It is going to be a lot harder next year for the Sweden Town Council to raise your taxes so they can give themselves another pay raise.
Last Monday, New York State Comptroller Thomas P. DiNapoli issued a press release that said the Tax Cap will drop below 1% next year.
Property tax growth for all local governments in New York State will be capped at less than one percent for the 2016 fiscal year.
The Comptroller’s report noted that the allowable tax levy growth factor will be 0.73% for entities that operate on a calendar-based fiscal year – which includes all counties, towns, and fire districts in New York State.
According to the 2010 United States population census there are 932 towns in New York State.
Last January, New York State Comptroller Thomas DiNapoli said that 53 of those towns (5.69%) “Inappropriately exceeded” New York State’s property tax cap. The other 879 towns (94.31%) stayed within the property tax cap.
Unfortunately Sweden was one of the 53 towns (5.69%) that exceeded the state’s property tax cap. The tax cap was 1.56% but the Sweden Town Council passed a 2015 budget that raised the tax levy 5.09%. That is more than three times the tax cap.
Many people thought the Tax Cap was a 2% limit on taxes. But New York’s State’s Property Tax Cap Guidelines define the tax cap this way, “The growth in annual levy is limited to the lesser of 2 percent or the Consumer Price Index.”
Last year the tax cap was 1.56%. Next year the tax cap will be 0.73%. The Sweden Town Council couldn’t find a way to stay under the tax cap this year. What are the odds that they will fail again next year?
It’s bad enough that the Sweden Town Council couldn’t find a way to stay under the tax cap this year. But to make matters worse, they had to throw salt in the wound.
At the Town Council meeting on October 28, 2014 the five members of the Sweden Town Council, all of them Republicans, voted unanimously to over-ride the New York State tax cap for 2015.
The five tax and spend Republicans didn’t want to trim the town budget, so they overrode the tax cap.
Then at their Organizational Meeting on January 2, 2015, those same five Republicans voted to raise their own salaries by 2%. At the same meeting they voted to raise your taxes by 5.09%.
What are they going to do next year give themselves another pay raise while they raise your taxes again? Or will the voters heed the State Comptroller’s warning and elect someone else in November?
All three Democrats running for the Sweden Town Council – Annie Crane, Mary Rich, and Lori Skoog – have vowed to keep town taxes under the tax cap.
Here is the complete text of the press release from Comptroller DiNapoli that the Tax Cap Will Drop Below One Percent in 2016.
Generally, the State’s property tax cap law limits local government and school district levy growth to the lesser of 2 percent or the rate of inflation. Since 2014, these entities have been dealing with the stark reality of a “less than 2 percent” scenario. Now, they face a “significantly less than 2 percent” scenario.
Based on the newly released Consumer Price Index (CPI) data, the downward trend in inflation means that local governments operating on a December 31 fiscal year end will see the inflation factor decrease to 0.73 percent, thereby causing a significant reduction over prior years in an important component of their tax cap calculation (the allowable levy growth factor).
Although the allowable levy growth factor represents only one component of the complex, multi-step calculation of the tax cap, it’s an important one. In fact, OSC estimates that these calendar year local governments will have roughly $88.3 million less in available tax levy growth compared to what they had in 2015 when the factor was 1.56 percent, and $135.1 million less than they would have had when the factor was at 2 percent as it was in 2012 and 2013.
Estimated Reduction in Allowable Levy Limit ($ Millions)
Local Governments with 12/31 Fiscal Year End
Cities (44 of 61)……….$5.9
Villages (10 of 552)….$0.3
Total (12/31 FYE)…..$88.3
Note: The estimate was generated by applying the 2016 inflation factor of 0.73% to the 2015 data filed by local governments that operate on a calendar year fiscal year. We re-calculated the tax levy limit using the lower 2016 allowable levy growth factor and subtracted this amount from the 2015 tax levy limit (which was based on a 1.56% growth factor). The difference represents the levy impact of the lower allowable levy growth factor.
- If these trends continue, it is possible that some local governments with fiscal years beginning later in 2016 could even be faced with zero allowable levy growth.
- For example, in school districts (which have fiscal years beginning July 1), the impact of a more restrictive allowable levy growth factor on the tax levy could range from a loss of $182.7 million, assuming an inflation factor of 0.73 percent similar to calendar year local governments, to a loss of $332.6 million, assuming an inflation factor of zero. These potential losses reflect comparisons to 2015-16, when the factor was at 1.62 percent.
- The “Big Four Cities” of Buffalo, Rochester, Syracuse and Yonkers (all having fiscal years beginning July 1) face the possibility of losing from $7.2 million to $13.1 million as a result of the potential lower cap in 2016, while villages (most of which have fiscal years beginning June 1) could lose from $12.6 to $22.3 million.
- New policy developments at the State level, such as the Tax Freeze and the newly enacted Circuit Breaker program, mean that both local governments and school districts face added pressure to stay under the cap, since overriding the cap would render their taxpayers ineligible for these credits.