Record-low Inflation Equals Zero Tax Cap for School Districts
ALBANY, NY (01/20/2016)(readMedia)-- The U.S. Department of Labor recently released the final Consumer Price Index (CPI) for 2015, showing a monthly-adjusted average change of 0.12 percent. Under New York State's real property tax cap law, school district tax levy increases are limited to this percentage for 2016, unless voters approve a budget with at least a 60 percent supermajority to override the tax cap. This means that school districts will be allowed to increase their tax levies by 12 hundredths (12/100) of one percent in order to stay within the Tax Cap.
The property tax cap was initiated in 2011 by Governor Andrew Cuomo to moderate the size of property tax increases that occurred prior to the Great Recession. Before the recession, annual school spending increased almost six percent a year. This spending slowed during the Great Recession to less than half and this slower growth in spending has continued during the era of the Tax Cap.
Allowable Levy Growth Factor
2015-16 1.62 %
2014-15 1.46 %
2013-14 2 %
2012-13 2 %
The tax cap was originally marketed, and largely understood, as a "two percent cap." But the law actually reads "the lesser of two percent or the inflation factor" and now for three years in a row the tax cap has been below two percent.
The tax cap is made more burdensome by nuances in the law. First, the law ties growth to the prior year's CPI. For 2016, inflation is expected to increase, so districts will be limited to a severely low cap while inflation is going up. Second, the Legislature passed a bill in 2015 allowing some additional flexibility with the tax cap, but these laws have not yet been implemented.
Chapter 20 of the Laws of 2015 authorized the Commissioner of Tax and Finance to include payments in lieu of taxes (PILOTS) in the property change factor, and count BOCES capital costs in the capital exclusion. These changes would better align the tax cap to the real needs of schools. Unfortunately, Chapter 20 included language that left the implementation of these changes to the discretion of the Commissioner of Tax and Finance.
NYSASBO has been advocating for the Legislature to either tie the tax cap to a steady two percent, or provide state aid to make up for the loss in local revenues, which is estimated to be $405 million. NYSASBO is also advocating for the Department of Tax and Finance to issue regulations to implement the changes that were passed by the Legislature.
"We urge the Legislature and concerned citizens to contact the Governor's Office or the Commissioner of Tax and Finance and request they fulfill their obligation to implement these changes to the tax cap that the Legislature passed. These changes will each benefit about 75 percent of school districts throughout the state, which is particularly important in a zero percent tax cap year," stated Michael J. Borges, NYSASBO Executive Director.