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"Tax Cap" (tax levy limit) Mythbusters

MYTH: The “tax cap” sets a limit on how much my property tax bill will increase.

TRUTH: No, the law sets a threshold for a district’s tax levy, which determines whether a budget needs to be approved by a simple majority of voters (50 percent + 1) or by a supermajority (60 percent or more).

That threshold is determined by a complex, eight-step calculation. The "cap" calculation has a base figure plus a number of exempted items which allows for a number above 2 percent.

Even if the approved budget has a "tax levy" increase of 2 percent or less, the "tax rate" increase (the percentage your taxes will go up) may be much higher. The tax rate (tax warrant) is calculated on the equalization rates of each town and based on property value assessments.

MYTH: The "cap" (or threshold) for a tax increase is now 2 percent.

TRUTH: No, what we learned last year, which was the first year the "cap" was implemented, is that in determining the tax levy threshold, the “2 percent” is only one factor in that eight-step calculation, and even that figure will not always be 2 percent.

In fact, in 2012, 575 districts – or 86 percent – had a tax levy limit calculated at GREATER than 2 percent. Ninety-one districts – or nearly 14 percent – had a calculated limit LESS than 2 percent. And only 5 districts – less than 1 percent – had a calculated “cap” of 2 percent. The actual range of the “2 percent tax cap” were tax levy limits calculated between a 31.84 percent increase to a 34.82 percent decrease in the tax levy.

MYTH: In year one, most districts proposed budgets AT their tax levy limit or “cap.”

TRUTH: Not true. A total of 476 districts were BELOW the cap. Another 146 were AT the cap. Only 48 districts were ABOVE the cap and sought a supermajority approval. Of those 48, 19 were defeated. Of the other 622, only five were defeated.

Property Tax Levy Limit (Cap), Pensions, Mandates, STAR and Other Issues Affecting School Budgets

The following information was compiled by Capital Region and Questar III BOCES and State Aid Planning.

Tax Levy Limit (Cap) Explained

 

Other Resources

Archived News from 2011-2012 Budget Season about the Tax Levy "cap"

McMahon: Tax cap doesn't always equal 2% (4/18/12 - Newsday)
Confusion, concern over tax cap - Variations in levy limits leave region's taxpayers frustrated (3/12/12 - Times Herald-Record)
 'Cap' doesn't fit - Complicated formula to leave many taxpayers with increases topping 2 percent (3/11/12 - Times Union)
Why New York's 2 percent property tax cap isn't really 2 percent (2/26/12 - Syracuse.com)
New York’s property tax cap math not as simple as 2 percent (1/22/12 - Auburn Pub)

MORE INFORMATION ABOUT THE MONTICELLO SCHOOL DISTRICT BUDGET