Documents

budget 26 pages

Also attached to this agenda item: NYS OSC 2011 taxcaplaw

New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap: New York’s New Property Tax Cap: Issues and Implications Issues and Implications Barbara VanEpps, NYCOM Deputy Director September 28, 2011 White Plains, NY New York’s New Property Tax Cap New York’s New Property Tax Cap OUTLINE Property Tax Cap
History
Other States
What We Got What We Got
Points of Clarification
Implications Mandate Relief
NYCOM’s Efforts
What We Got
What We Asked For
Next Steps New York’s New Property Tax Cap New York’s New Property Tax Cap History History
Commission on Property Tax Relief (2008) Commission on Property Tax Relief (2008) – the lesser the lesser of 4% or 120% of CPI on school RPT levies only of 4% or 120% of CPI on school RPT levies only
Paterson Proposal (2010) Paterson Proposal (2010) – the lesser of 4% or 120% the lesser of 4% or 120% p ( ) p ( ) of CPI, override 2/3 of CPI, override 2/3rd rd vote of governing body, no vote of governing body, no exclusions exclusions
Cuomo Proposal (2011) Cuomo Proposal (2011) – the lesser of 2% or CPI, the lesser of 2% or CPI, override subject to mandatory referendum, override subject to mandatory referendum, exclusions for extraordinary capital expenditures & exclusions for extraordinary capital expenditures & judgments judgments New York’s New Property Tax Cap New York’s New Property Tax Cap Other States Other States Massachusetts Massachusetts
1980 Proposition 2 ½ 1980 Proposition 2 ½
Contains a levy ceiling (2 ½% of total full value) and Contains a levy ceiling (2 ½% of total full value) and y g ( ½% ) y g ( ½% ) a limit of 2 ½% in year a limit of 2 ½% in year-to to-year levy growth year levy growth
Excludes certain capital expenditures Excludes certain capital expenditures
Override must be approved by voters Override must be approved by voters
Cap was initially successful when coupled with an Cap was initially successful when coupled with an infusion of state aid infusion of state aid New York’s New Property Tax Cap New York’s New Property Tax Cap Other States Other States New Jersey New Jersey
July 2010 July 2010 - 2% levy cap 2% levy cap
E l d d bt i d h lth i t E l d d bt i d h lth i t
Excludes debt, pension and health insurance costs Excludes debt, pension and health insurance costs and spending for emergencies and spending for emergencies
Override must be approved by the voters Override must be approved by the voters
Passed with a promise of mandate relief some of Passed with a promise of mandate relief some of which has been realized (e.g., binding arbitration which has been realized (e.g., binding arbitration reform) reform) New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got
Chapter 97 of the Laws of 2011 (see attached) Chapter 97 of the Laws of 2011 (see attached)
Cap on year Cap on year-to to-year growth in the “tax levy” at the year growth in the “tax levy” at the lesser of 2% or CPI lesser of 2% or CPI U (CPI for All Urban Consumers: U (CPI for All Urban Consumers: lesser of 2% or CPI lesser of 2% or CPI-U (CPI for All Urban Consumers: U (CPI for All Urban Consumers: U.S. City Average) U.S. City Average) ---- currently 2% currently 2%
Effective for local fiscal years beginning in 2012 Effective for local fiscal years beginning in 2012
Applies to “taxes imposed on real property by or on Applies to “taxes imposed on real property by or on behalf of a county, city, town, village, school district, behalf of a county, city, town, village, school district, fire district or special district” fire district or special district” – NYC and Big 5 school NYC and Big 5 school districts exempt districts exempt New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got
Also applies to special ad valorem levies and special Also applies to special ad valorem levies and special assessments, but not user fees and fines assessments, but not user fees and fines
Up to 1.5% of any unused cap can be carried over Up to 1.5% of any unused cap can be carried over into the following year into the following year
Carryover must be used in subsequent year and Carryover must be used in subsequent year and therefore cannot be “banked” therefore cannot be “banked” New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got Exclusions from Tax Cap Exclusions from Tax Cap
Court order/judgment amounts (arising out of tort actions) Court order/judgment amounts (arising out of tort actions) exceeding 5% of the prior year levy exceeding 5% of the prior year levy
Does Does not not include tax certioraris include tax certioraris
Increases in full value of taxable real property resulting from Increases in full value of taxable real property resulting from new construction, annexation or tax roll omissions (“tax base new construction, annexation or tax roll omissions (“tax base growth factor” calculated by NYS Dept. of Taxation & Finance) growth factor” calculated by NYS Dept. of Taxation & Finance)
Adjustments will be made for transferring functions as well as Adjustments will be made for transferring functions as well as government consolidation/dissolution government consolidation/dissolution New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got Exclusions for Pension Costs Exclusions for Pension Costs
Increase in pension costs attributable to increase in average Increase in pension costs attributable to increase in average actuarial contribution rates for ERS & PFRS in excess of 2% of actuarial contribution rates for ERS & PFRS in excess of 2% of payroll payroll E.g., Change in Average Actuarial Rate from 2012 to 2013 E.g., Change in Average Actuarial Rate from 2012 to 2013
ERS: 16.3% to 18.9% = 2.6% increase in rate so 0.6% of ERS ERS: 16.3% to 18.9% = 2.6% increase in rate so 0.6% of ERS payroll is excludable payroll is excludable
PFRS: 21.6% to 25.8% = 4.2% increase in rate so 2.2% of PFRS: 21.6% to 25.8% = 4.2% increase in rate so 2.2% of PFRS payroll is excludable PFRS payroll is excludable
Note: The Average Actuarial Rate changes amount to a 16% Note: The Average Actuarial Rate changes amount to a 16% increase in ERS bills and a 19.4% increase in PFRS bills increase in ERS bills and a 19.4% increase in PFRS bills New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got Exclusions for Pension Costs Exclusions for Pension Costs
“Payroll” is what Retirement System uses to generate “Payroll” is what Retirement System uses to generate pension bill pension bill
If local government has chosen to amortize, it cannot If local government has chosen to amortize, it cannot take advantage of the pension exclusion take advantage of the pension exclusion
No carryover of unused pension exclusion is No carryover of unused pension exclusion is permitted permitted New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got – Local Override Local Override
Prior to budget adoption, local government must file Prior to budget adoption, local government must file tax levy limit calculation with OSC (using web tax levy limit calculation with OSC (using web-based based reporting system) reporting system)
Local governing body may adopt local law to Local governing body may adopt local law to
Local governing body may adopt local law to Local governing body may adopt local law to authorize override of tax cap authorize override of tax cap
Override is good for one fiscal year and must be Override is good for one fiscal year and must be approved by 60% of local governing body approved by 60% of local governing body
Law is considered effective upon adoption and may Law is considered effective upon adoption and may be approved on the same day as budget be approved on the same day as budget
If tax levy limit is exceeded due to “clerical or If tax levy limit is exceeded due to “clerical or technical error,” excess must be placed in reserve to technical error,” excess must be placed in reserve to reduce next year’s levy reduce next year’s levy New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got – Issues of Interest Issues of Interest
Default Budgets Default Budgets – If proposed budget becomes If proposed budget becomes adopted budget “by default,” the resulting levy adopted budget “by default,” the resulting levy cannot exceed the 2% cap cannot exceed the 2% cap
Special Districts without separately elected governing Special Districts without separately elected governing bodies are subject to the cap of the local government bodies are subject to the cap of the local government by which they are governed by which they are governed
The tax cap law essentially controls for PILOT The tax cap law essentially controls for PILOT payments that do not grow by more than 2% payments that do not grow by more than 2%
When a PILOT agreement expires and the property When a PILOT agreement expires and the property goes back on the tax roll, it will not be accounted for goes back on the tax roll, it will not be accounted for in the Quantity Change Factor in the Quantity Change Factor New York’s New Property Tax Cap New York’s New Property Tax Cap What We Got What We Got – Tax Cap Calculation Tax Cap Calculation
Determine total amount of taxes levied for prior fiscal year Determine total amount of taxes levied for prior fiscal year
Multiply amount by Tax Base Growth Factor as determined by Multiply amount by Tax Base Growth Factor as determined by Taxation and Finance Taxation and Finance
Add any PILOTs that were receivable in the prior fiscal year Add any PILOTs that were receivable in the prior fiscal year y p y y p y
Multiply the result by the allowable levy growth factor (tax Multiply the result by the allowable levy growth factor (tax cap) which will be calculated annually by OSC cap) which will be calculated annually by OSC
Subtract PILOTs receivable in the coming fiscal year Subtract PILOTs receivable in the coming fiscal year = Tax Levy Limit Before Exclusions = Tax Levy Limit Before Exclusions
Add adjustment for transfer of function Add adjustment for transfer of function
Add amount of tort exclusion Add amount of tort exclusion
Add amount of pension exclusion Add amount of pension exclusion = Tax Levy Limit Adjusted For Exclusions = Tax Levy Limit Adjusted For Exclusions New York’s New Property Tax Cap New York’s New Property Tax Cap Points of Clarification Points of Clarification
Relevies of delinquent taxes or delinquent Relevies of delinquent taxes or delinquent user fees are not subject to the tax cap user fees are not subject to the tax cap
Th l h ld t b dj t d f t Th l h ld t b dj t d f t
The levy should not be adjusted for tax The levy should not be adjusted for tax refunds granted after taxes are levied refunds granted after taxes are levied
The tax levy limit applies to the combined The tax levy limit applies to the combined town town-wide and TOV levy wide and TOV levy
BIDs are included in the tax levy limit of the BIDs are included in the tax levy limit of the municipality in which they operate municipality in which they operate New York’s New Property Tax Cap New York’s New Property Tax Cap Additional Information Additional Information
Office of the State Comptroller Office of the State Comptroller FAQs, Online Reporting Form, Pension Exclusion Calculator, FAQs, Online Reporting Form, Pension Exclusion Calculator, www osc state ny us/localgov/realprop/index htm www osc state ny us/localgov/realprop/index htm www.osc.state.ny.us/localgov/realprop/index.htm www.osc.state.ny.us/localgov/realprop/index.htm
Dept of Taxation and Finance/Dept. Of State Dept of Taxation and Finance/Dept. Of State Guidelines for Implementation & Tax Base Growth Factors Guidelines for Implementation & Tax Base Growth Factors www.tax.ny.gov/research/property/cap.htm www.tax.ny.gov/research/property/cap.htm
NYCOM website contains links to NYCOM website contains links to all all documents documents www.nycom.org www.nycom.org New York’s New Property Tax Cap New York’s New Property Tax Cap Implications Implications The Truth About Tax Caps… The Truth About Tax Caps…
They do nothing to address the true cost drivers They do nothing to address the true cost drivers  Pensions Pensions  Health insurance Health insurance  Energy/fuel Energy/fuel
May increase disparities among communities May increase disparities among communities
Often result in reductions in services and personnel Often result in reductions in services and personnel ...unless they are accompanied by increased State aid ...unless they are accompanied by increased State aid and and meaningful meaningful mandate relief mandate relief New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap Capped Growth in Property Taxes vs. Mandated Growth in Pension Costs vs. Workforce Reductions City Population Capped Increase in Property Tax Levy Estimated Pension Increase 2012 % by which Pension Increase Exceeds Tax Increase Reduction in City Workforce 2000 to 2011 Canandaigua 11,264 $83,578 $212,089 154% 18% Corning 10,842 $106,081 $249,937 136% 21% Elmira 30,940 $208,851 $822,619 294% 16% Lackawanna 19,064 $177,774 $425,725 139% 16% North Tonawanda 33,262 $313,626 $911,632 191% 22% Ogdensburg 12,364 $87,446 $129,135 48% 8% Oswego 18,096 $136,474 $318,703 134% 26% Plattsburgh 18,816 $181,623 $814,777 349% 15% Rome 34,950 $293,392 $961,501 228% 15% Syracuse 147,306 $664,242 $5,903,687 789% 6% Watertown 26,705 $149,748 $887,349 493% 3% Source: Preliminary data from New York State Conference of Mayors (NYCOM) city budget survey. New York’s New Property Tax Cap New York’s New Property Tax Cap "By enacting a tax cap without meaningful mandate "By enacting a tax cap without meaningful mandate relief, New York has missed an historic opportunity to relief, New York has missed an historic opportunity to provide real and sustainable property tax relief. The so provide real and sustainable property tax relief. The so- called mandate relief approved by the Senate and called mandate relief approved by the Senate and Assembly is meager and anemic. It will have no Assembly is meager and anemic. It will have no material impact on the rapidly rising local costs that are material impact on the rapidly rising local costs that are material impact on the rapidly rising local costs that are material impact on the rapidly rising local costs that are the cause of New York's property tax crisis. As a result, the cause of New York's property tax crisis. As a result, communities throughout our state will be forced to communities throughout our state will be forced to either override the tax cap, decimate essential either override the tax cap, decimate essential municipal services, or both. Before the tax cap goes into municipal services, or both. Before the tax cap goes into effect in 2012, our leaders in Albany must enact effect in 2012, our leaders in Albany must enact mandate relief that makes a difference.“ mandate relief that makes a difference.“ Peter A. Baynes Peter A. Baynes NYCOM Executive Director NYCOM Executive Director New York’s New Property Tax Cap New York’s New Property Tax Cap Mandate Relief Mandate Relief NYCOM’s Efforts NYCOM’s Efforts
1910 1910 - Schenectady Schenectady
2006 2006 Connecting the Dots Connecting the Dots
2006 2006 Connecting the Dots Connecting the Dots
2009 StoptheTaxShift.org 2009 StoptheTaxShift.org
2010 Mandate Relief Task Force & 2010 Mandate Relief Task Force & You Can’t Cap What You Can’t Control You Can’t Cap What You Can’t Control Educate policymakers and the public regarding the Educate policymakers and the public regarding the direct relationship between mandate relief and direct relationship between mandate relief and property tax relief property tax relief New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap New York’s New Property Tax Cap Mandate Relief Mandate Relief What we got What we got ---- not exactly “meaningful” not exactly “meaningful”
Repeal of the mandate that requires municipalities to Repeal of the mandate that requires municipalities to provide a police chief with the same dollar increase in provide a police chief with the same dollar increase in i i d b hi /h hi h ki i i d b hi /h hi h ki compensation received by his/her highest ranking compensation received by his/her highest ranking subordinate subordinate
Ability to recover municipal expenses associated with Ability to recover municipal expenses associated with police officer training when an officer transfers to police officer training when an officer transfers to another municipal police department another municipal police department
Authorization to piggyback onto federal contracts for Authorization to piggyback onto federal contracts for computer hardware, software and professional services, computer hardware, software and professional services, as well as federal defense supply contracts as well as federal defense supply contracts New York’s New Property Tax Cap New York’s New Property Tax Cap Mandate Relief Mandate Relief What we got What we got ---- not exactly “meaningful” not exactly “meaningful”
Authorization for the Office of General Services Authorization for the Office of General Services (OGS) to provide centralized fuel and electricity (OGS) to provide centralized fuel and electricity h f i i liti h f i i liti purchases for municipalities purchases for municipalities
Creation of an 11 Creation of an 11-member Mandate Relief Council member Mandate Relief Council (7 gubernatorial appointees and 4 legislative (7 gubernatorial appointees and 4 legislative appointees) with the power to review and appointees) with the power to review and recommend recommend amendment/repeal of regulatory and amendment/repeal of regulatory and statutory mandates presented by local statutory mandates presented by local governments and school districts governments and school districts New York’s New Property Tax Cap New York’s New Property Tax Cap Mandate Relief Mandate Relief What We Asked For What We Asked For
Pension reform Pension reform
Mandatory health insurance contributions Mandatory health insurance contributions y
Repeal of the Triborough Amendment Repeal of the Triborough Amendment
Binding Arbitration reform Binding Arbitration reform
Limits on police and firefighter disability payments Limits on police and firefighter disability payments
Prevailing Wage reform Prevailing Wage reform New York’s New Property Tax Cap New York’s New Property Tax Cap Next Steps Next Steps
Resolve outstanding Tax Cap issues and provide Resolve outstanding Tax Cap issues and provide training for local officials training for local officials training for local officials training for local officials
Achieve real and sustainable property tax relief Achieve real and sustainable property tax relief
Promote coalition Promote coalition-building and public education building and public education
Continue dialogue with Governor and legislators on Continue dialogue with Governor and legislators on “2 “2nd nd step” step”
Expand local revenue options Expand local revenue options