Budget Squeeze: Can School Districts Handle Cuomo’s Property Tax Cap?

Just 23 of New York’s school districts—about 3 percent—will be trying to override the state's property tax cap at school board elections and school budget votes held on Tuesday.

Some educators argue that the 2 percent tax cap has been squeezing school programs since its enactment in 2011, but it is increasingly hard for school districts to override it. Not only do communities need to garner a 60 percent supermajority vote to do so, but a new tax rebate offered as part of the recently passed state budget will now be paid to homeowners in those districts that stay under the cap.

“If you try and pierce the cap and you are successful, more power to you,” said Tim Kremer, executive director of the New York State School Boards Association. “But your taxpayers will not have that money rebated to them. So there’s heavy pressure from the state on the local officials to stay below the cap.”

The cap is being partially offset by a $1.2 billion increase in statewide school aid, to nearly $22 billion, the most per capita in the country. 

Kremer said that districts considering an override to the cap tend to be in financial straits, but that the circumstances in each district are unique. Communities scattered around the state are weighing an override, including Ithaca City in Tompkins County and the Long Island towns of East Hampton, Bridgehampton, Sayville and West Babylon. Tuesday's vote does not include the state's five major school districts—New York City, Buffalo, Rochester, Syracuse and Yonkers. 

In a survey of the school districts, the School Boards Association found that over half said the tax rebate program played a factor in staying below the tax cap.

“We did ask to what extent did this tax freeze that was so highly touted by the governor," Kramer said. "What impact did that have on where your spending proposal would be? Did it cause you to stay below the tax cap? And at least 60 percent of them said ‘absolutely.’ ”

Kremer said the rebate is appealing  in an election year, but that it does not stray from the governor’s fiscally conservative stance.

“Of course, those rebate checks will be distributed, not coincidentally, shortly before Election Day in November; late October, early November," Kremer said. “But it is not inconsistent with where he’s gone all along. He has oftentimes said we spend too much and we’re not getting the results we deserve.”

Last year 28 districts sought to exceed the cap, which means convincing local residents to pay more than 2 percent in property taxes. Less than a quarter of those 28 managed to do so, compared with over 95 percent of districts that proposed budgets below the threshold and passed them on the first go-round. School districts that do not pass their budget tomorrow will have a second chance with voters, most likely in June.

Kremer says next year all school districts are going to come forward with a regional plan as to how they’re going to lower taxes by 1 percent each year for three years going forward.

“We’re doing a series of workshops around the state under the title of the Municipal Innovation Exchange,” said Kremer, who is part of a panel that also includes the Association of Towns, the Association of Counties and the Conference of Mayors. “We all have to accommodate this freeze plan, this tax-lowering plan and figure out how we’re going to do that together. Our memberships are really pressing us as organizations to help them figure this out and do so collectively, so It’s actually been a great opportunity in a weird sort of way.”