Understanding New York’s property tax levy cap
With year one of New York’s property tax “cap” now behind us, details about the law’s provisions and impact continue to evolve. While the law is often referred to simply as a "2% tax cap", the details are more complicated.
Questar III and Capital Region BOCES teamed up to create publications for school districts to share with their communities to help explain the property tax levy cap.
- Navigating Through Year Two of New York's Property Tax Cap
- The Three Tax Levy Numbers Under New York's Tax Levy "Cap"
- Tax Levy "Cap" Law Raises the Stakes for Schools
- The Rules that Govern our Schools and
Mandates & Mandate Relief
- Public Employee Pensions in New York State
- Understanding New York's STAR Program
Tax Cap Q&A
Q: Doesn't the 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 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. Please visit your school district’s website for specific voting information, including times and locations.
Q: When does the 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 my 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. 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. Additional information will be communicated as they become known.
Q: I have questions or concerns. How do I voice them?
A: Please contact your school district for more information.
Updated: March 25, 2013