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Top Ten 2011: An Earful Over 2 Percent Tax Cap

Posted on 28 December 2011

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Despite backlash from the education sector, New York State Governor Andrew Cuomo’s proposed two-percent tax cap became a reality last spring when the governor announced a 2-percent tax-levy cap would be imposed on the 2012-2013 fiscal year.

At a town-hall style meeting convened by New York State Assemblyman Fred W. Thiele, Jr. at Rogers Memorial Library in Southampton last spring addressed the then-proposed tax cap for a crowd of concerned residents.

The law would cap the amount of money – not the tax rate, individual tax bills, or spending – that any school district or local government can collect in property taxes at two percent or the rate of inflation, whichever is less.

“Which means this year if you collected $100, all you could collect next year would be $102,” Thiele explained.

School districts and libraries – the two entities affected by the cap which require voter approval for their budgets – can ask voters to override the cap, said Thiele, but would need a 60 percent vote in favor of any spending plan that would increase the tax levy by more than two percent.

If they fail to gain support after two budget votes, they are then limited to a zero-percent increase in the amount of taxes they collect from their district.

On the town or village level, said Thiele, an override can occur if four of five board members approve it.

Thiele said if he “ruled the world” he would prefer a system where the state provides a basic, quality education to all of its school districts with each district responsible for funding anything additional. However, he said, that scenario is not currently on the table.

Last February, Sag Harbor School District Treasurer Janet Verneuille crunched some numbers to show just how much the school might potentially lose over a five-year period of time.

By using this year’s actual budget of $31.5 million, Verneuille added the projected rise in the district’s fixed costs, which are expected to climb by five percent this year and six percent each consecutive year after that through 2017. She then capped each year’s projected tax levy at 2 percent.

Had the tax levy been capped at 2 percent this year, the district would have lost $1.5 million in funding. This number will increase over time, as fixed costs are currently set to rise well over 2 percent each year; so, by 2017, Verneuille estimated the district would be short a total of $22 million.

District Supervisor Dr. John Gratto said the district would consider cutting both personnel as well as academic and extracurricular programs, should such a cap go into effect.

“We would start with everything that’s not mandated: sports programs, music clubs, drama productions — kindergarten is not mandated,” he explained. Though he added that none of this will be completely on the table until the school gets more details on what the final tax-cap legislation entails.

When it comes to local government, however, change has already taken shape.

“It is always my goal to avoid layoffs,” said Southampton Town Supervisor Anna Throne-Holst in an October interview. However, she said it would have been nearly impossible this year to balance the budget and maintain a zero-percent tax increase without cutting costs to personnel. Ultimately, the town adopted a budget that retired 21 employees and laid-off seven.

But the cap wouldn’t just be confined to the schools and government. When putting together this year’s library budget, John Jermain Library’s Head Librarian Cathy Creedon said she has been advised to be careful with next year’s budget in anticipation of a tax cap: if the library’s spending plan shows increases above 1.5 percent it may very well need approval from 60 percent of district voters.

While school districts are safe from the legislation affecting spending plans immediately, many libraries like JJML have annual budgets, and according to the legislation, any 2012 budget will have to adhere to tax cap standards. This is one of many ways Creedon said libraries are falling through the cracks when it comes to the proposed law.


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