The State’s Tax Cap: A ‘Most Convoluted’ Law

By Theodore M. Fafinski, Farmington Town Supervisor/Chairman, Ontario County Board of Supervisors

I was pleased when the governor first announced plans for a cap on the amount of property taxes local municipalities could levy. And I wasn’t alone. Many fellow colleagues in local government hoped to finally see some support from the state that we could pass on to taxpayers on the local level. We assumed such a measure would come with the needed mandate relief to allow us to implement it. We believed it would be transparent to the public, meaning an average citizen could decipher whether a municipality had met the cap simply by comparing a tax levy from one year to the next. We assumed it would be fairly simple to enact come budget time each year.

We were wrong on all fronts.

As town of Farmington Supervisor and Chairman of the Ontario County Board of Supervisors I have been an outspoken critic of this legislation, which goes into effect for our 2012 budgets. In the many media interviews I’ve given on the subject – including to The New York Times – I’ve said it’s the “most convoluted” piece of legislation to come out of Albany that I can recall.

Here’s why: Many New Yorkers think the tax cap limits municipalities and school districts from increasing their tax rates (what you pay per thousand dollars of assessed property) or amount to be raised by taxes (the tax levy) by no more than 2 percent. It’s not that simple. And, in fact, a citizen would not be able to tell if the cap has been exceeded by examining a budget. The state gives each municipality or school district an online form – far more complicated than a personal property tax return – where information must be logged, everything from the current year’s tax levy in each fund and special district, to Workers Compensation and employee pension payments, to expected Payments In Lieu of Taxes. The formula even asks for something called a “growth rate factor” for each municipality. The resulting calculation by the state is the allowable tax levy for the government or school district. Many fellow supervisors in Ontario County that have submitted their information have found the limit allowed is actually closer to 4 percent because of credits for increased pension payments and such.

In Farmington we came in well below our allowable limit. But the town board still voted to override the tax cap as a precautionary measure because the penalties are too great a risk if, say, there is a mistake in our calculations; interpretation of the legislation changes as a result of court challenges or a change in administration with differing opinions. All of these factors are a great risk since the state law itself is very much open for interpretation. We have gotten conflicting opinions on how to calculate our allowed tax cap everywhere from the New York State Association of Towns to the State Comptroller’s Office itself. Talk about confusing. Our town attorney, having done a thorough review of the law, advised us to enact the override, allowed with a 60 percent or greater vote by a governing board. Many other communities followed suit. For school districts, though, it’s not that simple; a public vote is required. And despite our greatest efforts to educate the public on our concerns with this, confusion remains.

Among the most unsettling parts of this state legislation is that it was thrust upon us with no related mandate relief. Our costs are going up, in part due to things we are required by the state of New York to pay for. Case in point: the increasing Medicaid burden on counties. The state’s shift of the percent of Medicaid payments to counties accounts for upwards of 65 percent of the amount to be raised by taxes for residents in Ontario County. If the state assumed responsibility for Medicaid, like many other states have, it could reduce a person’s tax bill by more than half. It could be argued that the burden would then be shifted to state taxes – but I counter that New York state must look at overhauling Medicaid.  New York is said to have the “Cadillac” of Medicaid benefits compared to some other states.

Going forward, I hope our state lawmakers have gotten the message from the mess we towns and counties have endured this year in trying to comprehend and then implement their tax cap.  Stay tuned and let’s see if Albany can make progress on this front in the 2012 election year.

One Response to “The State’s Tax Cap: A ‘Most Convoluted’ Law”

1. Beyond Po'ed says:

   December 29, 2011 at 10:15 am

   Well I just received my property tax bill from the Town of Canandaigua, and my tax burden is $500.00 MORE than last year.

   I am SICK over this, just sick.

   Reply