Schools wary of tax cap impact


The last day of the recent state legislative session was a momentous one and saw state lawmakers make sweeping changes to state law.

And those changes went far beyond same-sex marriage straight to the future of education in small towns like Granville.

Just before the same-sex marriage bill passed, senators and representatives passed a wide agenda of legislation, including a tax cap that had been one of Gov. Andrew Cuomo’s campaign promises.

Granville school officials and education authorities across the state have said the new law carries serious implications for poor and rural school districts.

The tax cap restricts municipalities and school districts to a two percent increase per year in the tax rates.

The tax cap is expected to have a provision allowing public entities to go above two percent provided they garner a 60 percent majority of voters in the case of a school district. 

“We’re really in for it,” business manager Cathy Somich said Thursday. Under a two percent tax cap the amount of tax revenue which can be raised with two percent is $130,000; the district raised an additional $98,000 with the 1.5 percent levy increase in this year’s budget.

The cap applies to the next four years, starting with the 2012-2013 school year covering through 2016-2017, Somich said. Extending the cap past 2016-2017 is tied to extending rent control provisions in New York City beyond the same year.

Budget expenses from year to year from electricity and fuel to retirement fund and health insurance costs have increased at roughly $800,000 per year, Somich said.

“I think in this economic climate it’s going to be difficult to get to 60 percent if you’re going to go over two percent, it’s going to be difficult to ask people to pay more than that,” Somich said.

Following two years of zero percent tax increases the Granville School District in May put forward a budget with a 1.5 percent tax increase which was approved by the voters. While the district has passed recent budgets by the 60 percent majority needed to get past the cap, Somich said those were budgets with low or no tax increases.

By way of example, without use of fund balance for the 2011-2012 budget, the district needed to raise tax rates 11 percent beyond what the two percent cap would allow.

The district has a fund balance in excess of the four percent state permits, Somich said it is that savings account which will help the district through the next few years heading off the need for large tax increases.

“The fund balance is for the tax payers, it’s their money, that’s how the district sees it,” Somich said. However, that savings account won’t hold out forever. “It’s like living off of a savings account when you don’t have a job

The tax cap measure impacts towns and villages as well although not to the extent of the school district.

Supervisor Matt Hicks said he had not yet seen the final version of the cap bill but said it was sure to make an already difficult budget time that much more difficult. “We have to do some real work to get ready,” Hicks said.

“I think the two-percent tax cap is a wonderful idea, but I don’t like the way it was done because there is no mandate relief,” Hartford Supervisor Dana Haff said. “I just think it’s horribly unfair.” 

“With the tax rate dropped 10 percent last year make (the cap) makes it difficult try to keep tax rates low as possible,” Hicks said.  

The biggest difference for Hicks and the Granville Town Board is passing the budget. While the school goes out to the voters, the boards at the county, town and village level cast the only votes for or against their budgets.

As a result of the time and work that goes into preparing a budget, Hicks said they generally pass unanimously.

“If we can get three out of five to agree, it will pass,” he said.

Citing holes in the cap such as exemptions regarding what can be considered part of a two percent increase reduced the impact of the measure. “The state is saying you’ve got a two percent tax cap after they get their cut. This truly isn’t a two percent property tax cap,” Haff said. 

At the county level, the tax rate went up about 2.5 percent. “It’s a very involved and much larger and there are a lot of changes from beginning to the end – I’m sure it will be a lot of work this year too,” Hicks said.

Haff said the two percent would easily be “gobbled up” by expenses such as retirement costs and healthcare.

Hicks said the much more involved and considerably larger budget will require a tremendous amount of work to pare the increase down to two percent.

“It’s certainly going to make it tougher for creating budget,” Hicks said.

While the cap was no surprise to those in education who watched over the last two years as Cuomo campaigned for the governor’s office on the tax cap, Hartford Superintendent Tom Abraham said it is yet another hurdle for administrators to clear during the difficult budget process.

“We are going to be forced to adjust because we have to live within the confines of the law, but what I really wish is the state legislature would do something about the state education department and rein in some of these unfunded mandates,” he said.

While he said he understands the need for property tax controls to help the residents of his district afford to live in their homes, the double edge continues to be unfunded mandates passed down to the schools from state education.

Abraham reflected back on his decades-long career in education citing hard times for school budgets in 1979 and 1992, but said with the tax cap, state aid declines and other factors the next few years were sure to be worse than any he could recall.

“It’s going to be a problem. They’ve got to bring what they’re forcing us to do under control and they refuse to do that,” Abraham said. 

Hartford’s tax levy rose 1.9 percent for the coming school year’s budget after freezing for the previous year, but lowered taxes and dropping school aid have consequences, he said. 

“If there isn’t relief it will eventually catch up with us and impact programs and staffing,” Abraham said. 







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