School districts across New York state are holding votes on their budgets Tuesday, May 16th. The vast majority are keeping their spending requests within the mandatory tax cap, but schools wonder whether the tax cap, over the long term, is sustainable.
The property tax cap is now in its sixth year, and according to the New York State School Boards’ David Albert, 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 within 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 schools 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, says schools’ 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 says the tax cap law was originally supposed to include what’s known as “mandate relief” - the easing of state rules that schools say add to their costs - but that never occurred.
Albert, with the School Boards Association, says the biggest reason that schools have been able to adhere to the tax cap and keep afloat, is that Governor Andrew Cuomo and the legislature have increased school aid each year in the state budget. The recently enacted state spending plan gives schools 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 that the state will continue its generous increases in school aid. Albert says 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 schools 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.