Sizing up school tax caps

by E.J. McMahon |  | NY Torch

While New York State’s new property tax cap has a starting point of 2 percent (or the prior year’s average inflation rate, whichever is less), it will vary from school district to school district based on a series of exclusions for capital expenditures, increases in pension costs, and physical additions to the district tax base. Heading towards the first annual school budget votes to be affected by the tax cap, districts were required to submit their estimates of the adjusted “levy limit” to the comptroller’s office earlier this month. The results can be found in this spreadsheet.

Among 679 districts reporting their estimates to the comptroller, the median levy limit for 2012-13 school budgets will be 2.7 percent, and the average will be 3 percent. By comparison, school districts actually proposed average tax levy increases of 2.9 percent a year ago, before the cap took effect. However, it seems likely that many districts will seek to come under the cap this year, in order to avoid having to meet the law’s new requirement for a 60 percent super-majority to override the tax levy limit. As I note in today’s Newsday column, we’ll know more about this year’s school budget proposals when the 2012-13 School Property Tax Report Card comes out in a couple of weeks.

A further breakdown:

  • 10 school districts (all of them small and upstate) will have levy caps of more than 10 percent.  The list is headed by the tiny Barker School District in Niagara County, where the cap will be 31.59 percent. Such large effective limits generally reflected a combination of sharply decreased payment in lieu of tax (PILOT) payments, which meant more property is coming on the tax rolls next year, and an increase in voter-approved capital expenditures. A big PILOT decrease is primarily responsible for the change in Barker, for example.
  • 96 will have levy limits of less than 2 percent, including a dozen with caps effectively set at zero. Effective tax caps below 2 percent generally are due to large increases in PILOT payments or large decreases in voter-approved capital expenditures, or both.
  • 351 districts will have limits of 2 to 3 percent.
  • 132 districts will have limits of 3.1 to 4 percent.
  • 42 districts will have limits of 4 to 5 percent, and
  • 48 will have limits above 5 percent but below 10 percent.

Twenty-eight school districts covered by the cap have yet to submit levy limits to the comptroller’s office as of early this week.



- E.J. McMahon is the President at the Empire Center for Public Policy.