The property tax cap that New York school districts must heed when budgeting has been decreased
A slight decrease to the property tax cap that school district officials must heed when creating budgets will create a gap for the coming fiscal year, according to officials.
Starting July 1, the new property tax cap will be 1.81 percent, a 0.0019 percent drop compared to the past two years.
While about 700 school districts will be affected, Timothy Burns doesn't have too many concerns about the adjustment. As the business administrator for the Manchester-Shortsville Central School District, Burns oversees the budget for the district, and noted that there have been decreases before in the state-mandated tax cap. In the 2017-18 fiscal year, the cap was set at 1.62 percent, while in 2016-17, it was 0.12 percent.
Which is to say he isn't surprised by the figure for the upcoming fiscal year.
The change in the rate means the district will have an approximate gap of $14,500, according to Burns, although he says that will be easy to make up, tapping into other revenue streams for the district, including state aid or collecting rent through the district's BOCES facility in Shortsville.
Burns also doesn't foresee any impact to staffing or programs, either. Noting that the district is "early in the budgeting process," he said district officials don't anticipate the decrease in the cap will affect the school budget.
"It's just one piece of the puzzle," he said
As for the Canandaigua City School District, Superintendent Jamie Farr put out a statement addressing the drop, noting the difficulty it poses for public school districts. In his statement, he said the tax cap plus yearly growth in unfunded mandates and rising operational costs "have truly made financial management for public school districts challenging, and it will for many years to come," Farr said.
The tax cap, implemented by Gov. Andrew Cuomo and the state Legislature in 2011, limits the growth in the property tax to either 2% a year or the rate of inflation, whichever is less.
State Comptroller Thomas DiNapoli sets the tax-cap limit each year for schools and municipalities.
The Democratic governor has hailed the cap as limiting the growth in property taxes in New York, which has among the highest taxes in the nation.
The cap curbed increases in school taxes to an average of 1.9% between 2012 to 2018, a report last year found. For the five years before that, the increases averaged nearly 7%.
Last year, Cuomo said he wouldn't approve a state budget without making the property-tax cap permanent, and he was successful. The measure was included in the state budget for the fiscal year that started April 1.
"You have to make the tax cap permanent — period," Cuomo said during budget negotiations last year. "You have to offer New Yorkers some stability in this environment."
But the permanent cap comes amid difficult fiscal times for state government.
The state faces a $6 billion deficit for the coming year, and that means increases in school aid may be limited.
School groups have been lobbying for a $2 billion increase in aid for the 2020-21 year. In the current year, school aid rose by $1 billion, to a total of $27.9 billion — by far the most per capita in the nation.
Now school officials said they will likely be limited in their increase in school aid and how much they can seek from taxpayers at the polls May 19.
"This will be the first time in three years that the tax cap has been below 2%," said Michael Borges, executive director of the state Association of School Business Officials. "Coupled with a state budget deficit of approximately $6 billion, it will make a very difficult year for school district budgeting."
New York pays the most in taxes to Washington — as in billions of dollars more — but gets the least back.
Districts can seek an override, but they are difficult to achieve. Usually about a dozen districts are successful in getting voters to approve exceeding their cap limit.
The lower tax cap this year is "one piece of a more complicated issue,” said Joseph Phelan, the superintendent in Rhinebeck, Dutchess County. He said the decreased cap represents a $50,000 decrease in the amount of money Rhinebeck can generate from its tax levy.
“We will do as we have to do every year and consider priorities and what the tax levy cap allows us to raise in revenues," he said. "Obviously if we got $50,000 more in state aid this will be a wash but likely that is not going to happen.”
Includes reporting by Joseph Spector of the USA TODAY Network and by Poughkeepsie Journal staff writer Katelyn Cordero