Reform the Property Tax Levy Cap

 

New York State’s property tax cap law limits the degree to which property taxes can be raised in a given year. While the formula is complicated, the basic concept is that it allows for taxes to increase by the lesser of 2% or the consumer price index (CPI). Because of a very low CPI, many school districts predict a near 0% tax cap for the 2016-2017 school budget year. This creates challenges for district budgets that include negotiated increases in costs in multi-year contracts. In many cases, school districts will be required to cut programming

Budgets can be passed over the tax cap but require a 60% majority of the community to approve the budget rather than requiring a simple majority of over 50% of the voters. Additionally, the New York State Tax Freeze Credit creates incentive for voters to reject budgets that exceed the tax cap.

The New York State School Boards Association (NYSSBA) recommends changes to the current tax cap law to ease the burden on school districts across New York State, including:

  • Redesigning the override requirement as a separate ballot question;
  • Modifying the uniquely restrictive zero percent contingent budget cap for schools;
  • Making the allowable levy growth factor a consistent 2 percent, regardless of CPI;
  • Addressing instances where a district’s maximum allowable tax cap is negative;
  • Counting BOCES capital costs in the capital exclusion;
  • Including PILOTs in the tax base growth factor; and
  • Accounting for enrollment growth in the tax cap calculation.

For more information see NYSSBA’s brief Q&A on the tax cap and information on tax cap challenges for the coming year.