Property Tax Cap

NYSChapter 97 of the Laws of

2011

Allowable tax levy growth factor=

Lesser of 2%

or change in CPI

Property Tax Cap

2001 2.8 2002 1.6

2003 2.3 2004 2.7

2005 3.4 2006 3.2

2007 2.8 2008 3.8

2009 -0.4 2010 1.6

CPI History

If the CPI change is negative in a given year, the tax levy increase limit will be 0%.

• Cap effective for the 2012-13 school year

• Effective through at least 2016-17 (as long as rent control laws are in place)

• Current contingency budget requirements remain in place

• Submit info to NYS on March 1st for levy calculation

Property Tax Cap

Initial Calculation (assuming 2%)

School Year Tax Levy $ Increase

2011-12 $43,629,717  

2012-13 $44,502,311 $872,594

2013-14 $45,392,358 $890,046

2014-15 $46,300,205 $907,847

2015-16 $47,226,209 $926,004

2016-17 $48,170,733 $944,524

#1 Capital Local Expenditures

#2 Court Orders#3 ERS Costs#4 TRS Costs

Exclusions from Cap

Capital Local Expenditures Exemption

• Expenditures associated with voter approved construction, acquisition, and reconstruction

• Includes debt service, lease expenditures, and transportation capital debt svc (bus purchases)

• Not clear whether decreasing debt service will work against districts

Court Orders Exemption

• Expenditures resulting from court orders or judgments arising out of tort actions (tax certiorari)

• Only such expenditures that exceed 5% of the total tax levied in the prior school year

ERS Cost Exemption

• May levy any increase in ERS costs above 2% ERS rate increase

Example: 2010-11 ERS Rate = 11.20%

2011-12 ERS Rate = 15.60%

Difference in Rates = 4.40%

Exempt from Cap = 2.40%

TRS Cost Exemption

• May levy any increase in TRS costs above 2% TRS rate increase

Example: 2010-11 TRS Rate = 8.62%

2011-12 TRS Rate = 11.11%

Difference in Rates = 2.49%

Exempt from Cap = 0.49%

ERS & TRS Exemption

• Separate exemptions-2% calculation not aggregate

Example: ERS increase is 2%TRS increase is 2%Total State Retirement

Contribution Increase = 4% In this scenario, there is no exemption from tax cap because each system’s increase is at the 2%

threshold individually.

ERS & TRS Exemption

• Since levy increase limit is calculated on 3/1, ERS & TRS exemptions will be calculated on estimated contribution rates.

Example: 2011-12 estimated TRS rate at budget time: 11.0%2011-12 actual TRS rate: 11.11%….0.11% would not included in our

exemption and levy calculation that needs to be paid.

ERS & TRS Exemption

2010-11 Rate 2011-12 Rate%

Increase

Contribution % Excluded

from Tax Cap

Contribution % Within Tax Cap

TRS 8.62% 11.11% 2.49% 0.49% 10.62%ERS 11.20% 15.60% 4.40% 2.40% 13.20%

ERS & TRS Exemption

Salaries2010-11

Pmt2011-12

Pmt$

Increase%

Increase

Excluded from Tax

Cap

Included in Tax Cap

Budget Increase Within

CapInstructional 31,410,000 2,586,000 3,489,651 903,651 34.94% 153,909 3,335,742 749,742Non-Instructional 12,875,000 1,400,000 2,008,500 608,500 43.46% 309,000 1,699,500 299,500

1,049,242

Illustration of Exemption Impact using 2011-12 salary estimates and actual 2011-12 ERS & TRS rates

Required contribution rate expense necessary to fit within the budget, under the cap is $1,049,242. The allowable 2% tax cap increase is around $900,000. Because of additional ERS & TRS contribution expenditures, the budget has a -$150,000 revenue gap.

Budget Vote

• Vote process remains the same-need majority to pass vote

• If levy is over 2% cap (less exemptions), need 60% approval

• Contingency budget requirements remain same

Budget Turndown

3 Options• Resubmit original budget• Submit a revised budget• Adopt contingency that levies a tax no greater than

that of the prior year (can increase levy for exemptions)

2nd Turndown• Adopt contingency that levies a tax no greater than

that of the prior year (can increase levy for exemptions)

Miscellaneous

• Carryover into next tax year if entire 2% allowance is not used, max 1.5% carryover

• Impact on Credit Ratings/Borrowing

• Voter Perception

• Change in Building Aid Payments

Questions?