Information About the Tax Cap Legislation
What's going on with the proposed 2% tax cap?
· A 2% cap on the property tax levy was proposed by the Governor and approved by the State Senate in January 2011. In May, the State Assembly proposed tax cap legislation as well.
· The New York State PTA and the New York Council of School Superintendents oppose the proposed tax cap legislation. See below for links.
· A vote in the Assembly is expected soon, possibly next week, so now is the time to get informed and raise questions or concerns with state legislators.
· PTAs, school boards and superintendents have asked for meaningful reforms. If the legislature can't accomplish reform, why punish our children? http://www.lohud.com/article/20110605/OPINION/106050341/Tax-cap-plan-hides-what-Albany-really-needs-do
How does the proposed legislation remove control from local communities?
· Under the proposed legislation, the increase in the tax levy would be capped at the lesser of 2% or the previous year's consumer price index (CPI). Voter approval would still be needed, but voters would approve the "tax levy" (difference between revenues and expenditures), not an expenditure budget (or spending plan) as is currently the case.
· Under the proposed legislation, communities lose the ability to determine their school budgets by majority vote. Under the tax cap scenario, 40% of voters can block a school budget that is just $1 over the cap.
· Existing rules regarding contingency budgets would be eliminated; if the community vote failed to approve the School Board's planned tax increase, a second vote could be held. If that vote did not pass, however, the legislation would require the School Board to adopt a budget with a zero percent tax increase, requiring likely cuts in staffing and services to pay for rising pension costs and other expenses out of the community's control.
How does the proposed tax cap legislation address unfunded mandates?
· It doesn't - except that the Assembly bill contains a limited exclusion for a small portion of pension cost increases.
· The legislation does not address pension reform or cost-drivers such as health care or state mandates, nor does it provide for additional state funding.
· The proposals do not make any changes in the laws governing tenure, merit pay, or the negotiation of union contracts.
How would a tax cap impact our district over time?
· Our school district would be forced to use most or all of a 2% increase to pay for things Albany mandates. For example:
o Under the proposal, next year's tax levy would be limited to $2.2 million over our current levy. Approximately $1.9 million of this amount - more than 86% -- would go for mandated pension increases under the Governor's proposal (somewhat less under the Assembly's proposal).
o The proposal would not remove the requirement that we pay to bus students who attend private schools.
o The proposal does not address or exclude from the cap cost drivers outside the school district's control such as pension costs, tax assessment rebates, costs due to enrollment increases.
· Some projections indicate that the school district will face significant budget shortfalls within two years after passage of the tax cap, resulting in depletion of the general undesignated reserves within two years. Thus, the district would likely be facing major cuts to staff and programs by the 2013-2014 school year and possibly even before.
