Planning for tax cap’s impact

As Valley Stream school officials begin preparing their 2012-13 budgets, this year presents a challenge like never before. It is the first time that school districts are subject to the new tax cap, which limits how much taxes can be raised.

One misconception is that taxes can only increase 2 percent, said Meredith Brosnan, the assistant superintendent for business in District 13. The 2 percent figure (or consumer price index, whichever is lower) is just one part of an 11-step formula that school officials must use to calculate how much a district can raise its tax levy, the total amount of money collected in property taxes.

The formula allows school districts to factor in the growth of its tax base, payments related to capital projects, and increases to pension costs in determining its allowable tax levy.

“The presumption and the understanding out there is that taxes, tax levies cannot raise more than 2 percent,” Brosnan said. “People assume their taxes will be a 2 percent increase maximum and that’s not the intent of the legislation. The intent of the legislation is to provide what they are calling a tax levy limitation and 2 percent is only a part of that formula. There are a number of variables.”

To exceed the allowable tax levy increase, 60 percent of voters would have to approve that budget. Otherwise, Brosnan said, if the proposed spending plan meets the tax cap requirement, the budget must be passed by a simple majority as in years past.

Brosnan said that it would be up to the Board of Education whether or not to put up a budget that exceeds the tax cap, a discussion that she said will take place at upcoming meetings.

Lisa Rutkoske, the assistant superintendent for business in District 30, said the Board of Education there already has given her direction to keep spending down. “We plan to stay within the tax cap,” she said.

She said one unknown factor that will affect the budget is state aid. District officials are not expecting a decrease in aid as in recent years, Rutkoske said, but they are not expecting an increase either. Rutkoske will present a draft budget to the board at is Jan. 23 and 31 meetings.

High School District Board of Education members, at their budget meeting following the Jan. 7 building tour, also want to stay within the tax cap. They charged administrators with drafting a budget that raises taxes no more than the allowable increase.

The decision by the nine-member board was unanimous. “Even if we could get the 60 percent,” Trustee Elise Antonelli said, “I don’t think it’s well advised. Our community is already stretched to the limit.”

In District 24, the Board of Education will discuss over its next few meetings whether or not to put up a budget that would exceed the tax cap. Dan Onorato, the assistant superintendent for business, said the public has approved the last few budgets by greater than a 60 percent majority. However, that doesn’t mean officials will bank on that. “We’re going to try and be as close to 2 percent as possible,” he said.

Onorato said he has not yet calculated the maximum tax levy increase allowed. However, because District 24 has debt from a past energy performance contract, Onorato said it is likely that its allowable increase will exceed 2 percent.

If a budget is defeated in May, school districts can put up the same or a revised spending plan for a revote in June. If voters defeat the budget twice, districts must adopt a contingent budget. A new requirement this year is that under a contingent budget, districts cannot increase the tax levy at all.

At the village

Village budgets are also adopted in the spring, and Valley Stream officials are currently preparing their 2012-13 spending plan. Like the schools, villages are also subject to the tax cap, however voter approval is not needed to pass these budgets.

Valley Stream officials are not looking to override the tax cap, even though the same vote required to simply pass a budget — three out of five board members — is the same supermajority needed to exceed the cap. “I think the village should make every effort to stay within in the 2 percent,” said Deputy Mayor Vincent Grasso.

While creating a budget within the constraints of the tax cap creates a challenge, Grasso said he believes it is a challenge that officials should strive to meet. He also said that this is an opportunity for government to become more efficient. However, he said he wished the legislation had come with more mandate relief for local governments.

Mayor Ed Fare, noting that some villages have already passed legislation allowing them to override the tax cap, said he wants Valley Stream’s budget to fall within the allowable increase. “I have no intent to pass a resolution to exceed the tax cap,” he said.

The village board froze the tax levy last year. Fare said that would be impossible to do again this year because of salary increases due to employees in the current union contract. “The money’s got to come from somewhere,” he said. “Your No. 1 expense is your employees.”

Village treasurer Michael Fox said that, like the schools, the 2 percent is not a set number. There is also a formula the village has to follow to calculate its allowable tax levy increase. Part of that formula includes an allowance for increases in state-mandated pension costs. He said he expects this to add about half a percentage point to the 2 percent base.

Fox said he will calculate the maximum tax levy increase by early February, once the tentative assessment rolls are completed. Right now, he said, budget development is in its early stages with department heads submitting their requests.

Fare said each department supervisor is being asked to submit a budget with no increase or, if possible, a small decrease.