New York State Property Tax Cap

Transcription

1 New York State Property Tax Cap Chapter 97 of the Laws of 2011

2 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 What we can do as a community

3 Facts: Stays in affect until tied to rent control regulations All Contingency budget rules stay in effect It allows for exemptions that could go beyond 2% Is a soft cap not a hard cap - does not relate to the increase in taxes that you will pay individually Changes the 50.1% majority to a 60% super-majority for all budgets over 2% (excluding exemptions) Removes the decision making from the local level and puts it at the state level The Cap is 2% unless the Consumer Price Index (CPI) is lower which could result in a 0% increase over the previous year

4 Old Terminology: Tax Levy is the total amount of money to be raised from property tax to support the adopted school budget Property Tax is a tax based on the taxable assessed value of real property. One portion of property taxes are school taxes. Tax Rate Tax rate x Taxable Assessed Value = Tax Amount

5 New Terminology: Tax Levy Override when the tax levy exceeds the Allowable Tax Levy Limit and the budget requires a supermajority to pass Supermajority Vote a 60% yes vote that is needed to override the tax cap Tax base growth factor Quantity change factor due to physical or quantity change in tax base compared to prior year s tax PILOT Agreements Payments In Lieu of Taxes owed to schools or municipalities Prior Year Exemptions Capital Tax Levy, Local Capital Expenditures (i.e. local portion of capital projects), Court Orders/Judgments

6 New Terminology: Allowable Growth Factor lesser of the Consumer Price index (CPI) or 2% Available Carryover Prior year tax levy limit minus the prior year tax levy, but no greater than 1.5% Current Year Exemptions Capital Tax Levy, Capital Local Expenditures (i.e. local share of capital projects), Court Orders/Judgments, Pension costs above 2% annual increases Contingency Budget The budget adopted after two failed school budget votes results in a 0% increases in the tax levy

7 What the law really is: Although the law has been described as limiting the property tax increases, what the cap really applies to is the tax Levy, not the tax rates or the individual tax bill Tax Levy is the total amount of money to be raised from property tax to support the adopted school budget Property Tax is a tax based on the taxable assessed value of real property. One portion of property taxes are school taxes. Tax Rate Tax rate x Taxable Assessed Value = Tax Amount

8 Sample 2% Tax Cap Levy: (What the Public Perception May Be) Prior Year Tax Levy X 2% = New Tax Levy WRONG $88,990,091 X 2% = $90,769,893 Wouldn t that be nice

9 The Real Tax Levy Part 1: Prior Year Tax Levy X Tax Base Growth Factor + Prior Year Pilot Agreement(s) Prior Year Exemptions = Adjusted Prior Year Tax Levy You don t hear about this from the Government Officials * Pursuant to Chapter 97 of the laws of 2011

10 The Real Tax Levy Part 2: Adjusted Prior Year Tax Levy X Allowable Growth Factor (1.02 or CPI whichever is lower) Coming Year s Pilot Agreement(s) + Available Carryover = Tax Levy Limit (Reported to Comptroller) * Pursuant to Chapter 97 of the laws of 2011

11 The Real Tax Levy Part 3: Tax Levy Limit + Coming School Year Exemptions = Allowable Tax Levy Limit Changes the Tax Levy Base * Pursuant to Chapter 97 of the laws of 2011

12 Example of an Exemption: Pension Increase (ERS) The pension cost exemption applies only when employees Retirement System (ERS) and/or Teachers Retirement System (TRS) employer contribution rates increase by more than 2 percentage points over the prior year (4 Step process) * Pursuant to Chapter 97 of the laws of 2011

13 Pension Increase (ERS): Step # % School Year 16.3% School Year 2.6 Point Difference Step # Percentage Point Diff 2% Local Responsibility 0.6% Exempt portion * Pursuant to Chapter 97 of the laws of 2011

14 Pension Increase (ERS): Step # 3.6% Exempt Portion $15,173,197 Projected Salary Base $394,503 Exempt Portion Step # 4 $394,503 Added to Base Levy Amount (Exemptions increase the amount of taxes you are allowed to Levy) * Pursuant to Chapter 97 of the laws of 2011

15 The True Tax Levy Cap Calculation: Prior Year Tax Levy $ 88,990,091 Tax Base Growth Factor X = $ 89,265,960 Prior Year PILOT + 0 = $ 89,265,960 Prior Year Exemptions (Capital) $ 1,892,535 Adjusted Prior Year Levy = $ 91,158,495 Allowable Growth Factor X 1.02 = $ 92,981,665 Coming Year PILOT + 0 = $ 92,981,665 Available Carryover + 0 Tax Levy Limit (Reported to the Comptroller March 1 Annually) = $ 92,981,665 Coming Years Exemptions (Capital + & Pension) $ 545, Maximum Allowable Levy = $ 93,526,968

16 Reality vs. Truth: Adjusted Projected Increase over prior years Tax Levy Tax Levy Tax Levy Would not require a Supermajority $ 88,990,091 $ 90,769,893 $ 1,779, % $ 92,981,665 $ 93,526,968 $ 4,536, % Difference $ 2,757, % The Tax Levy cap will not automatically result in a 2% tax Levy cap as Government Officials have continually implied * Pursuant to Chapter 97 of the laws of 2011

17 What happens if the budget does not pass: The district has two (2) choices if the proposed budget does not pass A. The district may resubmit the original budget or submit a revised budget to the voters on June 21, 2011 (If it does not pass, it goes directly to a contingent budget) Or B. Adopt a contingency budget with no increase in tax levy over the prior year (no exemptions or growth factors) and be subject to all contingency requirements * Pursuant to Chapter 97 of the laws of 2011

18 The disparity of the Law: Rank in New Tax Levy Increase in $ per Enrollment C.W.R. C.W.R. Tax Levy at 2% Cap Tax Levy $ Student William Floyd 9, $ 80,121,159 $ 81,723,582 $ 1,602,423 $ 169 Patchogue Medford 8, $ 92,393,092 $ 94,240,954 $ 1,847,862 $ 223 Smithtown 10, $ 158,117,025 $ 161,279,366 $ 3,162,341 $ 291 Northport E Northport 6, $ 129,158,546 $ 131,741,717 $ 2,583,171 $ 402 Half Hollow Hills 9, $ 169,632,413 $ 173,025,061 $ 3,392,648 $ 342 Hauppauge 4, $ 72,015,274 $ 73,455,579 $ 1,440,305 $ 355 Middle Country 10, $ 111,055,665 $ 113,276,778 $ 2,221,113 $ 213 Brentwood 17, $ 84,530,713 $ 86,221,327 $ 1,690,614 $ 98 Comparable Levy but completely different result

19 How it affects us: Potential Impact of a Straight 2% Tax Levy Cap Adopted Budget Potential Budget Increase over % Prior Year Increase Budget $ 208,134,194 $ 214,898,555 $ 6,764, % Tax Levy $ 88,990,191 $ 90,769,995 $ 1,779,804 2% Cap Potential Reduction $ 4,984,557 Potential Impact of the Tax Levy Cap Formula Adopted Budget Potential Budget Increase over % Prior Year Increase Budget $ 208,134,194 $ 214,898,555 $ 6,764, % Tax Levy $ 88,990,191 $ 93,528,691 $ 4,538, % Limit Potential Reduction $ 2,225,862 * Assumes no change in State Aid * Pursuant to Chapter 97 of the laws of 2011

20 Summary: New York State has a tax levy cap, not a true 2% tax cap The law limits the increase in the school district tax levy not in the individual tax bill The actual levy will vary by district based on exemptions The law allows for certain exemptions which will result in a levy higher than 2% without the need for a supermajority A district may choose to increase the tax levy through an override that would require a 60% supermajority

21 No Relief on Unfunded Mandates : Chapter 97 of the laws of 2011 did address some mandate relief but nothing that results in any significant local impact No Exemptions for APPR Environmental Mandates Local share of State health and social service programs Health care Costs

22 What we need to do as a Community: Collaborate effectively to increase our share of State Aid Communicate to all community members the true effect of the law Lobby our Government Officials to advocate for our district Advocate for Mandate Relief Help stop cost shifting to the local level Get out the Vote!