Two Percent Tax Cap Coming to NYS in 2012 – How will it Affect Your School?

Late last June, Governor Andrew Cuomo signed the two percent tax cap legislation into law in an effort to provide relief to taxpayers. This is the first time New York State has ever had a tax cap on property taxes and its importance as a school issue for parents is huge, although school districts will not confront the issue until they embark upon their budget process in early 2012.

Expect to be hearing and reading a lot about it in the news and from your district this school year. Indeed, a recent New York Times article indicated that local governments, which are also affected by this legislation, are already mounting protests and threatening to override the cap. They are objecting to the restrictions on their spending limits and want to exempt themselves from the new cap, saying they cannot control the growth of property taxes and still provide services and comply with mandates. 

The good news for homeowners is that this legislation will limit the amount you pay in school and property taxes. It will become effective during the 2012-2013 school year, and it will prevent school districts and local governments from increasing property taxes by more than two percent or the rate of inflation, whichever is lower. 

The bad news is that all New York state school districts are worried about how this legislation will impact their finances. While there are certain exceptions in this legislation, such as allowing the tax levy to be higher for pension contributions required by law, districts are concerned that if state aid does not increase and unfunded mandates (state requirements for which the local districts shoulder the expenses) are not relieved, there will be further erosion to the educational program. During the last budget cycle, many districts reduced programs and staff.  Another exception is that districts will be permitted to propose budgets that exceed the cap if 60 percent of voters agree. 

Also problematic for school districts is that they must submit their proposed budget to the NYS Comptroller, Commissioner of Education, and Tax Commissioner by March 1. This is about six weeks earlier than most budgets have been finalized in the past so it will likely move up the budget process in most districts. The weak economy, coupled with the tax cap, and now the debt ceiling legislation, will likely engender much debate in school districts this year about cost savings. Be aware that your district can put anything on the table to be cut, including full-day kindergarten, sports, electives, music, busing, and even the closing of schools. You may also be asked to override the tax. Stay informed and keep tuned for tips to help you to advocate for quality education for your children.