New York State Comptroller Thomas P. DiNapoli has announced that the cap on tax levy increases for the 2020-21 budget cycle is 1.81 percent, down from 2 percent in the last two years.
“School district and municipal officials need to be fiscally cautious and examine where they can limit spending to stay under the cap,” Mr. DiNapoli said in a statement last week. “Local governments will have to examine their budgets more closely to control expenses.”
The tax cap is tied to economic inflation, specifically the consumer price index, a nationwide measure that looks at increases in “the cost of an average basket of goods,” according to Robert Hauser, the Bridgehampton School District superintendent. It includes items like food, gasoline, and utilities for a house. The tax cap is set annually at the rate of inflation or 2 percent, whichever is lower.
As several weeks of school board budget workshops begin, officials here say it’s too early to tell what kind of impact that will have on their districts. While the cap is 1.8 percent, for some districts it may actually be higher than that, based on considerations such as bustling real estate development and debt payments.
That was confirmed by Eleanor Tritt, the Sag Harbor School District’s interim superintendent. “The tax cap formula contains several factors unique to each district that must be utilized in calculating the actual tax cap for that district,” she said by email this week.
“It is too early in the process” to make any concrete projections concerning its impact, Ms. Tritt said. Sag Harbor will start a series of budget workshops on Feb. 10 at 6:30 p.m.
Limits on school tax levy increases often lead to budget cuts and tough decisions, but schools can exceed the cap if their communities approve a proposed budget with at least a 60-percent supermajority of voter approval in a district. It’s often called “piercing the cap.”
Richard Burns, East Hampton’s superintendent, also said it’s too early to tell, but he pledged that piercing the cap is off the table in his district.
“In a sense, we lose .19 percent” of a tax levy increase, Mr. Burns said. “I’d much rather have 2 percent than 1.81, but it’s not as low as some years that did go that way. The board is committed to staying under the cap, so whatever the tax levy cap allows us to do, we’re going to move in that direction. There’s not going to be any drastic issue.” East Hampton’s first budget workshop is on Feb. 25 at 6 p.m.
The Bridgehampton School District is an example of how booming real estate development affects a district’s bottom line. The district has increased its total tax levy by double digits in the last two years, but actual tax rates either fell or stayed largely flat during that time. The exceptions take into account real estate assessments in the hamlet, which have risen dramatically in Bridgehampton over the last few years, so the district did not have to go above the cap.
“It’s a little bit alarming in that we’re starting the calendar off with a rate that’s lower than last year,” Mr. Hauser said. “I’m hoping that we don’t continue that trend, where that number declines throughout 2020.”
Bridgehampton’s budget advisory committee has already had several meetings, and the district was to introduce a first draft of its budget at last night’s school board meeting.