ECB recommends tax cap changes


On Board Online • March 2, 2015

By Paul Heiser
Senior Research Analyst

After three years of experience with the state's property tax cap, a statewide advocacy group that includes NYSSBA has issued a report recommending dual ballot measures and other changes designed to improve rules on how school budgets are drafted and approved.

The recommendations of the New York State Educational Conference Board (ECB) include changes that voters will see and behind-the-scenes technical adjustments to how districts' tax caps are calculated.

The ECB is composed of the seven leading educational organizations that represent key stakeholder groups including school board members, superintendents, principals, teachers and parents. The recommendations apply to school districts outside the five biggest cities in the state (New York City, Buffalo, Rochester, Syracuse and Yonkers) and do not represent the position of the Conference of Big 5 School Districts, an ECB member.

Recommended state policy changes

The ECB report makes four recommendations for changes to the tax cap's framework:

  • Redesign the override requirement so that it is a separate ballot question. Under this proposal, school districts would be required to propose a "basic budget" that stays within their cap as a first ballot question each May. They would then have the option of proposing a separate ballot question for an override amount to fund specific budget items requiring only a simple majority vote.
  • Raise the amount of tax levy increase allowed in a contingency budget from the current 0 percent. While the district must respect the will of the voters when a budget is defeated, state policy should minimize damage to student programs and the fiscal stability of a district.
  • Make the allowable levy growth factor a consistent 2 percent, rather than the lesser of 2 percent or the rate of inflation. Many fixed costs for schools, including pension contributions, salaries and benefits, fuel, and educational materials, bear little or no resemblance to the inflation factor used.
  • Set a 0 percent floor for tax levy changes. A district's maximum allowable tax levy limit can result in a negative change from the prior year when districts have a new payment-in-lieu-of-taxes (PILOT) agreement or when local capital expenditures decrease. Under the current law, this puts some districts in the position of needing supermajority approval to decrease taxes.

Technical adjustments to the tax cap calculation

The report sets forth seven recommendations for how the tax cap is calculated:

  • Include PILOTs in the tax base growth factor. Under the current formula, the tax cap calculation does not allow districts to recognize any benefit from new construction and a broadened tax base when the growth is associated with a PILOT.
  • Count general fund transfers to a Capital Reserve Fund in the capital exclusion. Without this adjustment, the result will be a greater impact on local taxes when voters approve capital projects because districts will have less in savings to apply to the cost of the project.
  • Adjust the carryover provision. Current law allows districts to carry over "unused" tax levy when they don't increase taxes to their maximum limit. The carryover provision would better reflect what districts actually levy if it included their tax levy limit plus permissible exclusions.
  • Account for enrollment growth in the tax cap calculation. The tax cap currently does not adjust for enrollment growth and associated cost increases.
  • Count BOCES capital costs in the capital exclusion. The current tax cap formula does not include an exclusion for school districts' costs related to construction or renovations at BOCES facilities. This significantly impairs the ability of districts and BOCES to work together to invest in modernizing regional learning facilities.
  • Exclude significant tax certiorari judgments from the calculation. If a major property owner in the district successfully challenges an assessment, the cap provides districts with no flexibility in how this loss can be absorbed.
  • Adjust the pension exclusion to more accurately account for rate increases. The tax cap formula excludes those pension costs attributable to an increase in contribution rates greater than 2 percentage points for the pension systems. The exclusion should apply when the employer contribution rate increases by 2 percent rather than 2 percentage points, in either system.



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