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.

CPI data released yesterday by the Bureau of Labor Statistics reflect an average monthly inflation rate of 1.48 percent for the 12-month period ending in November.

The December CPI data won’t be released until late January. However, unless there’s an unexpected surge of inflation this month, it seems likely that the growth factor for school tax levies will be no higher than the 1.63 to 1.70 percent baseline caps already pegged for counties and municipalities in 2014 fiscal year.

That’s good news for property owners throughout the state — except, of course, in cap-exempt Buffalo, Rochester Syracuse and Yonkers. (New York City, also exempt, has long been subject to its own more complex property tax levy caps).

The low inflation rate also will make 2014-15 the most challenging tax cap test yet for school districts.  During the first two school years after the cap was enacted in 2011, the growth factor was 2 percent, since inflation in both years was slightly higher. The actual cap in each school district varies depending on added allowances for new additions to the local tax base, debt service related to voter-approved capital costs, payment in lieu of tax (PILOT) agreements, and the amount by which the change in employer pension contributions exceeds two percentage points.

With exclusions, the average effective cap was 3 percent in 2012-13 and 4.6 percent in 2013-14, with the latter year including 1.9 percent in wiggle room attributable solely to the partial exclusion for pension costs, which won’t recur in 2014-15.  Districts also have been drawing down substantial cash reserves built up before a cut in state school aid in 2011, but those reserves have been largely depleted.

This time around, assuming a baseline growth factor of less than 2 percent, the average effective school district tax won’t be much higher.  It will be interesting to see whether this prompts more attempted overrides, which require approval by a 60 percent supermajority of school district voters.

In the law’s first year, 48 districts sought overrides, of which approximately two-thirds were approved in the first vote.  This year, only 28 districts sought overrides, and one-quarter of those passed in the first vote.