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The two percent tax cap on local municipalities
- Updated: October 8, 2011
When Governor Andrew Cuomo and the state legislators promised and passed tax relief in the form of a local tax cap, the public thought it was the answer to many woes. Effective 2012, local governments will be subject to a 2 percent tax levy limitation, or the rate of inflation, whichever is lower. Local municipalities, including counties, towns, villages and school districts saw the pitfalls in the future and asked Albany for some mandate relief to balance what they knew would be problems. That relief never materialized and now local governments are slashinging budgets, raiding fund balances in an effort to make things happen.
What some municipalities have going for them, is that growth factors and retirement increases are not figured into the 2% cap. What some municipalities have going against them is no growth and other wages and benefits weighing on the bottom line
Wayne County, with a healthy reserve in excess of $50,000,000, is nonetheless making moves to ensure its financial stability. Department budgets are being scrutinized and the near future may present the County Board of Supervisors with some other ways to save in the future.
The Board of Supervisors and County Administrator Jim Marquette are working on longer term plans to save the County considerable annual sums. The eventual sale of the Wayne County Nursing Home and the end of contributions to the Western Finger Lakes Solid Waste Authority are being batted around. “We are working through some scenarios,” said Marquette coyly. “We may have some options to look at.”
Last week Governor Cuomo said the counties should not expect the State to pick up their share of Medicaid costs. In the 2011 Wayne County budget, Medicaid accounted for 37% of the total tax levy at $12.9 million dollars. According to the County Administrator, without offsetting federal stimulus money that was available last year, Wayne County Medicaid costs will increase in the 2012 budget to represent 41% of the tax levy, or about $14.4 million dollars. Although the Governor has said “no” to the State taking over the counties share of Medicaid, Marquette is still hopeful that the state legislature will see it a different way. “To say this is a major deal for us is an understatement, It is for everyone,” commented Marquette.
The County Administrator has been credited with helping Wayne County stay on a stable leg. The County has not raised the tax levy for a number of years under his watchful eye. Marquette credits the change in the Board of Supervisors, over the past several years, for the County’s financial stability. “We are in a better position than many counties (throughout the state) but we can’t screw it up,” he added.
Palmyra Town Supervisor Ken Miller stated his town will make the 2% cap, but not without taking some funds out of the fund balance. He said he is more concerned with the 2013 budget, unless mandate relief is on the horizon.
Butler Town Supervisor Dave Spickerman said his town stayed well under the 2% cap and said he absolutely refuses to allow his town to go into debt. “The problem is grants. They wind up costing more than they are worth. We (Butler) don’t go for grants.”
Macedon Town Supervisor Bill Hammond received a worker’s compensation reduction from this year that offset any potential problems for his 2012 town budget. The Board held a budget workshop on Thursday (10/6) and held the line just below the 2% cap. He too was concerned about future budgets without state mandate relief. The Macedon Town Board will hold their budget hearing on Thursday, October 27th at which time the Board will adopt the 2012 budget. “We always pass our budget before the elections,” said Hammond.
Lyons Town Supervisor Brian Manktelow discussed the new State-mandated 2 percent tax cap at his last town board meeting. There was some discussion about a tax cap override, which would require a local law. Several local municipalities are going this route, as it seems to offer the most legal protection should an error be made and the tax levy would exceed 2 percent.
Manktelow, along with several other Wayne County Town Supervisors, also attended a seminar on the matter last week in Canandaigua to help clarify the many issues related to the cap.
Walworth Town Supervisor Bob Plant and his Board, along with the Town of Palmyra and Williamson are hoping to override the 2% cap by passing a Local law that must be approved by 60% of the Board. This, in effect, would override the limit on the amount of real property taxes that may be levied by a town. “This will give us the option if the State changes the rules on workman’s comp. There is also some question whether special districts (such as sidewalk, lighting, fire districts, etc) fall under the 2% rule,” said Plant. “We could be penalized and the state could deduct the amount of the tax levy (overage) the following year.,” he added.Walworth will hold their Public Hearing on Thursday, October 20th at 7:45 p.m. Palmyra will hold theirs on Thursday, October 27th at 7 p.m. at the East Palmyra Fire hall. Williamson’s will be held on Tuesday, October 25th at 7:30 p.m., as part of their regular Board meeting.
The Town of Ontario Board decided not to evoke a Public hearing and are committed at this time to come in at, or below below the 2% cap.
School Districts are expected to feel the full brunt of the 25 tax and area school superintendents and boards are hoping for changes before the Spring ax falls on their budgets.