At the end of last month, New York Governor Andrew Cuomo into law a 2-percent cap on yearly municipal and school district tax levy increases.
While the passage of the cap has been cheered by citizens throughout the state, those who have to balance local budgets have been wary of the news.
"There are gonna be cuts in services that nobody wants," Supervisor Susan Siegel said.
Town board members discussed the implications of the tax cap Tuesday night during the town board work session. Town Comptroller Joan Goldberg said that by calculations the town already exceeds the 2-percent cap.
The increase in the mandates health benefits are estimated to be $331,000; and the amount that the town needs to contractually pay out to employees next year is $97,951. The combined total alone exceeds the $345,151 the town would have to increase the tax levy by for next year, Siegel said.
The bill caps year-to-year growth in municipal property tax levies at either 2 percent or the rate of inflation, whichever is lower, beginning in 2012.
Excluded from the equation are large legal settlements exceeding 5 percent of the prior year levy; levy increases due to government consolidation; levy increases to cover pension growths; and new developments that increase taxable properties.
At a previous meeting, Siegel .
The difference is each year when board members create the budget, they have to balance revenue and expenditures. There are 82 different sources of revenue in 2011 budget-- some are set amount, other revenues fluctuate and need to be estimated. The tax levy is the remaining lump sum that needs to be raised by property taxes in order to balance the budget. Then the lump sum is divided by all property owners based on their assessed value, and the resulting amount for each property owner is their tax rate. But there are additional factors that affect the tax rate, Siegel said.
"The cap is on the property tax levy and it's still too early to know how the cap will affect our 2012 tax rates," she said. "Early figures from the Town Assessor indicate a shrinking total assessment roll, which means that even if the levy remained the same next year, the tax rate will increase."
She said the 2-percent cap only applies to the tax levy, and it is designed to force municipalities and schools to cut expenses.
"While the Governor’s plan will help to control taxes, a 2-percent cap on the tax levy may not equate to a 2-percent cap on the tax rate for each individual property owner," Siegel said.
There have been a number of issues that were raised by the New York Conference of Mayors (NYCOM), that continue to increase local government costs. NYCOM has been calling for pension reform, mandatory health insurance contributions, binding arbitration reform and restrictions on police and fire disability.
But the passage of the tax levy cap only came with the following minor relief items according to NYCOM:
- Repeal of the mandate that requires municipalities to provide a police chief with the same dollar increase in compensation received by his/her highest ranking subordinate;
- Repeal of the mandate that requires municipalities to pay a new police chief the same compensation as his/her predecessor;
- Authorization to piggyback onto federal contracts for computer hardware software and professional services, as well as federal defense supply contracts;
- Authorization for the Office of General Services (OGS) to provide centralized fuel and electricity purchases for municipalities; and,
- Creation of an 11-member Mandate Relief Council (7 gubernatorial appointees and 4 legislative appointees) with the power to review and recommend amendment/repeal of regulatory and statutory mandates presented by local governments and school districts.
A release from NYCOM noted that "these items will have no material impact on those rising costs that are the true cause of high property taxes in New York State."
While the levy cap law has exceptions for some state-mandated costs, there are other unknown costs which could quickly eat up local budgets, leaving less money for employees and day-to-day government operations.
There is a way for elected officials to get around the tax cap. Town board members can adopt a law to override the cap each year, which must be approved by at least 60 percent, or three councilmen in Yorktown. If that were to happen, the only say town residents could have on the matter would be at the polls.
Councilmen Nick Bianco and Jim Martorano said they would be opposed to voting in favor of raising the tax cap. Both of them said they're concerned that services would have to be cut. If taxes are raised by 1 percent, Siegel said that would equate to approximately $13 a year. But some residents say that could quickly add up on top of other costs they have living on a fixed income.
"I'm being told my hands are tied," Martorano said and added that there might be layoffs in order for the town to stay under the 2-percent cap.
Roughly 78 percent of the town's budget is comprised of employee salaries, which would be something the town could have to cut in order to save money, Siegel said.
During the board meeting Lt. Richard Malan spoke to the board members saying the police department needs to hire two police officers. There was someone whom the department had interviewed and now, Lt. Malan said, they would have to tell that person they're not hiring.
"You're crippling us too," he said. "We have to get the manpower on the streets."
Highway Superintendent Eric DiBartolo also said he needs to hire a laborer and expressed his disapproval of board members taking out a , such as fixing the ballfields and tennis courts and spending money on the demolition of the Holland Sporting Club.
"I'm a little bit perplexed about that," he said. "Because if in fact we looked at it a different way, and turned around to let us do the Holland Sporting Club and the Woodlands Legacy Ballfields [internally...], we wouldn't have to bond."
"I'm worried about this financial situation that we have," Bianco said.
The only mandate relief the town is receiving, Siegel said, is on pension costs -- if the increase is beyond two percent, the town would be exempt. When asked if there are any advantages to enacting the legislature, she said "There are none."
"It keeps taxes down but they don't realize what kinds of cuts of services they'll have to deal with," Siegel said.
Patch editor Sean Roach contributed to this report.