Tax Cap Information

Key Points about New York’s New Property Tax Levy Cap

 

This publication answers some questions about New York's Property Tax Cap.  Details about the Property Tax Cap may be found on the Budget Information page under Property Tax Report Card.

 

• Our district supports property tax relief. New York has some of the highest property taxes in the country. We understand property owners’ desires to keep a lid on tax increases.
• The new law has been referred to as a “2 percent tax cap,” but the law itself does not limit how much the tax levy can actually increase under a proposed budget. The law does, however, require at least 60 percent voter approval for a school budget if the proposed levy increase exceeds a certain amount.
• That amount, called the “tax levy limit,” will be calculated by each district according to a formula outlined in the law. However, by law, the tax levy limit does not include any taxes we would levy to pay for expenditures related to certain “exempt” items, including court orders, pension costs and local capital expenditures.
• A proposed budget that carries a tax levy (before exemptions) at or below the levy “limit” will require approval by a simple majority. If the tax levy (before exemptions) is above the levy “limit,” a supermajority (60 percent or more of voters) is what is needed for approval.
• Although we have the option to exceed the “tax levy limit,” we are well aware that any proposed school tax levy increase will be benchmarked against our levy “limit,” adding to the pressures we are under to control taxes even in the face of escalating costs and expectations for teaching and learning.
• Obtaining community support for the district budget is a high priority, given the law’s new contingent budget restrictions. If a district fails to gain voter approval and must adopt a contingent budget, then the levy increase is truly “capped.” Under a contingent budget, there can be NO increase in the tax levy.
• The tax cap law does not cap an individual’s school tax bill. The law applies solely to the school tax levy. Increases in individual tax bills are often different from increases in the tax levy due to a variety of factors outside a school district’s control, and this will continue to be true.
• Property taxes and state aid are the two biggest sources of revenue that fund our educational programs. 
• Every year, we balance spending with available revenues. The District consistently looks for ways to control expenses, and we will continue to do so.
• Meaningful relief from state and federal mandates and regulations could also help control costs. Other changes requiring state action, such as more regional approaches to expenses such as health insurance, would also help. So far, state officials have neither provided significant mandate relief nor facilitated any significant systemic changes to help school districts control costs.
• As with any new and complex education legislation, we expect our understanding of this to evolve as it is implemented. We will do our best to keep you informed. 

What you can do...

Contact your legislators and share your concerns. Help them understand that:

• New Yorkers do need property tax relief.
• The tax cap threatens school districts with no funding increases—essentially a zero-percent cap.
• This tax cap fails to address the problems that drive education costs higher—salaries, health insurance, pension costs, and unfunded mandates.
• As adopted, this tax cap will widen the funding gap between poorer school districts like Stockbridge Valley who are highly dependent on State Aid for revenues and the wealthier school districts who have a greater share of revenues from their tax levy.
• Every child deserves the right to a good education—and the tax cap will have a long-term impact on Stockbridge Valley students. 

Understanding the negative consequences of the tax cap

Concerns with a tax cap:

It's a zero-percent tax cap—Tax cap supporters refer to the cap as a two-percent tax cap, but provisions in the bill actually promote a zero-percent cap. If a proposed budget fails twice to get voter approval, the district must adopt a budget with the prior year's levy—with no option for an increase—a zero percent increase. 

"No" votes are weighted more than "yes" votes—Unlike other votes where a simple majority passes, a budget that exceeds the cap would require 60 percent of votes to pass. 

Under the proposed tax cap, state government sets school property tax limits and requires a 60-percent supermajority to overturn those limits. Supermajorities are required when governments want to make it difficult to overturn regulations or laws (i.e. changes to the U.S. Constitution). 

A tax cap widens the gap between the haves and the have-nots—The lure of a tax cap is that it places limits on how quickly property taxes can rise. Barring an override vote, property owners can plan that taxes will not increase more than two percent per year. That may be good for taxpayers, but what will that do to schools?

Consider the following to understand the implications of the Tax Cap on District's highly dependent on State Aid;

Under the tax cap, Stockbridge Valley could collect $44,000 more in property taxes to support budget expenditures, while the Wealthier District would be able to collect $120,000 more to fund budget expenditure increases. With more money to spend, the Wealthier District can continue to provide an education with more opportunities than SVCS. Note- with each successive year, that gap widens.

A tax cap does not address the factors that drive school costs higher—

Many of our neighboring districts have made deep spending cuts over the last several years. Further cuts can only come at the expense of jobs and programs—fewer teachers (larger class sizes and fewer programs), fewer sports, clubs, and extracurricular activities, and few support staff (custodians, food service staff, etc.). These cuts merely limit student opportunities.

The real cost drivers are rising salaries, rising health insurance costs, rising retirement pension contributions, that are all necessary to maintain staff and remain competitive as an employer, along with an ever growing list of unfunded mandates (state-required programs, services, and compliance reporting that are paid by the local school district).

Schools will not be able to slow education costs without changes in laws and regulations that are beyond a school's control.