Schenectady school officials are predicting they will have little wiggle room, or none at all, for increasing the district’s tax levy next year.
Schools Superintendent Laurence Spring told the school board last month that he was concerned the district may have a “negative tax cap” after adding its exclusions to what is expected to be a low base tax cap across the state.
Tax caps, which are based on the Consumer Price Index and a series of financial exclusions, limit the amount districts can increase local taxes each year. If a district proposes a budget with a tax levy that exceeds its state tax cap for that year, it must receive 60 percent approval from voters at the polls.
Negative tax caps are possible for districts that have recently paid off capital debts or received payments in lieu of taxes, PILOTs, from businesses that cut deals with local economic development groups, like Schenectady County’s Metroplex Development Authority.
Spring said the tax cap prediction was based on “very preliminary” calculations. The district’s tax cap dipped just below zero percent for the 2012-2013 budget.
“A negative cap is pretty difficult for any district to deal with … ” Spring said at the school board’s Nov. 19 meeting. “As we look at this right now, we are a little concerned.”
After the meeting, Spring didn’t provide specifics about what impact a negative cap would have on the district’s budget or even if it would require lower taxes. He did not respond to a request for comment on Tuesday.
State Budget Division spokesman Morris Peters said the tax cap rules are such that reductions are equal to funds coming in from PILOTS so, according to a budget division report, “in no case will the total revenue from PILOT and tax levy result in a decrease for local governments.”
When a district receives new PILOT funds, its tax cap decreases; when the PILOT expires, the district’s tax cap rebounds, according to the report.
“If you get a new PILOT then it would make sense that the taxpayers should have their bill go down to reflect that,” Peters said.
But the revenue from PILOTs is often lower than what a district would expect to receive if a business paid property taxes, and school boards are left out of negotiations on the economic development deals, according to the New York State School Boards Association.
Districts and education groups across the state have also expressed concerns that the base tax cap this year could be as low as zero. With the rate of inflation hovering at almost zero, districts worry they will have little room to increase spending — even as they face increased costs in health insurance, salaries and other expenses.
“Many people think of the tax cap as the 2 percent tax cap, but it is not, and this year it is the 0 percent tax cap,” School Boards Association spokesman David Albert said.
The association plans to push lawmakers to ditch the tax cap’s use of the Consumer Price Index as a benchmark and set a concrete 2 percent base for the cap. He said it is also working with lawmakers on possible fixes to the PILOT-related “anomalies” that create negative tax caps for some districts.