Local tax cap may dip in ’15

by Tim Hoefer |  | NY Torch

Tax-Cap-150x150The starting point for computing the property tax cap in New York counties and municipalities may drop a bit next year. The average change in the Consumer Price Index (CPI) during the 12 months ending in June was 1.56 percent, according to preliminary federal data, compared to the 1.66 percent inflation rate during the same period a year earlier.

The property tax cap, passed in 2011, limits the increase in tax levies to the lesser of 2 percent or the average change in the 12-month period ending six months before the start of the fiscal year. The CPI average as of June would apply to cap calculations for fiscal years that begin Jan. 1, which is the case in most counties, towns and cities. The cap’s inflation factor will be officially established by the state comptroller, probably within the next month.

The cap in each locality will vary based on the amount of applicable allowable exclusions for growth in local property values. Localities also will be able to exclude the amount by which the change in pension contributions exceeds two percentage points (pension contribution rates should be available later this summer).

A 60 percent supermajority vote of the local governing board is required for a cap override at the county, city, town and village level. For localities whose legislative bodies have seven or fewer members — which would include virtually all town boards and many village boards — a supermajority is the same as a simple majority required to pass a budget. However, most local governments have kept levies within the cap since the cap was implemented.

School districts, budgets for which are voted on by district residents,  have a more difficult time garnering the 60 percent supermajority vote to override the cap.  Districts faced a 1.46 percent inflation factor for calculating caps for the 2014-15 school year. Twenty-four districts sought an override this year, of which 15 passed on the first attempt.

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- Tim Hoefer is the Executive Director at the Empire Center for Public Policy.