Based on inflation trends through the first 11 months of 2013, it looks like the starting point for property tax levy caps affecting 2014-15 school budgets across New York will be lower than 2 percent.
Under the state’s 2011 tax cap law, the growth in local property tax levies is capped at the lesser of 2 percent or an “inflation factor,” calculated as the average monthly change in the Consumer Price Index (CPI) for the 12-month period ending six months before the start of the fiscal year—which, for schools, is July 1.
Over the past few days, Governor Cuomo has made it clearer than ever that his “tax cut” focus next year will be on something that can be more accurately described as a tax shift: the creation of a new property tax “circuit breaker” credit that homeowners could claim on their state income taxes. The credit would rebate a portion of local property taxes, to the extent that they exceed some set percentage of each homeowner’s income. (For an example, see this Assembly bill.)
Cuomo also made it clear that he doesn’t want to touch the state’s largest revenue source–the personal income tax, or PIT– because, he said on the Capitol Pressroom radio show, “we just did the PIT last year … in the budget.” In fact, what Cuomo and the Legislature “just did” with the income tax in the 2013-14 state budget was to temporarily extend, for three more years, a 29 percent tax hike on individuals earning more than $1 million and couples earning more than $2 million, which was previously due to expire at the end of 2014.
Governor Cuomo today signed a bill imposing a 2 percent cap on increases in property tax assessments the “base agricultural assessment value” for farms. **UPDATED: See postscripts**
A press release from the governor’s office says the base value of agricultural land has doubled in the past seven years, and that tightening the assessment cap to 2 percent from the previous 10 percent “will help maintain agricultural lands in both high pressure development areas as well as rural areas, and save farmers thousands of dollars in property taxes every year.”
Business groups including NFIB and Unshackle Upstate are applauding the action, as is the Farm Bureau.
But with all due respect to farmers, the tighter farm property assessment cap is a really bad idea.
Reflecting the drop in overall inflation over the past year, the state-imposed cap on property taxes will be 1.66 percent for counties, cities, towns and villages with fiscal years that start Jan. 1, state Comptroller Thomas DiNapoli’s office has informed local officials.
Under the law passed in 2011, the cap on tax levies is set at the lesser of 2 percent or the rate of the growth in an “inflation factor,” calculated as the average monthly change in the Consumer Price Index (CPI) for the 12-month period ending six months before the start of the fiscal year.
Twenty-seven* school districts were seeking to override the state’s property tax cap in yesterday’s school budget votes. Twenty of these districts — or 74 percent — failed to collect the needed 60 percent supermajority to pass, according to news accounts. The closest result was in the Cornwall School District in Orange County, which fell two votes short of an override supermajority.
Opponents of Governor Cuomo’s 2 percent property tax cap were able to stick one major exclusion into the legislation before it passed in 2011: a provision excluding a portion of local government and school employee pensions from the total allowable “levy limit” in years when taxpayer-funded employer contributions rise by more than two percentage points of salaries.
That loophole will push the average “levy limit” in this year’s upcoming school votes to 4.6 percent statewide, more than double the base cap and the inflation rate, according to a report issued by the Empire Center today. And, ironically, the pension exclusion will make it easiest for the poorest districts to avoid a “supermajority” requirement for passing their budgets.
If not for the pension exclusion, the levy school tax limit statewide this year would average 2.7 percent, including allowances for factors such as physical additions to the tax base (new construction, not assessment manipulations) and partial “carry-forwards” of unused cap space from last year.
To no one’s surprise, the statewide teachers’ union today filed suit to overturn New York’s local property tax cap. NYSUT has enlisted some parents of school children as co-plaintiffs, but the chief motive here is obvious: the tax cap is likely to limit future increases in teacher compensation, which is by far the largest category of local school expenditures. (more…)
Just two school districts — out of nearly 700 in New York — will be limited to the new zero-tax hike contingency budget provision of the state’s new property tax cap law next year.
After failing to have either of two budget proposals approved by the electorate, the 1,500-pupil Cheektowaga-Sloan and the 355-pupil Oppenheim-Ephratah school districts will implement budgets for the 2013-14 school year using the current year’s tax levy, which equals no tax hike.
Nineteen school districts that attempted to override the tax cap in last month’s school budget votes will present revised budgets to voters tomorrow. Nine of those districts are resubmitting budgets below the cap, seven have budgets at the cap and three districts will try again to override the cap. (more…)
Assemblyman Harvey Weisenberg (D-Long Beach) has just introduced a bill (A.10676) that would exclude court-ordered tax certiorari refund payments from Nassau County school district tax levy limits under the state’s property tax cap. It’s the same measure introduced in the Senate a month ago by Sen. Jack Martins (R-Mineola).
If the bill is enacted, the added, uncapped school tax increases in Nassau County could come to at least $50 million a year, based on 2009-10 refund data cited by the Nassau-Suffolk School Boards Association in a memo to lawmakers urging passage of the bill. **See Update at bottom of post.**