A third of LI villages override tax cap

The Village of Great Neck accents its downtown The Village of Great Neck accents its downtown area with clocks like this one, located in a municipal parking lot. (Sept. 28, 2011) Photo Credit: T.C. McCarthy

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A third of Long Island's villages have voted to override the state's new 2-percent tax cap if necessary, reflecting many local officials' concerns about managing municipal finances while complying with the law.

The limit on tax levy increases comes as villages face increased state mandates, higher pension costs, rising fuel prices and a decrease in state aid.

"It's going to be virtually impossible for most villages to find enough areas to cut to stay within the 2 percent," said Tim Hogue, the mayor of Dering Harbor on Shelter Island and president of the Suffolk County Village Officials Association. "The majority of the villages I've talked to are going to vote [an override] in place just in case."

Many of the votes come months before the villages have to set fiscal 2013 budgets.

Authorizing a tax cap override doesn't guarantee the levy increase will exceed 2 percent, but it allows municipalities to go over the cap if they find they need to.

Village boards are citing a variety of reasons for authorizing a possible override -- to cover any levy calculation mistakes, maintain bond ratings, provide services residents demand or adhere to negotiated contracts.

Gov. Andrew M. Cuomo and legislative leaders enacted New York's property-tax cap in June.

 

Little fallout from override

While the law addressed public outcry about ballooning taxes, opposition to overriding the cap at the village level -- and political repercussions from exceeding it -- has been minimal.

"There are just so many ifs and buts and confusing features," Great Neck Mayor Ralph Kreitzman, who is president of the Nassau County Village Officials Association, said of the law. Great Neck is one of 15 villages -- about half -- in North Hempstead that have passed override votes.

All but 15 of Long Island's 96 villages operate on a June 1 fiscal year and don't have to adopt budgets until May 1. But boards of trustees in 32 villages have already passed override authorizations.

Thirteen other villages have held public hearings on the cap or scheduled them in the next three months. Thirty-six village boards are discussing the cap or say it's too soon to make a decision. Sea Cliff and Bayville deferred decisions after residents opposed any possible override. Fifteen have indicated they won't exceed the cap.

Voting to override the cap if necessary isn't unreasonable because the state comptroller's office checks the accuracy of levy calculations only after they've been submitted to the state, said Frank Mauro, executive director of the Fiscal Policy Institute in Albany.

"If you're going to have a cap, the law should be revised so there is some official calculation of a municipality's cap rather than, 'You go ahead and do it and we'll check after the fact,' " he said.

Of New York's 1,033 towns, counties and cities that had to adopt budgets by Jan. 1, about 20 percent planned to authorize an override, the state comptroller's office reported.

 

Call to revise law

The office reviewed 798 of those tax levy filings and found 43 had exceeded the cap, Nora McCabe, the comptroller's assistant director of policy and research, said. The range of error: $142 to $154,760.

"This is a scary law," she said at a January meeting of Nassau County mayors. "It's very complicated. There are a lot of calculations."

If a village exceeds the cap without approving an override, the money must be put in reserves and applied to the next year's tax levy.

Municipal boards need 60 percent approval to pass a cap override, which must be approved before adopting a budget.

"The only tool they're giving [villages] to deal with the tax cap is to override it," said Peter Baynes, executive director of the New York Conference of Mayors and Municipal Officials.

The Patchogue village board won't consider an override until it has a better idea of its 2013 budget, Mayor Paul Pontieri said. Last year, village taxes increased by 5 percent with 4 percent of that coming from health care costs and payments into public employee pension funds.

Another factor in village decisions is debt obligations. Limiting municipalities' ability to raise funds, through taxes, to meet debt payments could lead to a lower bond rating and higher borrowing costs, Pontieri said.

"The 2 percent cap has a much larger effect than the [state] government or the legislature wants to admit," he said.

 

Living within the cap

But some villages are finding ways to stay within the cap.

The Village of Freeport, the state's second largest, cut department budgets, froze discretionary spending and renegotiated health care costs to stay within the cap. It also plans to increase revenue by renting out an unused marina, village attorney Howard Colton said.

"You have to do more with less," Colton said. "The residents can't afford more taxes."

The Village of East Hills will stay within the cap in part by refinancing bonds to save more than $100,000 annually, Mayor Michael Koblenz said. Nonetheless, he doesn't like the cap. "I don't think it's realistic," he said. "It only works if [the state] caps everything else."

With Stacey Altherr, Jennifer Barrios, Denise M. Bonilla, Bill Bleyer, Sophia Chang, Emi Endo, Mitchell Freedman, Carl MacGowan, Deborah S. Morris, Emily Ngo and Candice Ruud

 

 

Overriding the 2 percent cap

 

LI villages that have voted to authorize overriding the state's new 2% tax levy cap:

 

Babylon Town

Amityville

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Lindenhurst

 

Brookhaven Town

Lake Grove

Old Field

@Newsday

 

East Hampton Town

None

 

Hempstead Town

Atlantic Beach

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Bellerose

Hempstead

Hewlett Bay Park

Hewlett Bay

Hewlett Neck

Lynbrook

New Hyde Park

Woodsburgh

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Huntington Town

Northport

 

Islip:

Brightwaters

 

North Hempstead Town

East Williston

Flower Hill

Great Neck

Great Neck Plaza

Kensington

Mineola

Munsey Park

North Hills

Old Westbury

Plandome

Plandome Manor

Roslyn

Saddle Rock

Westbury

Williston Park

 

Oyster Bay Town

Massapequa Park

 

Riverhead Town

There are no villages in the town

 

Shelter

Island Town

None

 

Smithtown Town

Head of the Harbor

 

Southampton Town

Westhampton Dunes

 

Southold Town

None

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