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Tax cap ordinance, confused, step in line
By Lee Chowaniec
Aug 6, 2011, 09:24
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When the tax cap ordinance was first approved, 75% of New Yorkers breathed a sigh believing tax relief was in sight. Municipalities and school districts would have to manage their budgets under the same constraints as many of its constituents have to. Think again!

At Monday evening’s Lancaster Town Board meeting, after holding a public hearing and where no one spoke in opposition, the board unanimously approved a resolution to approve the bonding of $990,000 for a water line replacement project.

The writer addressed the board at the public hearing and openly declared he was a proponent of the project. However, he had some questions that needed addressing on whether this bonding project, along with the numerous other recent bonding projects, was affected by the tax cap legislation.

Chowaniec: “With this bonding, this is an excellent time to bring up the tax cap and how it can potentially affect debt service. In reading the tax cap provisions there is language and exceptions in the ordinance that are difficult to comprehend. And, as Councilman Aquino just stated, credible information puts rumor to rest.”
“Examining the tap cap language, we are being told that the primary intent of the cap was to control tax rate increases. The tax levy increase could be no higher than 2% or the Consumer Price Index (CPI) number, whichever was lower.”

Supervisor Robert Giza interjected that the CPI number was now 1.87.

Chowaniec: “However, there are more and more exemptions being added to the formula. It is now being stated that, the tax levy limitation law does not contain an exception for the payment of debt service on either outstanding general obligation debt of municipalities or such debt incurred after the effective date of the tax levy limitation provisions. The town has increased its debt load significantly in the past several years. This bonding is not going to be exempt from the 2% cap, or is it? In other words, last year the town paid out near $1 million to pay off debt service principal and interest. That amount is not going to be excluded from the 2% tax cap limit, or is it?”

Supervisor Giza: “We are still getting some feedback from the Comptroller’s office on stuff like that.”

Councilman Aquino: “That stuff is just being worked on. The Comptroller doesn’t even know, doesn’t know how to interpret it. Also, if the plan is authorized we are not going to spend money that is not bid out. For this budget I don’t think we are affected anyways.”

Chowaniec: “The school budget is voted on. If 60% of the people voted for a budget that exceeded the tax cap limitation, the 2% cap would be overrode and approved. However, according to what is being written on the tax cap a municipality may exceed the tax levy limitation for the coming fiscal year only if the governing body of such Municipality first enacts, by at least a sixty percent vote of the total voting strength of the board, a local law to override such limitation for such coming fiscal year only. So is this saying that the board has the authority to override the tax cap?

Aquino declared it would be subject to a permissive referendum.

Supervisor Giza interjected that it would not be popular with the residents.

Aquino: “I think it is (subject to referendum), but I am not sure at this time. I spoke with Dave Brown (Financial/Budget Director) on this last week and a guy like him who would know is somewhat confused; even the experts. The basis is there but there is going to be some interpretation as to the concept of the plan. This is going to require a lot of second looks because it’s a moving picture. I know they are working on it and they better jet it done soon as we have a budget coming up.

Chowaniec: “I am well aware it is close to budget time and that is why I am bringing the tax cap limitation and how the debt service will figure into the tax cap. There is a lot of confusion and a lot of rumors and misleading information floating around.”

Town Clerk Johanna Coleman: “This is a question the bond council is curious about and I spoke with them about this last week. This is a good question and they don’t have the answers yet.”

Chowaniec: “Although you appear to be as uncertain as I am about the tax cap law, it is appreciated that you are trying to give answers and explanations. That’s what the public is looking for and expecting from this body. We were presented with a basic tax cap limitation of 2% of the tax levy and every time we turn around we hear or read of another exemption. We read there are permissible exceptions to the tax levy limitation provided in the Tax Levy Limitation Law, including expenditures made on account of certain tort settlements and certain increases in the average actuarial contribution rates of the New York State and Local Employees’ Retirement System, the Police and Fire Retirement System, and the Teachers’ Retirement System."


Lancaster’s total outstanding debt has increased from $8,325,000 in 2006 to $15,845,000 in 2010. Last year, between principal and interest the town paid out near $1 million. If the debt obligation payment is excluded from the tax cap limitation (along with the aforementioned exclusions) no tax relief can be expected.

And should municipalities challenge the 60% vote requirement, where that right belongs to the municipality board (which is already being looked into), and win their challenge, the tax cap should be considered useless, an ordinance without teeth, bringing no tax relief.


I asked the board if this was the year that they negotiated new contracts with the police, dispatch, Blue Collar and White Collar unions. I was told it is.
I asked if any progressive was being made and was told by Supervisor Giza that such talks have not started yet. “There were some preliminary discussions,” declared Giza.

Chowaniec: “Is this the last year for the current contracts and are negotiations due to be completed by the end of the year?”

Councilman Abraham: “For how long it takes.”


As town employees contribute zero to their health care plans and where the Erie County Sheriffs and other government workers contribute 15%, and where state workers recently took a two-year salary freeze, it will be interesting to see how the town handles these contract negotiations.

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