2% tax cap ordinance confusion

[gorja]

Lee's front page article-
Tax cap ordinance, confused, step in line

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!

More...

Some of Lee's information may have come from the Town of Lancaster's official statement for their Bond Anticipation Notes -
http://www.capmark.org/docs/Lan_POS.pdf

It states-

The Tax Levy Limitation Law does not contain an exception from the levy limitation for the payment of debt serviceon either outstanding general obligation debt of municipalities or such debt incurred after the effective date of the taxlevy limitation provisions.

It states further

Article 8 Section 12 of the State Constitution

“It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the

power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the creditof counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in

contracting of indebtedness by them.

Nothing in this article shall be construed to prevent the legislature from further restricting the powers herein
specified of any county, city, town, village or school district to contract indebtedness or to levy taxes on real estate.The legislature shall not, however, restrict the power to levy taxes on real estate for the payment of interest on or principal

of indebtedness theretofore contracted.

On one hand , they are stating the interest and principal paid for indebtedness is not an exemption to override the tax cap but constitutionally they are saying it may be an exemption.

Another confusing part-

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(resolution in the case of fire districts and certain special districts) to override such limitation for such coming fiscal year only.

Does this mean that every year the board can vote for a local law to override the tax cap for the upcoming fiscal year? Or does it mean just this upcoming fiscal year only- 2012?

Thanks Lee for getting the questions out there. I'm sure our town board is looking to find any way they can to increase taxes legally.

[Lee Chowaniec]

Gorga wrote:

Another confusing part-

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(resolution in the case of fire districts and certain special districts) to override such limitation for such coming fiscal year only.Does this mean that every year the board can vote for a local law to override the tax cap for the upcoming fiscal year? Or does it mean just this upcoming fiscal year only- 2012?

Aquino said something that muddies the water on the tax cap. He stated early that the tax cap would not affect this budget, but implied later that they needed clarification on this ordinance because the town budget process was near due.

As the town is saying ‘confusion reigns’ only one thing is certain, the town is spending freely and they will once again be in our wallets with a tax levy that far exceeds a 2% increase.

[gorja]

From Lee's article-

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?”

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.”

From the bill-

41 3. (A) SUBJECT TO THE PROVISIONS OF SUBDIVISION FIVE OF THIS SECTION,
42 BEGINNING WITH THE FISCAL YEAR THAT BEGINS IN TWO THOUSAND TWELVE, NO
43 LOCAL GOVERNMENT SHALL ADOPT A BUDGET THAT REQUIRES A TAX LEVY THAT IS
44 GREATER THAN THE TAX LEVY LIMIT FOR THE COMING FISCAL YEAR. PROVIDED
45 HOWEVER THE TAX LEVY LIMIT SHALL NOT PROHIBIT A LEVY NECESSARY TO
46 SUPPORT THE EXPENDITURES PURSUANT TO SUBPARAGRAPHS (I) THROUGH (IV) OF
47 PARAGRAPH (G) OF SUBDIVISION TWO OF THIS SECTION.

and. . . .

55 5. A LOCAL GOVERNMENT MAY ADOPT A BUDGET THAT REQUIRES A TAX LEVY THAT
56 IS GREATER THAN THE TAX LEVY LIMIT FOR THE COMING FISCAL YEAR, NOT
1 INCLUDING ANY LEVY NECESSARY TO SUPPORT THE EXPENDITURES PURSUANT TO
2 SUBPARAGRAPHS (I) THROUGH (IV) OF PARAGRAPH G OF SUBDIVISION TWO OF THIS
3 SECTION, ONLY IF THE GOVERNING BODY OF SUCH LOCAL GOVERNMENT FIRST
4 ENACTS, BY A VOTE OF SIXTY PERCENT OF THE TOTAL VOTING POWER OF SUCH
5 BODY, A LOCAL LAW TO OVERRIDE SUCH LIMIT FOR SUCH COMING FISCAL YEAR
6 ONLY,

http://www.assembly.state.ny.us/leg/...Y#jump_to_Text

The law states the fiscal year that begins in 2012. That fiscal year begins less than 5 months from now. Someone better tell Aquino that this budget will be affected.

[shortstuff]

It appears that in this case in municipality law our local board can override the tax cap law by voting 60% or more by exercising their voting strength. That is why we call this "crap" because local government can override this law and still increase the taxes as they deem necessary. Therefore, we need to vote in the upcoming November elections as well as in the primary election in September because a controlling democratic board will definately exercise their voting strength to increase the taxes. We need a "blend" of power, republican & democrat so they can keep the debate going and hopefully use common sense.

Another thought, and I cannot believe I am going to address this~~the 2% cap requiring our governing body to have the ability to override the cap, downsizing our board from 5 to 3 would not work.