Report: Schools Could Raise Taxes 4.6% Under Cap

10:57 PM, Apr 30, 2013   |    comments
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By Joseph Spector, Albany Bureau Chief

ALBANY, NY-- School districts in the coming fiscal year would be able to raise property-tax levies by as much as 4.6 percent on average and still stay under the tax cap, a report Tuesday said.

The tax cap, adopted in 2011, limits the growth in property taxes to 2 percent a year or the rate of inflation, whichever is lower. However, the cap has exemptions, such as growth in pension costs, that can push the limit for some school districts either above or below the 2 percent threshold.

The report from the Empire Center for New York State Policy, a fiscally conservative group in Albany, said the pension exemption is driving a higher tax-cap limit for schools.

"The pension exclusion undermines the effectiveness of a tax cap law that is otherwise well structured to balance tax restraint with flexibility for local voters in the long run," the report concluded.
School districts will report later this week to the state Education Department whether they plan to stay within their cap amount - which is different for every district.

School budgets will head to voters for approval on May 21. Last year, 95 percent of schools stayed within their cap limits. The 2013-14 fiscal year for schools starts July 1.

To seek an override of the tax cap, schools would need approval of 60 percent of voters - which last year proved difficult for the districts that tried.

E.J McMahon, the Empire Center's senior fellow, said he supports the tax cap, but opposes the exemption for growth in pension costs. Pension costs can be excluded from the cap if the growth is more than 2 percent in a year, and retirement expenses have been a major issue for schools and local governments.

Other exemptions include any major voter-approved capital expenses and growth in the tax base.

David Albert, a spokesman for the state School Boards Association, said the pension exclusion is a critical piece for schools. Without it, they would be further restricted in how much tax revenue they could raise and would face additional cuts in staff and services, he said.

"I think it would devastate school districts if you did not include a portion of pension costs" to be outside the tax cap, he said.
The report said that the pension exclusion raises the tax-cap limit mostly for poorer school districts. The average levy limit is 5.5 percent for high-need districts and 3.4 percent for low-need districts, according to data from the state Comptroller's Office reviewed by the center.

The limits were different by county for the 2013-14 school year, which starts July 1, the report said. The tax-cap limit is 5.2 percent for Tompkins County; 4.8 percent in Broome County; 4.7 percent in Monroe County; 4.3 percent in Dutchess County; 4.2 percent in Chemung County; and 3.4 percent in Westchester County.

At least 35 of the roughly 700 school districts in New York indicated to the Comptroller's Office last month that they would seek an override of the tax cap, the report said. Last year, 48 districts sought an override, and 19 failed.

For more information on the report, visit:

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