What is the New York State property tax?
The three tax levy numbers
With all the talk of New York’s “2 percent tax cap,” it may come as a surprise to learn that each school district presents three separate tax levy numbers every year in order to comply with the law.
And chances are good that none of these numbers will be exactly 2 percent. In fact, in 2014 only two of the state’s nearly 700 school districts had a 2 percent “cap.” That’s because the 2 percent you hear about is just one part of a complex formula that school districts must use to calculate two of their tax levy numbers, the tax levy limit and the maximum allowable tax levy. These two numbers—that establish more of a threshold than a cap—help districts determine their proposed tax levy.
Essentially, the tax levy limit tells a school district how much voter support it will need to pass a budget with its proposed tax levy. For school districts, the tax levy limit is the highest allowable tax levy (before exclusions) that a school district can propose as part of its annual budget and need the approval of only a simple majority of voters (50 percent plus 1) to pass the budget. If a district proposes a budget with a tax levy amount (before exclusions) above this limit, it will need the approval of a supermajority of voters (60 percent) to pass the budget.
School districts are required to report their calculated tax levy limit to the state comptroller by March 1 each year.
Maximum allowable tax levy
The maximum allowable tax levy is the tax levy limit PLUS certain exclusions.
Taxes levied to fund the following expenses are excluded from the tax levy limit:
- Voter-approved local capital expenditures.
- Increases in the state-mandated employer contribution rates for teacher and employee pension systems that exceed two percentage points.
- Court orders/judgments resulting from tort actions of any amount that exceeds 5 percent of a district’s current levy.
A school district adds these exclusions to its tax levy limit without triggering the need for 60 percent voter approval.
Proposed tax levy
The third tax levy number is arguably the most important. It’s the tax levy called for by a school district’s proposed budget. By definition, the tax levy is the total amount of money to be raised locally by a municipality (i.e., school district) after factoring in all other available revenues.
If a school district’s proposed tax levy minus exclusions is less than or equal to the district’s calculated tax levy limit, the district will need the approval of a simple majority of voters to pass its budget. If the proposed tax levy minus exclusions is greater than the district’s calculated tax levy limit, 60 percent voter approval is needed.