The following property tax cap FAQ was published by the Rye City Board of Education.
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Q: What is a property tax cap?
A: The property tax cap proposed by Governor Cuomo calls for a cap of 2% or the inflation rate, whichever is lower, on tax levies (the amount that entities such as school districts, towns, and counties receive from property taxes in order to provide services). Residents can override the proposed tax cap and increase the levy beyond 2%, but only if a 60% majority votes to do so.
Q: Is the tax cap now a law?
A: As of now, the Senate has passed the tax cap, but the Assembly has not yet done so, so there is no tax cap in the law as of today. Furthermore, it is unlikely that a tax cap would be imposed in the 2011-2012 school year, since the Senate's bill calls for it to be imposed in 2012-13.
Q: What will the tax cap's impact be on my taxes?
A: A tax cap does not mean that taxes will be reduced; all it does is limit the INCREASE to 2% or less per year. In fact, even the Governor has suggested that the purpose of the tax cap is to 'slow the growth' of property taxes, not reduce taxes. But remember that total property taxes depend not only on spending; they are also dictated in no small part by community assessed value and other factors. That is why a cap is often termed a 'blunt instrument' – it limits the levy increase, but does not account for factors that can have an extraordinary impact on the levy and are out of the community's control, like tax certioraris, fluctuations in assessments, and other revenue losses. Many school districts will face gaps between property tax revenues and expenditures and be forced to cut programs, lay off staff, and decrease reserves as a result.
Q: What will the tax cap's impact be on the Rye City School District
A: In order to maintain sufficient reserves and maintain expected costs within a 2% tax cap, nearly $9MM in budget cuts would be required over the next five years. Right now, our programs are safe, as the proposed 2011-2012 budget draws from District reserves. However, using the fund balance is only a short-term solution – years of doing this would deplete our reserves by 2014!
Q: Why is there so much discussion this year about risk to school programs in the future?
A: In addition to the proposed tax cap, state aid to schools is being cut by $1.2 billion. At the same time, unfunded mandates are placing even more financial burden on school districts as we must meet rising costs of pensions, health benefits, repair expenses, special education, and more, as well as the addition of Race to the Top requirements, with no relief from the state.
Q: Without a tax cap, how can relief be provided to taxpayers?
A: The state can address cost drivers and reduce the burden of unfunded/under-funded mandates on school districts. The state can also implement a circuit breaker, which is similar to a tax cap but directed at each individual household's tax bill in relation to income. Additionally, the New York State School Boards Association (NYSSBA) has identified several alternatives to a tax cap, such as salary freezes and ways of lowering health insurance costs, that could provide relief to taxpayers without compromising the quality of educational programs.
Q: What can we do?
A: The Assembly has not yet passed the tax cap bill. Residents can send state legislators (start with Assemblyman George Latimer) a letter or email asking them to oppose the property tax cap unless it includes significant relief from unfunded mandates. Sample letters are available on the Sound Shore Alliance Website, http://soundshorealliance.blogspot.com.
Assemblyman George Latimer
933 Mamaroneck Avenue, Suite 102
Mamaroneck, NY 10543
Senator Suzi Oppenheimer
222 Grace Church St. 3rd Floor
Port Chester, NY 10573
The Honorable Andrew M. Cuomo
Governor of New York State
NYS State Capitol Building
Albany, NY 12224
Q: Where can I find out more?
A: Resources for updates and background information regarding the proposed property tax cap include:
· Sound Shore Alliance website: http://soundshorealliance.blogspot.com.
· New York State School Boards Association (NYSSBA) website: www.nyssba.org.