Transcript NYS Property Tax Cap Legislation of 2011

NYS Property Tax Cap
As Enacted by State Senate Assembly
and Governor's Office, 2011
What is the Tax Cap
• Ch. 97 of the Laws of 2011
– Enacted June 24, 2011
– Imposes tax levy limit beginning with FY2012
– In effect until June 15, 2016 at minimum
• Tied to NYC rent control
– Note: The law does not place limits on
assessed values or tax rates.
– Adds Section 2023-a to Education Law
amending provisions related to budget
adoption
Definition of Property Tax
• A local tax imposed on real property for the
purpose of financially supporting local
governments and public schools.
• Real property (commonly known as "real estate") is
land and any permanent structures on it.
• Does not include user fees or Payments in Lieu
of Taxes (PILOT)
Basic Rule of Tax Levy Limit
• Board of Education cannot adopt a budget
that exceeds the prior year tax levy by
greater than 2% or the Rate of Inflation,
whichever is less.
• However, there are certain factors that are
excluded from the limit.
Tax Levy Limit Implications
Total levy requiring simple majority to
support proposed budget
Tax Levy Limit
+
Coming school year exemptions
=
Maximum Allowable Tax Levy
Tax Levy Limit Calculation Factors
• Adjustments to Base Levy Limit
– Tax Base Growth Factor
– Pilot Payments
– Carryover Limit from Prior Year
• Exclusions for Budget Year Levy Limit
– Court orders/Torts
– ERS/TRS
– Capital Tax Levy
Tax Levy Limit
Prior year tax levy
X
Tax base growth factor, if any
+
Payments in lieu of taxes (PILOTs) receivable during base year
Taxes levied for exemptions during prior year (not ERS & TRS)
=
Adjusted Prior Year Tax Levy
X
Allowable levy growth factor (lesser of 2% or CPI)
PILOTS receivable during budget year
+
Available carryover, if any
=
“Tax Levy Limit”
(before exclusions)
Tax Base Growth Factor
• Provided by the NYS Department of
Taxation and Finance
• Based on economic growth
– Adjusts the levy limit for new growth or
increases in property values, not
decreases in full value
Code
Chautauqua County
Districts
64603
63001
66201
63201
62401
64601
67201
63801
66601
63601
65801
60300
47601
66001
60800
62803
64801
62201
62601
47201
Forestville
Pine Valley
Ripley
Clymer
Frewsburg
Silver Creek
Westfield
Falconer
Sherman
Bemus Point
Fredonia
Dunkirk
Randolph
Brocton
Jamestown
Chautauqua Lake
Panama
Southwestern
Cassadaga Valley
Gowanda
Tax Base Growth Factor
1.009600
1.009600
1.008300
1.007500
1.006700
1.004700
1.003900
1.003400
1.003200
1.002900
1.002900
1.002800
1.002800
1.002500
1.001300
1.001200
1.000800
1.000500
1.000000
1.000000
Average
1.003730
PILOT Payments
• PILOT adjustments are first added into the
2011-2012 base levy
• PILOT adjustments are then deducted out
of 2012-2013 budget year levy
Levy Limit Add-Ons and
Exclusions
• NYS and Local Retirement System (ERS)
and Teacher’s Retirement System (TRS)
employer contributions
• Court Order/Tort action judgment
expenditures greater than 5% in prior
fiscal year
• Capital tax levy
– Necessary to support local capital
expenditures
ERS/TRS Employer Contributions
Some pension cost increases may be excludable from levy
limit if the District’s pension contribution rate increase
exceeds 2%.
ERS Exclusion Factor
TRS Exclusion Factor
2011-2012 ERS Rate
16.30%
2011-2012 TRS Rate
11.11%
2012-2013 ERS Rate
18.90%
2012-2013 TRS Rate
12.50%
Difference
2.60%
Difference
1.39%
State Set ERS Rate
Limit
2.00%
State Set TRS Rate Limit
2.00%
Excludable ERS Rate
0.60%
Excludable TRS Rate
-0.61%
ERS Salaries Used for Calculation
• Salary projection provided by NYS
– Uses April 1, 2010 – March 31, 2011 actual
reported salaries
– Projects two years forward using actuarial data
• Example:
– $100,000 base salary projected two years at rate of 1%
set by the State
– 1st year is $101,000 ($100,000 x 1%)
– 2nd year is $102,010 ($101,000 x 1%)
– The projected increase over two years would be $2,010 or
2.01%
TRS Salaries Used for Calculation
• The District projects TRS reportable
salaries for base year 2011-2012
• The calculated excludable factor rate for
TRS is -0.61%. Therefore, this pension
cost is not an eligible levy limit exclusion
item for the 2012-2013 tax levy calculation
Capital Tax Levy
• Applicable only for school districts and not
for municipalities or fire districts
• Guidance is still forthcoming from the
State…there is much speculation on what
are allowable expenses and how the “net
of aid” calculations will be performed
Capital Tax Levy (Con’t.)
• Budgeted expenditures for financing, design,
construction, furnishing, equipping, or otherwise
providing for school district capital facilities and
equipment
• Expecting guidance from State Education
Department on what “capital expenditures”
clearly means
– Anticipate the guidance to encompass items treated
as capital assets for accounting purposes
Capital Tax Levy (Con’t.)
• Expenditures anticipated to be included in
calculations:
– Cost of direct purchase of capital assets
(land, buildings, vehicles, some equipment,
etc.)
– Costs for new construction, reconstruction,
and renovation of facilities
• Design costs, architect and engineering fees,
furnishings, equipment, financing, or “otherwise
providing” for capital facilities
Calculating Capital Portion of Levy Limit
Capital Calculations
2011-2012
2012-2013
Expenditures
Debt Service
Bus Purchase less Reserve Funding
Equipment & Leases
Total Expenditures
$1,484,032
267,598
0.00
$1,751,630
$1,464,155
183,275
0.00
$1,647,430
Revenues
Building Aid
Transportation Aid (Ratio at 0.90)
Total Revenues
$1,527,775
240,838
$1,768,613
$1,475,038
164,948
$1,639,986
(16,983)
7,444
Total Capital Costs Net of Aid
(Expenditures less Revenues)
Tax Levy Limit
Prior year tax levy
X
Tax base growth factor, if any
+
Payments in lieu of taxes (PILOTs) receivable during base year
Taxes levied for exemptions during prior year (not ERS & TRS)
=
Adjusted Prior Year Tax Levy
X
Allowable levy growth factor (lesser of 2% or CPI)
PILOTS receivable during budget year
+
Available carryover, if any
=
“Tax Levy Limit”
(before exclusions)
Summary of Levy Limit
Levy Amount
Dollar
Increase
Percent
Increase
2011-2012 Tax Levy
$5,404,754
2% Increase
$5,512,849
$108,095
2%
Levy Limit Without
Exclusions
$5,556,233
$151,479
2.80%
Levy Limit With
Exclusions
$5,574,801
$170,047
3.15%
Overrides
• Local governments may override the tax
cap limit by resolution or local law adopted
by 60%
• School districts may override the limit by
the adoption of the budget by no less than
60% of votes cast
– A Simple majority is needed to pass the
budget for a levy at or below the levy limit
Levy Reserve and Carryover
• Levy in excess of levy limits must be
placed in a Tax Levy Reserve
• Carryover
– Allows districts to carryover up to 1.5% of levy
limit and only by the amount that the base
year was below the levy limit
– Since 2012-2013 is the first year of
implementation, this is not applicable
Tax Levy Limit Important Dates
• February 15th
– Tax base growth factor provided by NYS Department
of Taxation and Finance
• March 1st
– District submits to NYS Comptroller tax limitation plus
exclusions and intent regarding override option
• 45 days before legal notice
– District will have to specify whether it will seek vote to
exceed levy limit
• May 15
– Vote on budget levy and BOE elections
Sources
Erie 1 BOCES Finance and Legislative Services
New York State Office of the State Comptroller
New York State Office of Real Property Services
Questar III BOCES State Aid and Financial Planning Services
And from presentations provided by:
Harris Beach PLLC, Mr. Patrick Malgieri & Ms. Tracie Lopardi
Hodgson Russ LLP, Mr. Jeffrey Swiatek
Municipal Solutions, Mr. Jeffrey Smith
Statewide School Finance Consortium, Dr. Richard Timbs