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In June, Gov. Andrew Cuomo signed into law a property tax cap that limits the growth in the amount of total taxes raised to 2 percent or the rate of inflation, whichever is less.
The law applies to school districts, counties, towns, villages and special districts. It goes into effect in 2012 and expires in five years. Government and school agencies are all now busy planning next years budgets and most are discussing how to cut spending to accommodate the cap.
Here is an explanation of the law based on information from the New York State Department of Taxation.
The 2 percent limit applies to the total tax levy, which is not necessarily the same thing as a 2 percent limit on an individual homeowners tax bill. The tax levy is the total amount of revenue that a school district or municipality raises by property taxes. The tax levy has a direct effect on the tax rate that homeowners pay, but it is not exactly the same thing. Other factors that influence the tax rate include the state equalization rate, a formula that seeks to make the tax burden equal for services, such as schools, that are shared by taxpayers across jurisdictions.
There are some, limited exceptions to the tax cap, including payments to the state pension system for teachers and other public employees, capital projects or existing debts.
Local voters can override the tax cap.
If a school district chooses to put up a budget that includes a tax-levy increase greater than 2 percent, it must be approved by 60 percent of voters, rather than a simple majority.
Counties, towns, villages and special districts can also override the tax cap. In cases where the public doesnt directly vote on the budget, but instead votes on elected officials who decide the budget, 60 percent of the governing body must vote to approve the override.
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