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NYS Property Tax Cap. As Enacted by State Senate Assembly and Governor's Office, 2011. What is the Tax Cap. Ch. 97 of the Laws of 2011 Enacted June 24, 2011 Imposes tax levy limit beginning with FY2012 In effect until June 15, 2016 at minimum Tied to NYC rent control

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Nys property tax cap

NYS Property Tax Cap

As Enacted by State Senate Assembly

and Governor's Office, 2011


What is the tax cap
What is the Tax Cap

  • Ch. 97 of the Laws of 2011

    • Enacted June 24, 2011

    • Imposes tax levy limit beginning with FY2012

    • In effect until June 15, 2016 at minimum

      • Tied to NYC rent control

    • Note: The law does not place limits on assessed values or tax rates.

    • Adds Section 2023-a to Education Law amending provisions related to budget adoption


Definition of property tax
Definition of Property Tax

  • A local tax imposed on real property for the purpose of financially supporting local governments and public schools.

  • Real property (commonly known as "real estate") is land and any permanent structures on it.

  • Does not include user fees or Payments in Lieu of Taxes (PILOT)


Basic rule of tax levy limit
Basic Rule of Tax Levy Limit

  • Board of Education cannot adopt a budget that exceeds the prior year tax levy by greater than 2% or the Rate of Inflation, whichever is less.

  • However, there are certain factors that are excluded from the limit.


Tax levy limit implications
Tax Levy Limit Implications

Total levy requiring simple majority to support proposed budget

Tax Levy Limit

+

Coming school year exemptions

=

Maximum Allowable Tax Levy


Tax levy limit calculation factors
Tax Levy Limit Calculation Factors

  • Adjustments to Base Levy Limit

    • Tax Base Growth Factor

    • Pilot Payments

    • Carryover Limit from Prior Year

  • Exclusions for Budget Year Levy Limit

    • Court orders/Torts

    • ERS/TRS

    • Capital Tax Levy


Tax levy limit
Tax Levy Limit

Prior year tax levy

X

Tax base growth factor, if any

+

Payments in lieu of taxes (PILOTs) receivable during base year

-

Taxes levied for exemptions during prior year (not ERS & TRS)

=

Adjusted Prior Year Tax Levy

X

Allowable levy growth factor (lesser of 2% or CPI)

-

PILOTS receivable during budget year

+

Available carryover, if any

=

“Tax Levy Limit”

(before exclusions)


Tax base growth factor
Tax Base Growth Factor

  • Provided by the NYS Department of Taxation and Finance

  • Based on economic growth

    • Adjusts the levy limit for new growth or increases in property values, not decreases in full value


Pilot payments
PILOT Payments

  • PILOT adjustments are first added into the 2011-2012 base levy

  • PILOT adjustments are then deducted out of 2012-2013 budget year levy


Levy limit add ons and exclusions
Levy Limit Add-Ons and Exclusions

  • NYS and Local Retirement System (ERS) and Teacher’s Retirement System (TRS) employer contributions

  • Court Order/Tort action judgment expenditures greater than 5% in prior fiscal year

  • Capital tax levy

    • Necessary to support local capital expenditures


Ers trs employer contributions
ERS/TRS Employer Contributions

Some pension cost increases may be excludable from levy limit if the District’s pension contribution rate increase exceeds 2%.


Ers salaries used for calculation
ERS Salaries Used for Calculation

  • Salary projection provided by NYS

    • Uses April 1, 2010 – March 31, 2011 actual reported salaries

    • Projects two years forward using actuarial data

      • Example:

        • $100,000 base salary projected two years at rate of 1% set by the State

        • 1st year is $101,000 ($100,000 x 1%)

        • 2nd year is $102,010 ($101,000 x 1%)

        • The projected increase over two years would be $2,010 or 2.01%


Trs salaries used for calculation
TRS Salaries Used for Calculation

  • The District projects TRS reportable salaries for base year 2011-2012

  • The calculated excludable factor rate for TRS is -0.61%. Therefore, this pension cost is not an eligible levy limit exclusion item for the 2012-2013 tax levy calculation


Capital tax levy
Capital Tax Levy

  • Applicable only for school districts and not for municipalities or fire districts

  • Guidance is still forthcoming from the State…there is much speculation on what are allowable expenses and how the “net of aid” calculations will be performed


Capital tax levy con t
Capital Tax Levy (Con’t.)

  • Budgeted expenditures for financing, design, construction, furnishing, equipping, or otherwise providing for school district capital facilities and equipment

  • Expecting guidance from State Education Department on what “capital expenditures” clearly means

    • Anticipate the guidance to encompass items treated as capital assets for accounting purposes


Capital tax levy con t1
Capital Tax Levy (Con’t.)

  • Expenditures anticipated to be included in calculations:

    • Cost of direct purchase of capital assets (land, buildings, vehicles, some equipment, etc.)

    • Costs for new construction, reconstruction, and renovation of facilities

      • Design costs, architect and engineering fees, furnishings, equipment, financing, or “otherwise providing” for capital facilities



Tax levy limit1
Tax Levy Limit

Prior year tax levy

X

Tax base growth factor, if any

+

Payments in lieu of taxes (PILOTs) receivable during base year

-

Taxes levied for exemptions during prior year (not ERS & TRS)

=

Adjusted Prior Year Tax Levy

X

Allowable levy growth factor (lesser of 2% or CPI)

-

PILOTS receivable during budget year

+

Available carryover, if any

=

“Tax Levy Limit”

(before exclusions)



Overrides
Overrides

  • Local governments may override the tax cap limit by resolution or local law adopted by 60%

  • School districts may override the limit by the adoption of the budget by no less than 60% of votes cast

    • A Simple majority is needed to pass the budget for a levy at or below the levy limit


Levy reserve and carryover
Levy Reserve and Carryover

  • Levy in excess of levy limits must be placed in a Tax Levy Reserve

  • Carryover

    • Allows districts to carryover up to 1.5% of levy limit and only by the amount that the base year was below the levy limit

    • Since 2012-2013 is the first year of implementation, this is not applicable


Tax levy limit important dates
Tax Levy Limit Important Dates

  • February 15th

    • Tax base growth factor provided by NYS Department of Taxation and Finance

  • March 1st

    • District submits to NYS Comptroller tax limitation plus exclusions and intent regarding override option

  • 45 days before legal notice

    • District will have to specify whether it will seek vote to exceed levy limit

  • May 15

    • Vote on budget levy and BOE elections


Sources
Sources

Erie 1 BOCES Finance and Legislative Services

New York State Office of the State ComptrollerNew York State Office of Real Property Services

Questar III BOCES State Aid and Financial Planning Services

And from presentations provided by:

Harris Beach PLLC, Mr. Patrick Malgieri & Ms. Tracie Lopardi

Hodgson Russ LLP, Mr. Jeffrey Swiatek

Municipal Solutions, Mr. Jeffrey Smith

Statewide School Finance Consortium, Dr. Richard Timbs


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