Tax cap drop worries officials
Local municipal and school officials are expecting belts to get even tighter in 2014.
For the last two years, the state has imposed a 2 percent cap on the tax levy increases of all local governments and school districts. But next year, the state comptroller’s office announced that, due to inflation, it will reduce the tax cap to 1.66 percent.
The 2 percent was actually a base that a number of exemptions and other considerations were calculated into, so most municipalities had a tax cap that was a little above or below that number. The same will happen with the 1.66 percent.
Randy Douglas, Essex County Board of Supervisors chairman and Jay town supervisor, said his town has always tried hard to keep a responsible budget and cut any fluff from it.
“I understand what the governor is trying to do, but we’ve always done our due diligence in the town,” Douglas said.
It’s the state-mandated expenses that are the problem with municipal budgets, he said. Retirement costs alone have doubled in less than a decade, and the state forces local governments to pay that.
“It wasn’t the local governments that invested wrong, but we’re certainly paying the price for it,” Douglas said. “Something’s got to give with property tax relief.
“A lot of our local governments have slashed and slashed as much as they can.”
North Elba town Supervisor Roby Politi hadn’t heard about the change yet, but he said it would be a substantial decrease. In the end, however, he said it all comes down to the same considerations as the last two years: saving money wherever a municipality can and drawing in as much revenue as possible.
“Your choices are still the same,” Politi said. “You either figure out how to do it, or you override the cap.”
He noted that Essex County’s increase in its sales tax, which is set to go into effect Dec. 1, will help keep property tax levies low for the county and towns across the county.
Franklin County Manager Tom Leitz said that no matter what the percentage is for the cap, “everyone struggles mightily to get that number as possible.”
Franklin County has made significant cuts over the last few years, but Leitz noted that much of municipal budget increases are due to the expense of state mandates.
“We can try to get to the cap every year, but eventually your options are just way too limited,” Leitz said.
He said Franklin County legislators have tried hard to keep taxes low, noting that the 2013 tax levy was about $14.9 million, less than the $15.4 million levy in 2006.
“So cap or no cap, this board has been really tough when it comes to tax increases,” Leitz said. “You probably won’t find too many municipalities that have a lower levy than they did in 2006, but we do.”
He noted that the next few years might be difficult for Franklin County, but he hopes a merger of the county’s nursing home with Alice Hyde Medical Center and plans to build and renovate hotels in Saranac Lake and Malone will help the county’s financial situation in the long run. He hopes the hotels will create jobs, so people will use fewer county services, and increase sales tax revenue for the county.
“That will give us a nice shot in the arm, I think,” Leitz said. “I’m really hopeful the long term looks bright for us.”
Saranac Lake Mayor Clyde Rabideau, in a message posted last week on his Facebook page, said his village’s tax levy has been at or below 2 percent for the last four years.
“2014 will be even more formidable, this after some union contracts were negotiated at the 2% ‘maximum,’ health care costs go up 5% and mandated pension continuations rise to 8-9%,” Rabideau wrote. “We’re NOT complaining…just stating the facts as we prepare for 2014 and look for more ways to reduce costs, which must inevitably include reduction of services.”
Dan Bower, the Saranac Lake Central School District’s assistant superintendent for business, said the possibility of an even lower tax cap could be difficult for his district to deal with given ever-rising employee benefit costs.
“Even (with a tax cap) at 2 percent, this year our health insurance costs were up 6 percent and retirement costs were up considerably more than that,” Bower said. “When those costs are such a large portion of our budget, that has a bigger affect on us.”
The state allows certain expenses to be excluded from the calculation of an individual municipality or school district’s tax cap. The Saranac Lake school district’s tax levy limit this year was 3.79 percent. The $28 million budget voters approved in May increased the tax levy 3.67 percent. Bower said he hopes to stay under the cap again next year. The district’s budget process begins in the fall, but school officials are already talking about it now, he said.
“We’re going to look at starting a budget that meets the cap, whatever the cap is,” Bower said. “When you look at budgets that passed across the state, it’s pretty resounding: People want us to stay under the cap.”
For a municipality, the tax cap can be overridden with a two-thirds vote of the board, but school districts have had a harder time overriding. It would take a supermajority, or 60 percent, of district voters to approve a school budget that exceeded the cap. A large percentage of districts across the state that tried to override the cap have seen their budgets fail at the voting booths over the last two years.
Roger Catania, superintendent for the Lake Placid Central School District, said that if the district were to try for a tax cap override, it would get the community involved in the decision, with input about what they value in the school district.
“Our interest is in maintaining the best possible education ops we can for all of our kids, and while I think there’s some decisions, financial decisions, we can make that will really minimize the hit we can take on that, there’s others that are going to have a big impact,” Catania said, “and that’s something that we must seriously consider – all of us: not just the school board, not just the administration, the entire community.”
Catania said the district’s next budget was already going to be tight, but a lower tax cap will make it even tighter.
“This is going to make it again difficult to meet the bottom line, so the tax cap certainly forces us to make some tough decisions,” Catania said. “This is going to make them just a little bit tougher.”