2% TAX LEVY CAP (PROPERTY TAX CAP) Board of Education and Public Presentation October 26, 2011 November 30, 2011

Size: px

Start display at page:

Download "2% TAX LEVY CAP (PROPERTY TAX CAP) Board of Education and Public Presentation October 26, 2011 November 30, 2011"

Howard Clarke
8 years ago
Views:

1 2% TAX LEVY CAP (PROPERTY TAX CAP) Board of Education and Public Presentation October 26, 2011 November 30, 2011

2 Context: Challenges Facing Schools Implementation of a Tax Levy Cap Reduction in State Aid State mandates Most ambitious reform agenda from NYSED in decades Incur additional unfunded and underfunded mandates A decrease in student performance in that global economy Worst economic conditions in decades Saturated tax base made up of predominantly homeowners Falling house prices End of Federal Aid (AARA and Jobs Stimulus)

decrease in student performance in that global economy Worst economic conditions in decades Saturated tax

3 TAX LEVY CAP 2% PROPERTY TAX CAP IMPLICATIONS FOR 2012 AND BEYOND

4 Tax Levy Cap: A change in the conversation The Old Expenses Were Subject to Voter Approval The Board would set a tax levy to provide enough revenue to match the approved voter expenses The New Revenues Are Subject to Voter Approval The community sets the levy and the Board sets expenses to match the revenue

match the approved voter expenses The New Revenues Are Subject to Voter

5 Tax Levy Cap vs. Tax Rate Levy is the amount of money collected from the school tax paid by all property owners within a district Cap levy on the levy refers to a year to year increase in the tax Rate refers to the annual increase individuals pay as determined by assessed values of property, equalization rate and total levy A 2% CAP DOES NOT MEAN THE TAX RATE INCREASE IS 2% Assessed values, equalization rates will determine the tax rate increase (these numbers are not available until September) The cap can be increased by voter approved new debt The cap can be increased for an ERS and TRS exemption that is equal to an increase over 2% of the prior year s expense

in the tax Rate refers to the annual increase individuals pay as determined by assessed values of property, equalization rate and total levy A 2% CAP DOES NOT MEAN THE

6 Does the public still vote on a budget? YES - at the School District Annual Meeting and Election (third Tuesday in May) If the proposed tax levy does not exceed the tax levy limit, more than 50% of the votes on the proposed budget must be in the affirmative. If the proposed tax levy exceeds the tax levy limit, 60% of the votes on the proposed budget must be in the affirmative. In such a proposal, the ballot shall include the following statement: Adoption of this budget requires a tax levy increase of which exceeds the statutory tax levy increase limit of for this school fiscal year and therefore exceeds the state tax cap and must be approved by sixty percent of the qualified voters present and voting.

proposed budget must be in the affirmative. If the proposed tax levy exceeds the tax levy limit, 60% of the votes on the proposed budget must be in the affirmative.

7 Implications of a Tax Levy Cap Tax Levy Cap to take effect in and will remain in effect through Thereafter, it remains in effect only so long as regulation and control of residential rents and evictions (i.e., rent control) laws are in place. If the resubmitted/revised budget proposal is not approved by the required margin, the Board of Education must adopt a budget that requires a tax levy no greater than that of the prior year (NO increase in the tax levy) and the budget would still be subject to contingent budget requirements.

If the resubmitted/revised budget proposal is not approved by the required margin, the Board of Education must adopt a budget that

8 Implications of a Tax Levy Cap Deficits exacerbated by increases in uncontrollable costs, i.e., pension, health insurance, continued and new unfunded mandates. Over the course of four to five years the district could find it cannot meet its educational or fiduciary obligations as if all available fund balance and reserves are used. The challenge is finding cost savings measures in delivering instruction, managing operations, and through negotiations with CBA and employees. The question is whether such savings can be achieved and will they keep pace with increasing expenses and lost revenues. Lifting of unfunded mandates? a promise by the Governor, not likely.

are used. The challenge is finding cost savings measures in delivering instruction, managing operations, and through negotiations with CBA and employees.

9 2% TAX LEVY CAP AND EAST MORICHES UFSD The Numbers

10 The Numbers Revenues Tax Levy Cap 2012 ~ $375,000 State Aid Increase ~ $ 0 Expense Increases Mandated Contracted ~ $200,000 Health Insurance ~ $ 75,000 ERS/TRS ~ $100,000 Total ~ $ 0 Any other increases will result in cuts to the program or a proposed budget over the Tax Levy Cap that requires 60% of an affirmative vote Enrollment? High School Tuition? Special Education Enrollment? Transportation? Utilities? Insurance? Supplies? Equipment? Clubs and Sports?

program or a proposed budget over the Tax Levy Cap that requires 60% of an affirmative vote Enrollment?

11 The Numbers (continued) Revenues Tax Levy Cap 2012 ~ $375,000 State Aid Increase ~ $ 0 Expense Increases Mandated Contracted ~ $200,000 Health Insurance ~ $ 75,000 ERS/TRS ~ $100,000 Enrollment ~ $ 83,500 Total ~ $ (83,500)

Mandated Contracted ~ $200,000 Health Insurance ~ $

12 The Numbers (continued) Enrollment ~ $ 83,500 Salary ~ $55,000 Medical Insurance ~ $17,000 (District s Contribution) TRS ~ $ 7,000 FICA&MTA Taxes ~ $ 4,500 Total ~ $83,500

13 The Numbers (continued) One Elementary Teacher costs $83,500 What does $83,500 equal on the tax levy? It is.5% increase to the tax levy That raises the tax levy from 2.0% to 2.5% A 2.5% tax levy increase requires a 60% affirmative vote If the yes votes are 59% or less, the levy is set at 0% No increase in the tax levy will result in a reduction in expenses of $458,500 or 5.5 FTE

5% tax levy increase requires a 60% affirmative vote If the yes votes are 59% or less, the levy

14 Questions and Answers

New York State Property Tax Cap

New York State Property Tax Cap Chapter 97 of the Laws of 2011 Goals: Facts Terminology Old and New What the law really is What the Public s perception may be When is 2% not really 2% How it affects us