School districts will be able to increase their tax levies by an average of 4.6 percent this year — more than twice the statutory base cap of 2 percent –largely due to an exclusion for a portion of increased employee pension costs, according to a new study from the Empire Center for New York State Policy. Without the pension-related increases, the 2013-14 levy limit statewide would average 2.7 percent, the report found.
The 2.7 percent would include all other exclusions and allowances permitted for voter-approved capital expenses and physical additions to the local tax base, and factors like growth in the tax based and net changes in the value of payment in lieu of taxes agreements.
The pension exclusion for last year is an average of 1.9 percent statewide. Other exclusions totaled about 0.4 percent for new construction (down from about 0.5 percent in 2012-13) and 0.3 percent for voter-approved capital construction costs and net changes to payment in lieu of taxes agreements (down from 0.5 percent last year). That brings the total to 4.6 percent.
This is the second year the state has had a cap on increases in the property-tax levy. The limit is 2 percent or the level of inflation, whichever was less. It was 2 percent last year. In 2013, it is 2 percent for local governments and school districts whose fiscal years start Jan. 1 to July 1, and it is 1.96 percent for those with fiscal years that begin Aug. 1.
The partial exclusion for pensions boosts tax caps the most in the state’s poorest school districts, the report said. The average levy limit is 5.5 percent in high-need districts, 4.6 percent for average-need districts and 3.4 percent for the wealthiest school districts.
As of March 1, at least 35 districts told the state Comptroller’s Office that they planned to seek an override of the 2 percent cap. An override requires a 60 percent supermajority of voters to be approved. If voters don’t approve an increase in two rounds of voting. the allowable levy increase is zero.
While financing sources among school districts can vary significantly, the pension exclusion from the tax levy limit is a uniform percentage of covered payroll for all districts, regardless of wealth and financial need, the Empire Center found.