The state has eased the cap on property tax levies for school districts as they make higher pension payments next year, but few local districts plan to risk pushing the limit.
Most local schools are playing it safe with a tax levy increase of between 2 percent and 4 percent, well below their individual property tax cap limits, a look at district numbers shows.
Statewide, the average tax levy increase limit for 2013-14 is 4.6 percent, according to a report released Tuesday by the fiscally conservative Empire Center for New York State Policy. That’s more than twice the base amount that was sold to taxpayers as a 2 percent tax cap, noted senior fellow E.J. McMahon.
An increase in pension payments is one of the factors that is allowed to raise the so-called tax cap beyond the 2 percent base, and every district is grappling with a large pension hike next year as districts pay in the equivalent of 16 percent of teacher payroll compared to this year’s 11.8 percent.
“Everybody’s impacted by that,” said Susan Kay Salvaggio, superintendent of the Niskayuna school district. “We are all employee-driven institutions.”
Niskayuna expects to spend $1.4 million more next year just on pension payments, which alone raises the tax levy 2.7 percent. The larger Shenendehowa Central School District will need to pay $3.1 million more in pension payments next year.
In Niskayuna, despite using reserve funds and axing the equivalent of nearly 22 full-time jobs, cutting spending to less than the 2011-12 school year, officials still found themselves facing a deficit that requires a 5.76 percent tax levy increase.
That increase exceeds the district’s 4.66 percent tax levy limit, so the budget needs 60 percent of voter approval to pass on May 21.
Officials say they expect voters will pass the budget, based on past years’ votes. The average approval rating over the past five years was more than 61 percent, officials said, and last year more than 70 percent of voters approved the spending plan.
“We’re very hopeful,” Salvaggio said.
But most local districts are staying well within the tax levy limit.
The Greater Johnstown School District is asking voters for permission to raise the tax levy 3 percent next year, compared with the 8.86 percent increase allowable under the limit.
In poorer districts like Johnstown, officials know better than to ask voters for too much, McMahon said.
“The poorer the district, the more likely they are to propose less anyway,” he said.
If officials misjudge what their voters will accept, the district could be left holding the bag, a situation that hasn’t been widely seen yet but is bound to happen more, McMahon said.
If a budget is voted down twice at the polls, a district must abide by a contingency budget that contains no tax levy increase and scrapes programs down to the minimum.
“What’s causing Johnstown and other districts to be careful is not the limit, it’s the risk of being stuck with zero,” McMahon said.
And districts also face residents who heard the state passed a 2 percent tax increase limit and may wonder why they’re being asked to authorize a higher hike.
“The cap is not as advertised,” McMahon said. “A lot of the districts are trying to get as close as possible to 2 [percent], because people think it’s 2.”
Although the average tax increase limit this year across the state is 4.6 percent, the numbers vary in the Capital Region. On average, schools can raise the tax levy by up to 5.3 percent in Fulton County, 4.9 percent in Montgomery County, 4.8 percent in Saratoga County, 4.5 percent in Schoharie County and 3.8 percent in Schenectady County.