New budget tax caps for 2016
TRI-COUNTY AREA--Area municipalities will be faced with stricter taxation limits in the coming year. According to the New York State Comptroller's Office, villages will be limited to a 0.12 percent tax cap in 2016, while towns and counties will see a tax cap of 0.73 percent. Meanwhile, area school districts may have a tax cap closer to 0 percent.
"Local government officials need to brace for the lowest growth in their property tax revenue in the tax cap era," said State Comptroller Thomas P. DiNapoli. "Municipalities may have to operate differently under these new limits. Even tougher budget choices may be required on staffing levels, delivery of services, fund balance reductions, and deferral of capital and infrastructure projects. And if inflation trends continue, it is possible that some local governments with fiscal years beginning later in 2016, including school districts, could be faced with zero growth in property tax revenue."
State Senator Tom O'Mara (R,C--Big Flats) said municipalities are going to have a very hard time staying within this limitation, adding the cap has been decreasing every year. He said the reason for the decrease in allowable cap is due to the low inflation rate, adding while he supported the cap, there needs to be more mandate relief from the state so villages can meet their budgets.
According to the comptroller, the tax cap law limits the amount local governments and most school districts can increase property taxes each year to 2 percent or the rate of inflation, whichever is lower. Since July 31, 2013, the inflation factor has been less than 2 percent. Local government boards must pass a local law or resolution by at least a 60 percent vote to override the tax cap, while voters in school districts can override the cap with a 60 percent vote.
The tax cap also depends on the fiscal year of each municipality. Since the fiscal years of towns and counties runs from Jan. 1 to Dec. 31, their inflation factor is 0.73 percent, where most villages' fiscal years run from June 1 to May 31, amounting to an inflation factor of 0.12 percent.
Area officials stated their displeasure with the limitations. Penn Yan Village Trustee Bob Church said he was "very, very upset" with the fact the state is imposing such a low tax cap without any additional assistance during their regular Tuesday, Dec. 15 meeting. Church said the 0.12 increase amounts to $3,400 for the village, adding the health insurance costs alone are supposed to go up 13 percent next year.
"They are basically out of control," Church said.
In Dundee, Mayor Fred Cratsley Jr. said streets and fire departments are likely to suffer the most due to these restrictions, adding that is 95 percent of the village's general budget.
"The cap as it's projected is going to be very difficult for municipalities to obtain," Cratsley said. "Even though it can be done, my concern is over a long period, it may come back and haunt us if we don't at least keep up and possibly ahead of rising costs of health insurance, retirement costs and state mandates."
Cratsley added the village will look at all avenues of the budget and make as many necessary cuts as they can. He also said overriding the tax cap is "always a possibility."
School districts are anticipating the same struggles. While the rate of inflation numbers have not yet been identified for school districts, whose fiscal year begins July 1, some officials like Dundee Superintendent Kelly Houck have previously warned of a school tax cap near 0 percent in 2016. She claimed this would have a negative impact on all school districts and be very difficult to overcome.
In Penn Yan, Superintendent Howard Dennis said the basic, mandated increases will push the district beyond the cap. He added with the cap being so low, it will cause difficult decisions to have to be made and cuts to programs and services. The Penn Yan board of education is currently seeking input from the community to gauge the willingness of taxpayers to support an override to protect programs.
"The tax cap was never intended to constrain budgets to 0 percent," Dennis said. "It was intended to protect taxpayers from extreme increases that they could not afford. A 0 percent cap does not meet the intention of the legislation."
Dennis said the district is hopeful the Gap Elimination Adjustment will be fully restored in 2016, which for Penn Yan will mean an additional $500,000 in aid. Dennis noted this aid was cut a few years ago and never restored.
One Watkins Glen trustee said despite the limits, he anticipates the village will be in a good position come budget time next year. Trustee Kevin Thornton said the board plans to work to try to stay within the 0.12 percent tax cap despite it being so low. He said while it would be a tough call to make right now without having all the figures on the table, the limits are good and they will work to stay within those limits.
School districts are anticipating some challenges in 2016. While the rate of inflation numbers have not yet been identified for school districts, whose fiscal year begins July 1, some officials have previously warned of a school tax cap near 0 percent in 2016.
"This is creating a challenging situation for the school budget in that we cannot increase revenues, but the cost of providing a quality educational program continue to increase," Watkins Glen Superintendent Tom Phillips said. "The question we will grapple with is do we decrease the scope or quality of our program to stay within the 0 percent increase, or will the state provide enough aid to allow us to maintain the quality of programming we provide for students."
Phillips said the decision to override the tax cap or not depends on the amount of aid that is received from the state. He noted since more than than 90 percent of the budget is mandated services and programs, the only areas they can reduce is non-mandated programs and services like facilities, maintenance, equipment and elective educational programs. Phillips said with the elimination of the Gap Elimination Adjustment (GEA), the district does anticipate a one time increase in revenue next year. However, he added people must remember the GEA was the reason for over $9 million in lost revenues for the district since 2009.
"I am a taxpayer in this community so I clearly understand the impact of high property taxes," Phillips said. "The larger issue for our elected officials is to identify a system for equitable distribution of state aid across the state. It is simply not fair that students in affluent communities are provided comprehensive foreign language, art, music and accelerated programming in elementary grade levels, while other school districts across the state struggle to provide the basic level of program required for a high school diploma."
Odessa-Montour Superintendent Chris Wood said he thinks the lower cap is going to be tough for many districts.
"As the cost of providing a quality education rises, it then becomes tougher for districts to generate funds to meet the needs of providing a quality education," Wood said.
Wood noted the district does not expect any additional state aid and will plan to budget accordingly. He does not anticipate there will be a tax cap override, adding it is difficult to predict which programs and areas of the budget will suffer the most. Wood added like most districts, Odessa-Montour will do the best with what the state sets forth.