August 15, 2013

Lower state tax-levy cap concerns officials


---- — PLATTSBURGH — A lower state tax-levy cap is expected to make budgeting for municipalities and school districts more difficult.

“This is not good news,” City of Plattsburgh Mayor Donald Kasprzak said.

“The process is difficult enough without the added changes this tax cap presents.”

The cap, approved by the State Legislature in 2011, puts a limit on property-tax-levy increases of no more than 2 percent or the rate of inflation, whichever is lower.

This week, the Office of State Comptroller Thomas Dinapoli set a new rate of 1.66 percent for 2014 for municipalities, based on a decline in inflation. 

A new rate will be set for school districts for the 2014-15 school year next January, but it is not expected to be much different than the 1.66 percent, according to several published reports.

The cap is also affected by several other factors in a complex formula, which could make it higher than 2 percent or the rate of inflation.


According to New York State’s Property Tax Cap, a Citizen’s Guide, the other elements to the cap include growth factor, which is new construction within a taxing jurisdiction; tort settlements or awards whose costs exceed 5 percent of the tax levy; capital costs (including debt service) for school districts; pension contribution increases that exceed 2 percentage points of covered payroll; and a carryover of up to 1.5 percent of unused tax-levy growth to the following year.

A municipality can exceed the cap limit if at least 60 percent of the members of its governing body vote in favor of a local law overriding the cap.

School districts can only override the cap if at least a supermajority of 60 percent of district residents vote for it in the annual budget vote held each May.


Based on the formula, the maximum cap for Clinton County for 2013 was 3.2 percent. Legislators approved a budget that featured a tax-levy increase of 1.9 percent, well below the limit.

In the City of Plattsburgh, councilors approved a tax-levy increase of 5.2 percent, which was the maximum allowed under the formula.

Since the cap was installed, municipal and school-district leaders have been calling for mandate relief from the state to help them deal with the budget constraints the cap puts on them.

Kasprzak said not providing it is a real problem.

“Reducing the tax cap without seriously addressing unfunded mandates for cities, towns, villages and school districts is irresponsible and unfair by Albany decision-makers,” he said.

“This will continue to adversely affect how municipalities operate, the taxes local taxpayers will pay — and ultimately the services provided to communities.”


Clinton County Administrator Michael Zurlo, who serves as the county’s budget officer, said the lower tax-cap figure set by the state for next year will affect the budget process.

“When we calculate the cap using this growth factor, we will reduce expenses or look for additional revenue to stay within the statutory cap,” he said.

Zurlo said he will propose a budget that does not require an override, as he has the past two years since the cap was implemented.

Essex County is also bracing for the change.

Essex County Manager Daniel Palmer said his county has major revenue issues that a reduction in the tax cap is unlikely to effect.

“At this point, I am not really sure the difference between a 2 percent cap or a 1.66 percent cap is significant enough to matter in our case.”

The county has a budget funding gap of millions of dollars, he said, which could make it difficult to meet any cap.


Franklin County’s initial 2014 budget gap is between $4 million and $6 million before the process even begins, so a lower property-tax cap adds even more pressure to cut expenses.

“It’s going to be a tough budget to get to 2 percent and even tougher to get to 1.66,” said Legislature Chairman Billy Jones (D-Chateaugay).

“We’re going to get the budget down like we always do, no matter what magical number is out there, 2 percent or 1.66 percent.”

Layoffs, employee buyouts and leaving vacant jobs open have worked in the past, “but remember, the more you cut, the less you have to cut,” he said.

“We’ve cut the fat the last two years, and now we’re cutting into the bone. Nobody wants to pay more taxes, and we’re going to cut as much as possible,” Jones said. “This is difficult on the department heads, and it’s difficult on us.”


Most municipalities are just beginning their budget process for 2014. School districts will start their budget process in early 2014 for the 2014-15 school year.

Assemblywoman Janet Duprey (R-Peru), who voted for the tax cap two years ago, said meeting the 1.66 percent tax cap will be difficult for many municipalities and school districts without mandate relief.

“Taxpayers continue to struggle with increases in taxes and for the most part support the tax cap,” she said.

“However, taxpayers also want to have the same services they’ve come to expect from local government. I believe we are at or near the point where services will be reduced or more municipalities will need to override the 1.66 percent tax cap.”


Towns and villages will also be under the same pressure.

In the Town of Jay in Essex County, Supervisor Randy Douglas said the average tax-levy increase over the past nine years in their budget has been 1.75 percent, before and after the 2 percent limit was set two years ago.

It will prove challenging to drop that to 1.66 percent, he said.

“It’s going to make it tougher because the cost of everything keeps increasing. Every $16,000 (spending increase) was one percentage point on the budget last year. I don’t know if it will be the same for this year; we are just starting to crunch the numbers now.”

“I think what this accomplishes is that it makes the state look good,” said Town of Malone Budget Officer Andrea Stewart.

“Municipalities are required to be below the cap, but they aren’t required to,” she said of the state.

“So it’s just another day for towns and villages to do what’s best for taxpayers, which is what we always do anyway.”

She said the idea of mandates with no funding and restrictions on taxes is difficult to deal with.

“The whole process is offensive,” Stewart said.


State Sen. Betty Little (R-Queensbury) serves on the state Mandate Relief Council.

She said some relief has been provided, such as stabilizing Medicaid costs for counties, but the council continues to explore other changes.

“It is going to be a tough year for them (municipalities), but we just can’t raise taxes anymore,” she said.

“That is what is driving people and businesses out of the state.”

Little said providing more mandate relief is difficult because for every mandate, someone supports it.

“We are definitely looking at more options. A lot of them are small, but every little one helps,” she said.

The reaction generated from lowering the cap from 2 to 1.66 percent may also help spur more relief, she said.

“This could drive the (Relief) Council to look at more mandate and regulatory relief, but even if we do, they (municipalities) will tell you it is still not enough.”


While municipalities will begin to deal with the tax-cap change in the next few months, school districts have a bit longer, but the task will still be challenging.

Plattsburgh City School Superintendent James “Jake” Short told the Press-Republican in an email, “This inflationary figure reveals one of several inconsistencies within the tax-cap formula.”

After all, he noted, if the change in inflation is the basis for adjusting the rate downward below 2 percent, “then what is the rationale for not permitting this adjusting factor when the (Consumer Price Index) exceeds 2 percent?”