Understanding New York's Property Tax Cap

The Wynantskill Union Free School District is begining the process of creating a proposed spending plan for the 2012-13 school year. While the budget process timeline will remain largely the same, school officials will have a dramatic change in their budget development process this year in the form of New York State's Property Tax Cap.

While the law is often referred to simply as a "2% tax cap", the details of the state legislation creating the tax cap are more complicated. To help our community understand New York's Property Tax Cap, we have created this webpage with informational resources.

Tax Cap Q&A

Q:Doesn't the Property Tax Cap law mean my tax bill can't increase by more than 2%?

A: No. The law that New York State passed in June 2011 does not in fact cap an individual's tax bill. Instead, it restricts the school district's tax levy - or the total amount in property taxes a district collects. Factors outside a school district's control - such as the loss of assessment in the district - can cause an individual's tax rate to increase at a greater rate than the tax levy.

Q: Does the community still get to vote?

A: Yes, community members will still continue to vote on the third Tuesday in May. This year's school budget vote will be held on Tuesday, May 15 from noon-9:00pm in room 247.

Q: When does the Property Tax Cap law go into effect?

A: The Property Tax Cap law will go into effect with the 2012-13 school tax bills.

Q: Does the Property Tax Cap mean the tax levy - or total amount raised in property taxes - will be limited to a 2% increase each year?

A: Not necessarily. State legislators included exemptions in the Property Tax Cap law for certain expenses that may result in a tax levy increase greater than 2%. Those exceptions include items such as legally mandated pension contributions.

Additionally, if school districts want to exceed the property tax cap, they can do so if they get more than 60% approval from their community on the school budget.

Q: How will I know if Wynantskill Union Free School District is proposing a tax levy above its “tax levy limit,” requiring 60% voter approval?

A: By law, any school district that proposes a budget that requires a tax levy (before exemptions) above its “tax levy limit” must include a statement on the ballot indicating this to voters.

Q: If districts are not necessarily limited to a 2% increase in the tax levy, how do they know how much they can raise their tax levy by?

A: By law, each school district’s "tax levy limit" is determined by a complex, eight-step formula that was developed by the state. The formula takes into consideration a number of variables, including growth in the local tax base (if any), exemptions, the previous year’s tax levy, as well as the current and coming years’ PILOTs (Payment In Lieu Of Taxes). The rate of inflation or 2% (whichever is lower) is also part of the equation.

Individual school districts will each have a unique tax levy limit, which must be submitted to the state by March 1 each year. Once the tax levy limit is determined, the district will then add coming school year’s exemptions to the tax levy limit, creating a “maximum allowable levy.” As a result, a district may actually propose a budget with a tax levy that is higher than its lax levy limit and still be within its “cap” under the law.

Q: Are all the details of the new law finalized?

A: No. In this first year of the property tax cap, information about its provisions and implementation continues to evolve. We’re providing the information that we have available at this time. Wynantskill Union Free School District and other school districts across the state are awaiting further clarification from the New York State Office of the Comptroller, the Department of Taxation and Finance, the New York State Education Department, the Division of the Budget and the governor’s office.

Q: What other sources of revenue can the district use to help keep the tax levy to a minimum?

A: Unfortunately, while we continue to look for alternative revenue sources like state and federal grants our district has limited opportunities to obtain alternate funding sources.

Property taxes and state aid are the two largest sources of revenue that fund our educational programs, and state aid has been reduced the last two years.

Q: I have questions or concerns. How do I voice them?

A: More than ever, we need to hear from our community to help guides us through the difficult decisions that the tax cap will create. Community members are encouraged to attend a Board of Education meeting or write or send an e-mail to the district.

Publication Explaining Property Tax Cap

Questar III BOCES and Capital Region BOCES have put together a newsletter for school districts to share with their communities to help explain the Property Tax Cap. Click here to download a .pdf of the newsletter...

Media Coverage of Property Tax Cap

Times Union- "Mandate Relief for the Long Haul"

Times Union- "4th R: Running Out of Money"