Quarter of localities overrode NY tax cap in 2015
ALBANY - A lower tax cap meant more municipalities overrode it in 2015.
Twenty-six percent of local governments voted last year to exceed the state’s tax cap for their 2016 budgets, up from about 19 percent that did so in 2014, state records from the state Comptroller’s Office showed.
Local governments and schools are increasingly feeling the pinch from the tax cap — which has fallen from 2 percent in 2013 to just 0.12 percent for schools and villages for their coming fiscal years.
“It’s certainly changed the perception in terms of how New York handles property taxes,” Comptroller Thomas DiNapoli said. “In the long run, in terms of providing services, it also puts more pressure on the state to make up some of the difference.”
The tax cap, installed in 2011, limits the growth in the tax levy to 2 percent a year or the rate of inflation, whichever is lower. So as inflation falls, so too has the tax cap.
Municipalities with a Jan. 1 fiscal year had a 0.73 percent tax cap this year. They approved their budgets last fall.
Some local officials said they had to vote to override the cap — which requires a 60 percent vote of the local governing board. The 469 of the 1,823 taxing entities that reported an override included 215 towns, 11 cities and nine counties — including Ontario, Rockland and Wyoming counties.
Two years ago, 26 percent of taxing entities also overrode the cap, which then had a limit of 1.67 percent.
Rob Nesbitt, the supervisor in Webster, said the cap was untenable last year. The cap would have limited new revenue to $254,000; health care costs alone went up $300,000. So the Town Board voted to exceed the cap with a 7.9 percent tax levy increase.
Staying under the cap would have meant, “you got to cut, cut, cut out of what you already have, and that only hurts the services to the residents,” Nesbitt said. “And my board said, ‘We were not going to do that any longer.’ ”
Gov. Andrew Cuomo has hailed the cap for limiting the growth in taxes in a state with among the highest taxes in the nation. A report Tuesday from the Tax Foundation, a national group, said New York in 2012 had the highest state and local tax burden in the nation.
In the cap’s first three years, property taxes grew an average of 2.2 percent per year — less than half the average annual growth in the prior decade, Cuomo’s office said.
“We passed a 2 percent property tax cap that has brought welcome relief to the citizens of our state,” Cuomo said in his State of the State address Jan. 13.
But local governments and schools said the cap is more and more difficult to abide by. An override is easiest for town and village boards that have five members; it only takes a majority of the members to override the cap.
The larger problem is for schools, which need 60 percent of voters to override the cap. Few schools, therefore, try for an override each May — and only a handful are successful.
Staying under the cap also comes with incentives for homeowners: They get rebate checks each fall if their local governments and schools don’t exceed the cap.
So with a 0.12 percent cap coming for schools — announced Wednesday by DiNapoli — educators are bracing for either an override effort at the voting booth or cuts to programs and services.
“Schools will not be able to raise any meaningful new revenue without obtaining a 60 percent supermajority in support of their budget — a very challenging task,” said Timothy Kremer, executive director of the state School Boards Association.
According to the Comptroller’s Office, the most overrides occurred last year among library associations: 48 percent of the 103 districts voted for an override in 2015.
Just nine of the 56 counties outside New York approved an override.
Broome County Executive Debbie Preston said the county has stayed under the cap, but it has required cuts in spending. And counties, too, expect a tax cap near zero in 2017.
“New York state is making it tougher and tougher on local municipalities to stay within the cap,” Preston said in a statement. “Government leaders know this is next to impossible because of rising mandated costs, which equal about 67 percent of our budget.”
She said the choice is “either cut services, which would harm the local taxpayer, or not stay within the cap and our taxpayers won’t get a rebate check.”
School groups in particular have called for changes to the tax cap, either by making it a permanent 2 percent cap not tied to inflation or allowing an override with a simple majority of the vote. They are also seeking more state aid for schools to offset the tight cap.
New York is in the second year of a three-year “tax freeze” program that provides rebate checks to homeowners whose local governments and schools stayed under the cap last year and develop plans to share services. The average will total about $525 per household over the three years.
This fall, there’s another check that will provide a tax rebate for homeowners based on their income – and it’s also tied to cap compliance.
“With the tax cap, we understand what the governor is trying to do, but we don’t control all of our costs,” said Howard Philips, the town supervisor in Haverstraw, Rockland County. “Allow us to control all of our costs, and we’ll get down under that cap.”
The town has overridden the cap twice in recent years because of growing costs and limited revenue.
Cuomo has highlighted some ways the state has lessened unfunded state mandates on local governments, such as taking over the growth in Medicaid costs from counties and installing a new pension tier.
But while pension costs have fallen for schools and municipalities, sales-tax revenue — the largest revenue source for counties — has been stagnant.
Richard Thomas, the newly elected Mount Vernon mayor, said the city agreed to a tax-cap override last year, but the city still has a troubled financial picture.
“I do believe there’s going to be some serious cash challenges for the city of Mount Vernon,” he warned.
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