New York “Tax Cap” Primer

This is the first of a series of blogs discussing the newly enacted 2 percent “Tax Cap”. 

I have enclosed the phrase “Tax Cap” in quotation marks to emphasize my belief that the legislation will not actually “cap” property taxes. Also, by way of introducing this subject, let me state that I am certainly in favor of constraining the growth of property taxes, and even having my own taxes reduced. However, I do not believe the current new law will accomplish either.

Two Multiple Choice Questions:

1. What causes a high fever?

(a)    a thermometer, reading above 100F

(b)   feeling hot and flushed inside, warm to the touch outside

(c)    the body’s natural immune reaction to foreign antigens in the body

(d)    an infection which produces foreign antibodies in the body which trigger the natural immune reaction

(e)   Behavior (or neglectful behavior) which exposes you to acquiring an infection

(f)     Bad luck

2. What causes high school taxes?

(a)    Your school tax bill

(b)   The Tax Levy, which the school board passes to the County who generates your school tax bill

(c)    Not enough or too much money held in reserve by your school district which reserve either is used to lower the following year’s tax levy, or, which caused last year’s tax levy to be unnecessarily high

(d)   Not enough State Aid or Federal Aid or other revenue (like rental income from an unused school building) to offset spending by your school board

(e)   “Unfunded Mandates”, which are requirements in law or regulation requiring action by your school board, but without specific funding provided for those actions.

(f)     School spending in general, meaning the school board spending money to operate the schools, paying salaries and benefits, and building up some reserve funds.

Answers to Question #1:

[d]  a fever is caused by an infection, which is the” proximate cause”.

[e] behavior or neglect of behavior which exposes you to acquiring an infection is a “root cause” for some infections.

[f] bad luck can cause some infections, also a possible “root cause”.

Answers to Question #2:

[c], [d],  [e], and [f], all taken together cause school taxes to be too high.

[a] your tax bill is not the cause of anything besides telling you for how much money to write your tax payment check.

[b] the Tax Levy is not the cause of anything other than telling the County Tax Assessor how much school tax they need to bill property owners in your school district. 

The Tax Levy starts with [f] general school spending, which also includes [e] unfunded mandates. Then, [d], Revenue,  state aid, federal aid, and rental income (from an unused school building) are subtracted from the general school spending [f].  Finally, some of the reserve funds [c] can be “appropriated” by your school board to reduce the resulting Tax Levy [b].

Here’s a flow chart:

[f] Spending (including [e] unfunded mandates)........+    $70 Million

Minus [d] Revenue (Federal & State Aid, etc.)......... -     $20 Million

Preliminary amount to be raised by taxes................ =     $50 Million

Minus [c] Amount of reserve funds “appropriated”... -     $  2 Million

Tax Levy................................................................. =     $48 Million              

To conclude today's blog, allow me to pose another question:

If you were a legislator or the governor and you really wanted to control school taxes, which parts of the equation leading to the tax bill would YOU change, or “CAP:

[e] Limit general school spending?

[f] Reduce unfunded Mandates?

[d] Increase state school aid?

[c] set an optimum level for reserve funds to avoid over-taxing but to have some money that could be used to lower future tax levy increases?

[b] Cap the Tax Levy itself and ignore all of the very real money factors that make up the Tax Levy?

[a] Prohibit individual school tax bills from increasing by more than a fixed amount, ignoring everything else about school financing?

I will provide some more answers in follow-up blogs on this subject.  Feel free to address this question, here, in the meantime.