introduced to provide relief. Schools continue to be subjected to new and ever-growing unfunded mandates. Despite so-called “moratoriums” on new mandates, New York State schools continue to be subjected to more and more responsibilities at a greater expense to the local community. For example, the costs associated with New York State’s “Race to the Top” initiative continue to mount and our district will receive approximately $5,000 annually. This does not even begin to cover our local expenses. In fact, the district has put together a few financial models to project the 2012 tax cap impact and right now we are well over the cap. This means we will need to reduce expenses by this amount to meet the new requirements. Regrettably, this could mean significant layoffs, higher class sizes, elimination of academic programs, and fewer co-curricular activities and opportunities for students, including athletic and music programs.
This could change depending upon a few key factors in Albany. Over the past two years, the loss of state aid has caused the district to reduce staffing and resources. An increase in state aid would help us better meet the new tax cap law. In addition, the state could help by modifying the 1982 Triborough Amendment to the Taylor Law where employee salaries continue to increase even with expired contracts. Under this change, municipalities would be better equipped to control expenses and meet the law without reducing program or services.
We will continue to discuss the tax cap impact throughout the school year. It will be one of our topics at our first Town Meeting for the 2011-12 school year on Tuesday, Oct. 11, 7 p.m. at the Karopczyc Building.
