Just because New York state has a law capping taxes at 2 percent doesn't mean municipalities have to stick to that number - in fact, in Jamestown, taxes could increase as much as 4 percent.
The tax cap was rolled out by Gov. Andrew Cuomo in June 2011. Going into the 2013 budget season, local municipalities are going into the second year of using the government formula.
"Basically what the tax cap says is that, with a few exceptions, property taxes can not go up by more than 2 percent unless approved by a supermajority vote by the governing body for municipalities, or by the taxpayers for a school district," said Assemblyman Andrew Goodell, R-Chautauqua County.
However, Goodell explained that local governments are able to exceed the cap due to a variety of circumstances.
"You can get more than a 2 percent increase if your tax base grows by more. If you didn't use your 2 percent last year, you can carry over part of it. And, there may be a few expenses that are outside the tax cap," Goodell said.
The formula put in place by the state requires a lot of calculation and has many factors. According to Joseph Bellitto, city comptroller, the calculation includes the tax levy from the previous year and adding or subtracting payments in lieu of tax agreements.
Because this is the second year the tax cap is in place, the city is able to carry over the amount it was under last year's tax cap, which amounts to $200,046. Additionally, New York state calculates a tax base growth factor for each municipality, village, town and county. Bellitto said for Jamestown, the growth factor is very low.
Jamestown also receives an exclusion because of large increases in the retirement system payments. The city is receiving a $1,000 exclusion under the formula for the police and fire retirement system, which is added to the tax cap, according to Bellitto.
"So, that brings us up to our tax cap," Bellitto said. "It will be a total of $14,920,325. Even though they talk about a 2 percent tax cap, we were under last year. So that $200,000 plus the $91,000 on the police and fire retirement system plus those other little things, gives us the ability to have about a 4 percent tax cap instead of a 2 percent."
Because each calculation is different, the tax cap will vary between all governing bodies in the state. Bellitto emphasized some caps will be higher and some will be lower than Jamestown, based on individual numbers.
"Each community has to calculate it based on the criteria that we're given," Bellitto said. "Just because Jamestown is 4 percent, I don't know about Ellicott or Busti is or any other surrounding communities, but theirs could be a higher or lower, or I suppose that it could work out that it's right on the number of 2 percent. That's what people need to understand."
RELIEF IN SIGHT?
"Chautauqua County has the fifth highest property tax rate in the nation. That's adding school, village, town, sewer district, water district, fire district, everything together," Goodell said.
Part of what is raising the tax rate, Goodell said, is that New York has the most expensive Medicaid system in the nation. To address the issue, Goodell said the state has enacted legislation to cap the county's growth of Medicaid to 2 percent. Additionally, the state cut more than $2 billion out of the Medicaid program. Finally, to help local municipalities, the state enacted a new pension system for new employees.
"So, new employees coming into the municipal service have a pension system now that is much more similar to what you might expect in the private sector," Goodell said. "And, that's projected to save Chautauqua County in the range of $10 million over the next decade."
Goodell said he has also cosponsored several mandate relief proposals. However, he said many proposals have been blocked so far.
Putting a budget together at the local level isn't getting any easier, though, despite what Goodell said he is working toward.
"I think every year gets harder, because the state has not addressed the real problems," Bellitto said. "The property tax cap in my eyes is just a calculation that sounds good in Albany. Supposedly the municipalities around the state are only raising taxes 2 percent. But they need to start, in Albany, making tough decisions that affect all local governments."
Additionally, Bellitto said the city has seen a decrease of nearly half a million dollars in state aid over the last several years. He also said the state needs to address things such as the retirement system, the triborough agreement and other mandates passed down to local governments.
"The mandate relief that they promised us was going to come with the property tax cap, it never has come," said Jamestown Mayor Sam Teresi. "That mandate relief needs to come. I don't care if it is a city, a town, a village, a county or a school district, we can only do, from a cost-cutting standpoint, what the state gives us the legal authority and empowers us to do. Right now, we are virtually powerless, from a cost-containing standpoint, until the state starts passing the type of mandate relief measures that they need to."
"On the one hand, I think (the tax cap) has value. It was motivated well," Teresi said. "On the other hand, it's not going to fulfill its promise until the state gives us the mandate relief that was promised with the tax cap."
Goodell said he is able to see the difficulties both at the county level and the municipal level as local governments work to build their budgets.
He said he believes, for the county budget, the biggest cost drivers are increased costs in pension, employee contractual increases and health insurance. Additionally, Medicaid costs will increase by 2 percent. Plus, union contracts govern contractual increases, so health care is also a union negotiation.
"On the local municipal level, this worker's comp charge has to be straightened out," Goodell said. "That may affect the budget of the town, but if it's done correctly, it will not affect the homeowner's tax bill. They are moving it from a separate line item on the tax bill into a different line item. That's my understanding. If that's the case, it will show up in their budgets in a different way, but will not show up in your tax bill in a different way."
Bellitto anticipates that local government has not seen the last of changes in mandate relief from the state. He said this will impact all municipalities over the next few years.
"We're going to try to do everything possible to keep under (the tax cap) but again, because of all these factors from the state level, it makes it very difficult to do that," Bellitto said.
Teresi will lead a 2013 budget hearing at 4 p.m. Tuesday, in the mayor's conference room on the third floor of City Hall.
"By and large, our municipal governments are pretty efficient," Goodell said. "I know they take this budget process very, very seriously."