Tax Levy Limit legislation information
Capital Region BOCES, in partnership with Questar III BOCES, has
released the publication "Understanding New York's Property Tax Levy Cap
As It Relates To Public Schools."
A PDF version can be downloaded
At the end of June 2011, the New York State Legislature enacted a
property tax “cap” that seeks to limit the annual increase in the tax
levies of local governments and school districts. The new legislation
will affect district planning starting with the 2012-13 school budget.
Although the new law has been referred to as a “2 percent tax cap,” it
does not, in fact, restrict any proposed tax levy increase to 2 percent.
What it does is establish a tax levy limit (which will be determined by
each district according to an eight-step, complex formula dictated by
the law, and will vary by district) that determines the number of votes
needed to pass a school budget.
Keep in Mind
The tax levy is the total dollars
that a school district collects from property owners within the
district in order to balance its budget. The levy is determined
after accounting for all other sources of income, including state
The tax rate is used to calculate what each property owner will pay
in school taxes. The district tax levy rate is just one factor,
along with assessment rates and equalization rates, that figure into
determining the tax rate. The district does not set individual tax
10 Fast Facts about New York's
Property Tax Levy Cap
View these 10 Fast Facts to learn
about the new tax levy cap law, which will affect budget planning
for the 2012-13 school year, here.
Fact or Fiction?
There's a lot to know about the new tax levy cap law. View the Fact or
Fiction article to learn about important key points and help clear up
Questions & Answers
Below are some common questions
about the new property tax legislation. We will continue to post
more information about the legislation as it is made available by
Does the new cap mean school
tax levies can't increase by more than 2 percent?
No, the law does not prohibit tax
levy increases greater than 2 percent.
The law has been misconstrued and
misrepresented in media sound bites as a “2 percent tax cap.”
Instead of imposing a true cap, the law establishes a threshold — or
tax levy limit — that determines what level of support is needed for
a school budget to pass. Each district is required to calculate its
own tax levy limit by following a complicated, eight-step formula
established by the state.
If the proposed tax levy increase
is above the tax levy limit — after accounting for exemptions — the
support of a supermajority (60 percent) of voters would be required
for budget passage. If the levy is within the limit, a simple
majority is needed for budget approval.
What is a "tax levy limit?”
For school districts, the “tax levy
limit” is the highest allowable tax levy (before exemptions) that a
school district can propose as part of its annual budget for which
only a simple majority of voters (more than 50 percent) is required
for budget passage. Any proposed tax levy amount above that limit
requires budget approval by a supermajority (60 percent or more) of
Essentially, the “tax levy limit” sets a threshold that requires
districts to obtain a higher level of community support for a
proposed tax levy above the “tax levy limit.”
However, the new legislation does not place a limit on any taxes a
school district would levy to pay for expenses related to specific
“exempt” items, including some court orders, some pension costs and
local capital expenditures. The costs of these exempt items are
added to the “tax levy limit” to come up with the “allowable tax
It is important to note that:
(1) Tax levy limits will vary by school district;
(2) The new law does not limit an individual’s tax bill.
How is the district’s tax levy
By law, each school district’s tax
levy is determined by a complex, eight-step formula that was
developed by the state. The formula takes into consideration a
number of variables, including growth in the local tax base (if
any), exemptions, the previous year’s tax levy, as well as the
current and coming years’ PILOTs (Payment In Lieu Of Taxes). The
rate of inflation or 2 percent (whichever is lower) is also part of
the equation. Consideration is also made for any allowable
“carryover” funds from previous years, as districts are allowed to
“bank” some unused portions of their tax levy limits to use in
future years (details on this are still emerging from the state).
Individual school districts will each have a unique tax levy limit,
which must be submitted to the state by March 1 each year. Once the
tax levy limit is determined, the district will then add coming
school year’s exemptions to the tax levy limit, creating a “maximum
allowable levy.” As a result, a district may actually propose a
budget with a tax levy that is higher than its lax levy limit and
still be within its “cap” under the law.
How does the new law take into
account the fact that some expenses are currently beyond a school
By allowing for exemptions. After a
school district calculates its “tax levy limit,” it then adds
exemptions into that amount, allowing a district to propose a tax
levy greater than the amount set by the “limit” without triggering
the need for approval by 60 percent of voters. These exemptions
•Voter-approved local capital expenditures;
•Increases in the state-mandated employer contribution rates for
teacher and employee pensions that exceed two percentage points;
•Court orders/judgments resulting in any amount that exceeds 5
percent of a district’s current levy. However, tax certioraris are
As a result of these exemptions, a district's final tax levy after
exemptions are added could be greater than this published tax levy
limit and still be considered within that limit under the law.
What will the new property tax
levy law mean for MY tax bill?
That remains to be seen. First, the
new law applies to the tax levy, not to tax rates or to individual
tax bills. Second, it does not impose a universal 2 percent cap on
taxes, or any other specific amount. The law does require a greater
number of voters to approve a proposed budget that exceeds a school
district’s individual “tax levy limit,” as calculated by a complex
state formula. And third, there are several factors (assessments,
STAR, equalization rates, etc.) that dictate how your school tax
bill is calculated after the district sets the final tax levy; these
factors are beyond the district’s control.
Do residents still vote on
school district budgets?
Yes. Residents will still be voting
on the district’s proposed spending plan on the third Tuesday in
May. This year, the date is Tuesday, May 15, 2012. Under the new
law, the level of voter approval needed to pass a budget will now
depend on the amount of tax levy required under the school budget
If the district meets or stays below the “tax levy limit” threshold
(before exemptions), it only needs a simple majority (more than 50
percent) of "yes" votes for budget passage/approval.
If the district goes beyond the “tax levy limit” threshold (before
exemptions), it must secure support from 60 percent or more (a
supermajority) of voters for budget passage.
How will I know if VCSD is
proposing a tax levy above its maximum allowable tax levy limit,
requiring 60 percent voter approval?
By law, any school district that
proposes a budget that requires a tax levy (before exemptions) above
its “tax levy limit” must include a statement on the ballot
indicating this to voters. Information will also be available on the
district website and district budget newsletter.
Are all the details of the new
No. In this first year of the
property tax levy cap, information about its provisions and
implementation continues to evolve. We’re providing the information
as it becomes available. VCSD and other school districts across the
state are now awaiting further clarification from the New York State
Office of the Comptroller, the Department of Taxation and Finance,
the New York State Education Department, the Division of the Budget
and the governor’s office.
What happens if the district
budget is not approved by voters?
If a proposed budget is defeated by
voters, the school district—as in the past—has the option of putting
the same or a revised budget up for a revote, or adopting a
If a proposed budget is defeated twice by voters, the district must
adopt a contingent budget. Certain existing contingent budget
requirements remain in effect that prohibit spending in specific
areas including community use of buildings, certain salary increases
and new equipment purchases. More significantly, under the new law,
a district that adopts a contingent budget may not increase its
current tax levy by any amount—which would impose, in effect, a zero
percent cap. As of this writing, it is unclear if exemptions will
Will the tax cap legislation
affect all school districts equally?
No. The tax cap legislation will
affect all districts to varying degrees, but it is clear that some
will be affected much more than others. In particular, for poor
and/or rural school districts with low property wealth and declining
tax bases, staying within their “tax levy limits” will severely
restrict their ability to generate the revenues needed to sustain
core educational programs. This discrepancy is largely rooted in
what an increasing number of school leaders say is an unfair formula
for distributing state aid to districts around the state.