The Cuomo 2% Tax Cap and how it works:
1) Town and County taxes: In order to breach the 2% limit, 60% of Town Councils from each municipality must vote to go above 2% limit. Example a town with five Council Members requires 3/5th to vote for breaching 2%.
- Erie County held the line on taxes and planned on no tax increase in 2012 – this is in process of being changed through the leadership of newly elected Erie County Executive Mark Poloncarcz’s new direction for the county.
- Grand Island: As per Dick Crawford and Town Board they will stay within the 2% cap increase limit for 2012.
2) School Budget (vote occurs in May): In order to breach 2% cap 60% of the voters must vote to accept the breach above 2% for the budget to pass. If a second vote is held and the budget is rejected a 2nd time the budget will be frozen at pre-vote/prior year rate – no increase!
3) School Capital Appropriation Request (CAR) Budget (School board announces special vote date) – this part of Budget does not fall under 2% cap tax. Whatever is proposed can be passed by the people with one vote above 50% of the voter total.
Erie County Property and income tax facts:
- Property tax paid as a percentage of median home value = 2.6% which ranks 6th out of 792 counties of similar size.
- NYS property taxes on average are $3755/property owner = 4th highest out of 50 states
- NYS taxes as a percentage of median income = 5.04% which ranks 65th out of 792 counties
The actual Law:
New York’s Local Property Tax Cap
(Chapter 97 of the Laws of 2011)
What’s covered: Property tax levies of all counties, cities, towns, villages, school districts and special districts outside NYC
- Allowable tax levy growth, lesser of 2% per year or rate of inflation
- Expenses excluded from cap:
- Taxes necessary to support voter-approved school capital expenditures.
- Approved legal settlement of tort action whose costs exceed 5% of prior-year tax levy
- Cost of responsibilities shifted to the taxing jurisdiction from another local government
- Growth in annual required pension contribution exceeding two percentage points of covered employee payroll
- Added taxes generated by physical changes to assessed property values due to new construction.
- Expenses excluded from cap:
- Override provisions For counties, cities, towns, villages and special districts:
- Cap can be exceeded in a single year with approval of at least 60% of the governing body (e.g., County Legislature, City Council, Town Board) pursuant to a separate local law.
- For school districts:
- Tax levy above cap must be approved by >60% of voters.
- Tax levy within cap must be approved by >50% of voters.
- Tax levy will be frozen at prior year level if increase fails to win approval from voters in up to two attempts.
- “Carryover” allowance Unused tax levy capacity of up to 1.5% from one year may be used in the following year; e.g., if the cap is 2% in two consecutive years, and the levy increases 0.5% in the first year, the cap in the second year becomes 3.5%.
- Effective Dates Immediate, for 2012-13 school years and 2012 local fiscal years; expires June 2016 but shall remain in effect so long as “temporary” rent control and regulation laws also remain in effect.