Property Tax Cap
NYSChapter 97 of the Laws of
2011
Allowable tax levy growth factor=
Lesser of 2%
or change in CPI
Property Tax Cap
2001 2.8 2002 1.6
2003 2.3 2004 2.7
2005 3.4 2006 3.2
2007 2.8 2008 3.8
2009 -0.4 2010 1.6
CPI History
If the CPI change is negative in a given year, the tax levy increase limit will be 0%.
• Cap effective for the 2012-13 school year
• Effective through at least 2016-17 (as long as rent control laws are in place)
• Current contingency budget requirements remain in place
• Submit info to NYS on March 1st for levy calculation
Property Tax Cap
Initial Calculation (assuming 2%)
School Year Tax Levy $ Increase
2011-12 $43,629,717
2012-13 $44,502,311 $872,594
2013-14 $45,392,358 $890,046
2014-15 $46,300,205 $907,847
2015-16 $47,226,209 $926,004
2016-17 $48,170,733 $944,524
#1 Capital Local Expenditures
#2 Court Orders#3 ERS Costs#4 TRS Costs
Exclusions from Cap
Capital Local Expenditures Exemption
• Expenditures associated with voter approved construction, acquisition, and reconstruction
• Includes debt service, lease expenditures, and transportation capital debt svc (bus purchases)
• Not clear whether decreasing debt service will work against districts
Court Orders Exemption
• Expenditures resulting from court orders or judgments arising out of tort actions (tax certiorari)
• Only such expenditures that exceed 5% of the total tax levied in the prior school year
ERS Cost Exemption
• May levy any increase in ERS costs above 2% ERS rate increase
Example: 2010-11 ERS Rate = 11.20%
2011-12 ERS Rate = 15.60%
Difference in Rates = 4.40%
Exempt from Cap = 2.40%
TRS Cost Exemption
• May levy any increase in TRS costs above 2% TRS rate increase
Example: 2010-11 TRS Rate = 8.62%
2011-12 TRS Rate = 11.11%
Difference in Rates = 2.49%
Exempt from Cap = 0.49%
ERS & TRS Exemption
• Separate exemptions-2% calculation not aggregate
Example: ERS increase is 2%TRS increase is 2%Total State Retirement
Contribution Increase = 4% In this scenario, there is no exemption from tax cap because each system’s increase is at the 2%
threshold individually.
ERS & TRS Exemption
• Since levy increase limit is calculated on 3/1, ERS & TRS exemptions will be calculated on estimated contribution rates.
Example: 2011-12 estimated TRS rate at budget time: 11.0%2011-12 actual TRS rate: 11.11%….0.11% would not included in our
exemption and levy calculation that needs to be paid.
ERS & TRS Exemption
2010-11 Rate 2011-12 Rate%
Increase
Contribution % Excluded
from Tax Cap
Contribution % Within Tax Cap
TRS 8.62% 11.11% 2.49% 0.49% 10.62%ERS 11.20% 15.60% 4.40% 2.40% 13.20%
ERS & TRS Exemption
Salaries2010-11
Pmt2011-12
Pmt$
Increase%
Increase
Excluded from Tax
Cap
Included in Tax Cap
Budget Increase Within
CapInstructional 31,410,000 2,586,000 3,489,651 903,651 34.94% 153,909 3,335,742 749,742Non-Instructional 12,875,000 1,400,000 2,008,500 608,500 43.46% 309,000 1,699,500 299,500
1,049,242
Illustration of Exemption Impact using 2011-12 salary estimates and actual 2011-12 ERS & TRS rates
Required contribution rate expense necessary to fit within the budget, under the cap is $1,049,242. The allowable 2% tax cap increase is around $900,000. Because of additional ERS & TRS contribution expenditures, the budget has a -$150,000 revenue gap.
Budget Vote
• Vote process remains the same-need majority to pass vote
• If levy is over 2% cap (less exemptions), need 60% approval
• Contingency budget requirements remain same
Budget Turndown
3 Options• Resubmit original budget• Submit a revised budget• Adopt contingency that levies a tax no greater than
that of the prior year (can increase levy for exemptions)
2nd Turndown• Adopt contingency that levies a tax no greater than
that of the prior year (can increase levy for exemptions)
Miscellaneous
• Carryover into next tax year if entire 2% allowance is not used, max 1.5% carryover
• Impact on Credit Ratings/Borrowing
• Voter Perception
• Change in Building Aid Payments
Questions?