Uncapping a taxing formula

Government leaders finding 2 percent tax cap not so simple after all

— To calculate the tax levy limit there is an 8-step process:

Take the prior year’s tax levy to start; then, multiply by a “tax base growth factor,” which is a figure provided by that state; then add in any payment in lieu of taxes; take out tort action payments exceeding 5 percent of the previous year’s annual tax levy; then multiply by the “allowable levy growth factor,” which is 2 percent or the consumer price index, whichever is lower; take out PILOTs scheduled for the coming year; add in any carryover funds (extra taxes from the previous year); and carry forward eligible exclusions.

After budgets are developed and public comments are heard, the state Comptroller’s Office receives the adopted budget of a municipality or school district. The state then determines if levies are “erroneous,” or exceeding the limitations provided by law. Of course, this is overridden if the governing body has voted to remove the cap with a 60 percent majority.

Any charges exceeding the limit, no matter the circumstance, is always placed into a reserve.

There are special circumstances, though, where the Office of the State Comptroller would determine a tax levy limit calculation, which would result from the consolidation of two or more local governments, transferring functions of one government’s activity to another government (such as policing), or when a local government dissolves. New local governments that don’t result from consolidation or dissolution do not have a tax levy limit applied the first year.

University at Albany professor Betty Daniel, who teaches macroeconomics and international economics, said personally she was opposed to the tax cap, but understands the public wants to see ever-rising taxes stopped.

“You’ve got people assured that property taxes aren’t going to go up so rapidly they don’t feel like they can’t afford their homes anymore,” Daniel said. “I think the public likes it because they want to see limits on the rate of their property taxes going up.”

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