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Sunday, May 29, 2016
State must fix tax cap’s glitches

In budget discussions this month, officials from the Valley Stream Central High School District said they might need a supermajority — at least 60 percent of voters — to pass the budget in May, even if they ask for no tax increase. This requirement seems unjust, and must have more to do with a technical oversight in the tax-cap law than budgetary prudence.

The anomaly is the result of the tax-cap legislation, which went into effect for school districts and municipalities in 2012. It is designed to curb out-of-control property taxes in New York state by limiting tax increases each year.

While it is known as the “2 percent tax cap,” it is never exactly that. Each school district must follow an 11-step formula to calculate its tax cap, which considers factors such as debt and pension costs. Just one part of the formula is a natural allowance for budget growth, which is 2 percent or the consumer price index, whichever is lower.

In calculating its allowable tax levy increase for next year, the high school district ended up with a negative number, meaning any that tax levy equal to or higher than this year’s will exceed the cap. This happened because a $3 million annual bond payment will come off the books next year.

The district has paid off its debt, and is essentially being punished for doing so. It will now have that $3 million to spend on educational programs, but because the tax-cap formula factors in capital costs, the repurposing of that money affects the calculation.

It’s good that New York state has taken measures to control property taxes. The tax cap has gotten mixed reviews since it was implemented. Homeowners generally like it because it is a vehicle to keep spending and taxes in check. School officials mostly dislike it because it limits their ability to raise revenue, and often means that cuts must be made to cover the cost of unfunded mandates.


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