Village tax levy nears state cap

The village of Whitehall is within 10-percent of the New York State tax cap for villages.

The New York State Comptroller’s office recently issued a report which cited Whitehall as one of eight villages in the state who are exceeding 80-percent of their constitutional tax limit in 2008. The state cap, which is part of the state constitution, allows villages and cities to raise a tax levy that equals up to two-percent of a village’s or city’s total assessed property value.

“It is a statute based on the percentage of the full value pf property,” said Jim Fuchs of the Comptroller’s Office. “A property tax is a tax of last resort. You have sales tax and state aid and other revenues that are generated that are used first to pay for a budget, and then the rest is paid through property taxes.”

The 2008 Whitehall village budget calls for $1,257,217.89 to be raised in property taxes. The state Comptroller’s office said that the levy accounts for 90-percent of the maximum amount that the village can bring in via a property tax levy. Whitehall officials said that the levy represented 86-percent of the maximum cap.

According to the state, the most Whitehall could have levied in taxes in 2008 was $1,396,908.77, which represents two-percent of the village’s total assessed property value. Village figures would have put the maximum amount at $1,461,881.27.

“Eighty-percent is that point at which you start to worry that you are going to exceed the cap,” said Fuchs. “They are not exceeding, but they are getting up there. Clearly, this is a challenge for local leaders, but it is not at a crisis point.”

Village Mayor Patricia Norton said that the municipality is still hurting from the unfunded state mandates that it has been issued over the past few years, including the construction of a new water treatment facility and the improvements to the village sewer system.

“All of the unfunded mandates have put us in a very precarious position,” said Norton. “Where do we find the money to borrow just for the daily running of the village when we have these mandates that we are required to work on and there is no funding coming from the state?”

Norton also pointed to the fact that with real estate prices falling and foreclosures on the rise, the property tax piece of the funding puzzle is not getting better.

“The price of real estate is going down, but the balance that we have is not,” said Norton.

“With foreclosures on the rise, your tax base is going to start to decline,” said village clerk Joan Douglas. “There are going to be some very serious problems, and everything points that way.”

Douglas addressed village trustees and department heads at the Dec. 1 board meeting, imploring them to cut whatever they could out of their preliminary budgeting for 2009.

“I cannot urge you enough to speak to your departments heads and with the departments and honestly folks, if there are things you do not need, do not get it,” said Douglas.

Fuchs said that there are no sanctions on a municipality that exceeds the 80-percent window on property tax funding, but there would be penalties if the village were to go over the cap.

“If you exceed the two-percent of total assessed property value, then you have got a bit of a situation,” said Fuchs. “The worse case scenario is that the Comptroller is required by law to hold an equivalent of the amount a municipality goes over in state aid.”

Fuchs said that the Comptroller’s office provides the information to villages in order to help them look for ways to curb spending and keep property taxes within balance.

“We are not only here to serve in an audit way, but we are also there to serve as an expert and give advice,” said Fuchs. “Our goal is let’s reach out and see what we can do. In this situation, you may have to look at service cuts or increases in fees and fines.”

Other villages exceeding the 80-percent mark for funds raised through property tax include Ellenville, Herkimer (highest at 96-percent), Malone, Hempstead, Monticello and Potsdam.

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