Pension loophole boosts tax cap for schools

by E.J. McMahon |  | NY Torch

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.



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