August 15, 2013

Editorial: Local tax-cap reduction on tap


---- — It appears that the budget-creation process for municipalities and school districts in the North Country for 2014 is going to be even more challenging than in the previous year.

Why? Because of the decline in inflation, New York state’s property-tax cap next year will be 1.66 percent, not 2 percent as it has been the past two years.

That means more municipal budget-cutting, more layoffs, more elimination of services, etc.

And local education programs are likely going to take another hit as cash reserves, used to offset some effects of rising costs over the past couple of years, have either been depleted, or close to it.

In preparation for the revised tax-cap number, budget cutters may have to start using a meat cleaver instead of a paring knife to reduce expenses to get under the cap.

Gov. Andrew Cuomo and the State Legislature in 2011 passed the tax cap that limits the growth in the property-tax levy issued by municipalities and schools to 2 percent a year or the rate of inflation, whichever is lower.

The tax cap does have exemptions, though, such as growth in pension costs that can push the limit for some schools and municipalities above or below the 2 percent threshold.

For schools last May, the average tax-cap limit was about 4.6 percent. But with a lower baseline next year, those who prepare the budgets will face a more difficult task of keeping taxes under the cap.

Of course, voters can override the tax cap. Sixty percent of a governing board or 60 percent of school-budget voters in May can override the cap.

The override option gives local governments control of their budgets:

“They can spend whatever they want to spend, but have the debate, have the dialogue, have the discussion, have the vote, make it a meaningful vote,” Cuomo said in April 2012.

Few local governments have tempted the cap. Last May, 98 percent of schools stayed within their cap limit. This year, about 77 percent of local governments stayed under the cap.

Schools in particular are leery to seek a cap override. If a budget fails twice, schools can’t raise taxes at all for the coming school year.

So it’s time for those who create budgets on the municipal and school-district levels to start sharpening their pencils.

Or take out the meat cleavers.