Property Tax Cap and Tax Freeze Legislation Details for Fire Districts. Topics for Today s Session. Property Tax Cap - Summary

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1 Property Tax Cap and Tax Freeze Legislation Details for Fire Districts Presented by Ingrid Otto-Jones, CPA Senior Examiner, Monitoring and Analysis Unit Office of the State Comptroller Thomas P. DiNapoli State & Local Government Accountability Andrew A. SanFilippo Executive Deputy Comptroller Local Government & School Accountability Gabriel F. Deyo Deputy Comptroller Topics for Today s Session Review of Property Tax Cap Legislation Review of Tax Freeze Legislation Reporting Requirements Walk through of Online Service Filing System OSC Role Common Errors Property Tax Cap - Summary Tax cap limits total levy set by local governments, not assessed value or tax rate. Local Governments (including Fire Districts) and School Districts may not adopt a budget that requires a tax levy that exceeds the prior year s levy by more than 2% OR the rate of inflation, whichever is less, unless they officially override the tax levy limitation. 1

2 Fire Districts vs. Fire Protection Districts Fire Districts have their own levy limit and are NOT part of their municipality s tax cap. Levies for Fire Protection Districts (as opposed to Fire Districts) are part of the municipality s tax levy limit. BLENDED Fire Districts Blended Fire Districts are Fire Districts that have the town board as their fire commissioners, therefore they are NOT independent. They are reported within the Town s AUD and do NOT file separately for Tax Cap purpose. There are only six Blended Fire Districts in New York State. Fire Districts Revenues All other Revenues 6% State Aid & Federal Aid 1% Real Property Taxes and Assessments 93% Limited by Tax Cap 2

3 Reporting Requirements for Tax Cap Law Local Governments and Fire Districts must calculate the tax levy limit and report the data elements to the State. Must use OSC s form to report. User IDs and Password to access and submit forms sent to every local government. Form must be submitted prior to budget adoption. Report must be submitted even if an override is enacted. Override The law allows local governments and school districts to override the levy limit Must enact a local law or resolution to override before budget adoption Counties, cities, towns and villages: local law Fire districts and special districts: resolution Governing board must approve by at least 60% of voting power (i.e., 3 out of 5) Common Errors for Fire Districts Not Calculating the Limit Districts that failed to calculate the limit and submit the form were more likely to set a levy that exceeded the limit Tax Cap Reserve Many districts entered capital and equipment reserve amounts into the tax cap reserve line. An entry in this line should only be made if the district exceeded the levy limit in the prior year, without a proper override. 3

4 Tax Cap Formula Total Real Property Tax levy When determining your prior year levy you should consider all the variables Omitted Tax (does affect Fire Districts) Chargeback's (usually only affects Counties) Sales Tax Special Districts Special Assessments Anything else.. OSC Online Reporting System Enrollment Maintain your own contact information Change or retrieve lost passwords Create user rights and assign roles Access more than one application with same account. Tax Cap Form Tax Freeze Certification Form Constitutional Tax Limit Form Hopefully more soon. 4

5 OSC Online Reporting System -continued- Once enrolled you will be able to navigate through the system. For Tax Cap Filing - Go to My Apps then Local Government Real Property Tax Cap Filing System Click on the fiscal year of your filing 5

6 Tax Cap filing form - Prior Year Levy amount Tax Cap Reserve Guidance on Reserve for Excess Levy If actual levy exceeds the levy limit, and no override was passed, the excess must be placed in a reserve This excess amount, plus any interest, must be used to offset the levy in the next fiscal year Accounting bulletin on our website 6

7 Use of Reserve for Excess Levy The amount of the reserve is subtracted from the base levy, to adjust it down to where it would have been if the excess levy had not happened The total levy limit for FYB 2013 is then reduced by the amount of the reserve offset, to calculate the amount by which you may increase your levy within the limit New form will take care of this for you Tax Cap Reserve Offset Tax Levy Limit - Calculations and Total Tax Levy Limit (Cap) Before Adjustments and Exclusions PY tax levy should be what was actually levied Tax levy PY 50,000 51,000 49,000 + Reserve used to reduce PY levy - - PY offset should be added back to 1,000 PY tax levy to make LG whole - Total Reserve Amount (including interest earned) 1,000 PY levy is reduced to prevent the LG from getting a benefit from overlevying without a proper - override x Tax base growth factor PILOTS receivable (prior year) x Allowable levy growth factor PILOTS receivable (current year) Available Carryover Net adjustmens and exclusions Tax Levy Limit with Adjustments and Exclusions 50,000 50,000 50,000 Total Tax Cap Reserve Amount including interest - used to reduce levy - 1,000 - Proposed Levy 51,000 49,000 50,000 Amount levied on tax roll Difference Between Tax Levy Limit + Exclusions and Proposed Levy (1,000) - - Note: For ease of demonstration, the tax base growth factor and allowable levy growth factor have been set to 1.00 Tax Base Growth Factor 7

8 PILOT s Receivable Tort Exclusion Available Carryover If you levied less than the amount of your LG s tax levy limit before exclusions in FYE 2014, you may carry over the lesser of: The difference between the tax levy limit and the actual levy, or 1.5% of the prior year tax levy limit The system automatically calculates the amount. The calculated amount needs to be re-entered into the form to be carried forward to the summary page. 8

9 Carryover Pension Exclusion Transfers of Functions 9

10 Tax Cap Calculation Page Tax Cap Calculation Page Property Tax Freeze-Overview Property Tax Freeze Credit o Part FF of Chapter 59 of the Laws of 2014 o Provides a Real Property Tax Credit to qualified homeowners Homeowners: o Must be eligible for School Tax Relief (STAR) exemption o Live in a taxing jurisdiction that both: Stayed within its property tax cap limits Develop a Government Efficiency Plan 10

11 Property Tax Freeze-Overview (continued) Calculation will be performed by Tax and Finance The Freeze Credit will be equal to the greater of: The actual increase in their homeowner s tax bill or The previous year s tax bill multiplied by an inflation factor (the lesser of 2% or inflation) Implementation Of Law Law will be phased in over a two-year period Credits will begin 2014 for School District and Big 4 Cities 2015 for CCTV and Independent Special Districts (for fiscal years beginning in 2015) Year 1 and 2 of law Year 1 Jurisdiction must not exceed the tax cap. Year 2 Jurisdiction must not exceed the cap, AND Jurisdiction must develop a Government Efficiency Plan which must be approved by the Division of Budget. For More Info go to: 11

12 Local Government Requirements CEO or budget officer certifies no later than the 21st day of fiscal year Adopted budget complies with Levy Limit Override law has been repealed Year Two of Credit Same certification as above Efficiency plan adoption Submit to Division of Budget by June 1st, 2015 Savings of 1% in years ending 2017, 2018, and 2019 Agency Responsibilities The Office of State Comptroller: Collect Certifications (Form in development) Override legislation repealed Collect proposed and adopted budgets information Department of Tax and Finance: Calculate credit for each parcel Advance payment of credit Determine homeowners eligibility Division of Budget: Collect/Approve efficiency plans Tax Freeze Filing Process Tax Freeze Form will be available on OSC Online Services in November. OSC will send out s to the Chairman of the Board of Commissioners and to the Treasurer of each Fire Districts. You MUST notify OSC if your contact information has changed within the last year. will contain detailed information how to sign in and how to set up the account appropriately. 12

13 Questions/Contact Information Office of the State Comptroller Property Tax Cap Application/Tax Freeze Certification Form Option 1 Technical Issues Option 3 Tax Cap and Tax Freeze application questions Department of Taxation and Finance Credit Calculation/ Submittal of Tax Rolls Division of the Budget Efficiency Plans 13

14 Thank You Division of Local Government and School Accountability 14