March 3, 2012
Tax cap an unequal limit
Allowable levy increases vary widely among area districts
The state property tax cap of 2 percent is really nothing of the sort, and the result is a series of strange scenarios this spring as school districts plan their 2012-13 budgets.
Cincinnatus Central School and Groton Central School could each ask taxpayers to approve a budget in May with a tax levy increase above 2 percent limit, using what the state calls their maximum allowable limit — a 3.35 percent increase for Cincinnatus, a 4.26 percent jump for Groton.
But neither superintendent of schools, Steve Hubbard in Cincinnatus and James Abrams in Groton, plans to do that. Leery of trying to explain the levy increases to taxpayers who have been hearing about the 2 percent limit for more than a year, they are therefore sticking with 2 percent.
Moravia Central School, meanwhile, faces a different problem: its allowable limit is 3 percent lower than this year’s tax levy of $6.75 million.
The complex formula for determining the tax levy cap requires Moravia to cut $220,000 from the amount spent this year. To go for even a 0 percent increase, the district would need a 60 percent “super majority” of yes votes on May 15, when state residents vote on school budgets.
Jeff Carmichael, Moravia’s business manager, said the district would be better off proposing an increase of 0 percent or 2 percent, then adopting a contingency budget if that one is defeated. The state limits contingency budgets to 0 percent levy increases, starting this spring.
The 2 percent cap was put in place last year to give New Yorkers tax relief, but the amount that each district can raise its tax levy varies according to a complex formula that factors in tax base growth and allows exemptions for such costs as capital projects.
The irony is, even with levy increases, many districts will still need to cut jobs and dig into their reserves to get through next school year.
First, they need to craft a budget that the public will accept.
“We’re concerned about issues with our residents,” Hubbard said. “We could go higher than 2 percent by law, but the issue is, the public expects 2 percent.”
A tax levy that is 3.35 percent higher than this year’s means $111,532 more revenue for Hubbard’s district, compared to this year’s levy. Yet Hubbard and the district Board of Education are basing 2012-13 budget projections on 2 percent, at least for now — $66,534 in new revenue.
Abrams said a 4.26 percent increase for Groton would mean $200,000 more than this year’s levy. He plans to keep a 2 percent increase.
“The governor’s office wants to tout that 2 percent cap and the public has heard this,” Abrams said. “We’re looking at significant cuts again, for the fourth year. We could try for a tax levy increase above that 4.26 percent but that would require the budget to pass with 60 percent of the vote. We got that last year, we proposed a 6 percent increase and 60 percent of the voters said yes, but how many years can you do that?”
Charles Walters, DeRuyter superintendent of schools, faces a similar dilemma and is following a similar strategy for now. DeRuyter could legally raise its levy by 2.77 percent but he said the budget being planned now stays with a 2 percent increase.
New York state adopted a law last year that caps property tax increases at a base of 2 percent. But the formula allows exemptions in calculating the allowable limit on a levy increase, so some municipalities and school districts may surpass 2 percent while others end up below it.
The Cortland city school district has a 3.2 percent allowable limit and is using that in its early budget draft. That translates into a levy of $15.74 million — still $1.5 million short of what Cortland needs to keep its programs in place from this school year, according to Frank Ferraro, interim director of business services.
Homer’s allowable limit is 2.67 percent, McGraw’s is 1.69 percent, Dryden’s is 2.72 percent and Marathon’s is 1.85 percent.
Moravia planned on a 0 percent levy increase, which is allowed for some districts by the state Education Department if their levy change is a decrease. But the district does not qualify, Carmichael said.
Carmichael said the reason for the levy decrease lies with the district’s debt service on its $27 million capital project. The district is using a combination of long-term and short-term financing with low interest, so its debt service is not high enough to raise the levy.
“But for 2013-14, we will be way over 2 percent” Carmichael said. “We’ll probably do then what others are doing now, which is stay with 2 percent.”
For McGraw, a 1.69 percent tax levy increase equals $47,403, said Superintendent of Schools Mary Curcio in a recent draft budget presentation.
Dryden’s 2.72 tax levy increase would equal $416,949.
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