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Fact or Fiction? Understanding New York’s property tax levy cap March 2012 There's a lot to know about the new tax levy cap law. View the Fact or Fiction article to learn about important key points and help clear up misinformation. 1. FACT OR FICTION? UNDER THE NEW LAW, MY PROPERTY TAX BILL WILL ONLY GO UP BY 2 PERCENT. FICTION. The new law applies to the tax levy, not to tax rates or individual tax bills. Although it is commonly referred to as a “2 percent tax cap,” it does not in fact restrict any proposed tax levy increase to two percent. The law requires every district to calculate its own “tax levy limit” in order to find its Maximum Allowable Levy, and 2 percent (or the rate of inflation, if less) is just one of eight factors in this calculation. Learn more about the tax levy limit formula (pdf) 2. FACT OR FICTION? THE LAW TAKES INTO ACCOUNT CERTAIN EXPENSES THAT ARE BEYOND A DISTRICT’S CONTROL. FACT: There are some expenses such as certain pension costs, court judgments and local capital expenses that are exempt from a district’s “tax levy limit” calculation. After a district calculates its “tax levy limit,” it then adds these exemptions to that amount to find its Maximum Allowable Levy. 3. FACT OR FICTION? AS IN PREVIOUS YEARS, MORE THAN 50% OF VOTERS MUST APPROVE THE PROPOSED BUDGET IN ORDER FOR IT TO PASS. THAT DEPENDS: Under the new law, the level of voter approval necessary to pass a budget depends on the amount of the tax levy. If the tax levy (before exemptions) is at or below the “tax levy limit,” a simple majority (more than 50 percent) must approve the budget. If the tax levy (before exemptions) is higher than the “tax levy limit,” a super majority (more than 60 percent) must approve the budget. 4. FACT OR FICTION? A DISTRICT CAN PROPOSE A TAX LEVY INCREASE THAT IS GREATER THAN ITS “TAX LEVY LIMIT” WITHOUT NEEDING APPROVAL BY A SUPER MAJORITY (MORE THAN 60 PERCENT). FACT: This is true. A district adds their coming year exemptions to their calculated “tax levy limit” to find its Maximum Allowable Levy. As a result, a district’s final tax levy – after the exemption levies are added in – could be greater than its “tax levy limit” and yet still be considered, under the law, within that limit and wouldn’t necessitate approval by 60 percent of voters. 5. FACT OR FICTION? CONTINGENCY BUDGET RULES ARE REMAINING THE SAME. FICTION: As in the past, if the proposed budget is not approved, the district may submit the same budget proposal or a revised budget proposal for another vote or go directly to a contingency budget. If a second vote is not approved, the district must adopt a contingency budget. However, under the new law, a district that adopts a contingency budget cannot increase its tax levy from that of the prior budget year – a ZERO percent increase. At this time, it’s unclear if exemptions would still apply. 6. FACT OR FICTION? DISTRICT RESIDENTS WILL CONTINUE TO VOTE ON THEIR SCHOOL BUDGETS IN MAY.
FACT: There will still be a community vote on the budget that
will include propositions such as Board of Education elections. This
year’s vote will be held on Tuesday, May 15. |