School districts across the state are holding votes on their budgets Tuesday. While almost all of them are keeping their spending requests within the mandatory tax cap, some districts wonder whether the cap is sustainable over the long term.
The property tax cap is now in its sixth year, and according to David Albert with the New York State School Boards, most of the state’s nearly 700 school districts are asking for increases that are within the limits of the cap.
“For the most part we see districts staying at their tax cap,” Albert said. “Only 13 school districts this year are attempting to exceed their cap.”
The cap limits districts to a tax increase of 2 percent a year or the rate of inflation, whichever is lower. This year, the rate of inflation is calculated to be 1.26 percent. Because districts are allowed to go above that number for certain capital expenses, the average increase requested for school budgets this year is about 1.5 percent, according to the School Boards Association.
But while tax revenues have been successfully limited under the cap, Michael Borges with the New York State Association of School Business Officials said districts’ costs, including health care and transportation, have continued to rise much faster than the average rate of inflation.
“The cap has continued to restrain school district levies,” said Borges. “But it has failed to restrain, or cap, basically, school district costs.”
Borges said the tax cap law originally was supposed to include what’s known as “mandate relief” — the easing of state rules that school districts say add to their costs — but that never occurred.
Albert said the biggest reason that districts have been able to adhere to the tax cap and keep afloat is that Gov. Andrew Cuomo and the Legislature have increased school aid each year in the state budget. The recently enacted state spending plan gives districts an additional $1.1 billion, an increase of 4.4 percent from last year.
“Overall what has really been the saving grace for school districts since the tax cap began is state aid,” Albert said.
There’s no guarantee, though, that the state will continue its generous increases in school aid. Albert said if there’s another recession, or if proposed federal health care changes are enacted, New York state could have far less money to spend on schools in the future.
“Over the long term, what if we hit another recession like we did in 2008?” he asked. “How would the state be able to maintain its commitment to school districts?”
The 13 school districts that are asking for an exemption to the tax cap in Tuesday’s vote will have to convince a supermajority of 60 percent of voters to approve their plan in order to override the tax cap. That’s proved difficult in the past. Since the tax cap was enacted, 98 percent of districts that stay within the limit have seen their budgets approved, while those that tried to override have seen a success rate of just 58 percent.