The Cuomo 2% Tax Cap and how it works

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

Source: http://interactive.taxfoundation.org/propertytax/

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.
  • 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.

Source: http://www.empirecenter.org/files/taxcap-CH97.pdf

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