School budgets get larger OKs as tax cap limits spending 

Long Island voters have approved school budgets at record-high rates since the adoption of state spending restrictions, which has helped slow annual growth of school taxation to 1.9 percent from more than 6 percent a decade earlier, a Newsday review shows.

Proposed school budgets in Nassau and Suffolk counties won adoption in votes surpassing 93 percent since the 2012-13 academic year, when New York first imposed tax caps statewide. In contrast, annual passage rates in the years prior to the Great Recession were as low as 63 percent and rarely bested 90 percent.

Relatively low tax increases should continue in the 2019-20 school year, though figures are tentative until the state budget is finalized. Voting on budgets and school board candidates is scheduled for May 21.

Projections for the next school year, released by the state comptroller's office during the past two weeks, show an average tax increase of 2.53 percent in the 120-plus school districts in Nassau and Suffolk counties. The latest numbers are up slightly from the average of the last seven years, reflecting a gradual rise in inflation.

Only 13 school districts out of more than 640 statewide are considering an attempt to override their cap — the lowest on record, according to the Association of School Business Officials of New York. One of those districts, Eastport-South Manor, is on the Island.  

School taxation accounts for about two-thirds of the average homeowner's tax bill on the Island, and the region remains among the most heavily taxed in the nation, though the caps are exerting downward pressure. 

The weeks ahead could mark a pivotal moment for the state's cap system, which analysts say ranks among the country's most rigorous. 

Gov. Andrew M. Cuomo, who pushed through the current law, is barnstorming the state in an effort to make the restrictions permanent. The law is due to expire next year unless legislative action is taken.

Many education officials point to economic pressures stemming from the Great Recession as contributing to lower tax increases, and say the tax-cap law should be amended. But even skeptics concede that the cap system appears to be firmly in place and likely to remain so.

"There is a feeling among school leaders — it's not universal; I have to be careful about the way I say this — that it may be inevitable that a permanent tax cap will be put in place," said Lorraine Deller, executive director of the Nassau-Suffolk School Boards Association.

Permanent renewal is strongly supported by business and taxpayer representatives. They cite rising support for school budgets and smaller tax increases as evidence that the tax cap is serving its intended purpose.

Kevin Law, president and chief executive officer of the Long Island Association, the region's largest business and civic organization, ranks permanent extension of caps as his group's No. 1 priority this year. He said the region's homeowners could be looking at annual tax increases of more than $4,000 in the event that the cap law expires and tax rates rise at pre-2012 levels.

"The bottom line is that the cap is working, and thus we urge the State Legislature to support Governor Cuomo in his efforts to make the property tax cap permanent in this year's budget," Law said in a prepared statement.

New York's cap law, with some exceptions, limits growth in taxation by school districts and municipal governments to an annual baseline of 2 percent or the national inflation rate, whichever is lower. 

Actual increases in tax levies can be either higher or lower than the baseline, depending on local circumstances. For example, annual costs of bond borrowing for school construction and renovation approved by local voters are exempt from the state cap. 

A school district's proposed budget that pierces its cap requires 60 percent approval by voters, rather than a simple majority. In municipalities, a 60 percent vote of elected municipal boards is required for a cap override. 

Districts falling short of a 60 percent "supermajority" in the first round of voting are allowed a single revote in June. A second failure means that districts must operate under a tax freeze the following year.

At the local level, school leaders voiced mixed feelings over the campaign for a permanent tax cap.

School administrators and others acknowledge that limits on property taxation are popular, especially at a time when Washington has cut back on income-tax deductions for such expenses. At the same time, these officials say that caps make it more difficult to deal with rising costs of contractual salaries estimated at between 2.5 percent and 3 percent annually, as well as employee benefits mandated by state law.

"I do see pluses and minuses," said Patrick Brimstein, superintendent of the Eastport-South Manor system, where the cost of hiring armed security guards could force the need for a cap override.

"The state is trying to make our region affordable. That makes perfect sense to me,"  Brimstein added, referring to the rationale behind the tax cap. "On the other hand, schools have costs beyond their control, issues like health care, and that presents a difficult financial challenge."

New York's cap law is among the more restrictive statutes of its type in states across the country, according to Jared Walczak, a senior policy analyst at the Tax Foundation, an independent think tank in Washington, D.C. He notes that cap restrictions in some other states allow tax hikes to float above 2 percent, depending on inflation. 

Even with the cap law, New York continues to rank high among the states in property taxation, though it recently moved down a notch. The Tax Foundation's latest figures, for the 2015-16 fiscal year, show New York in fifth place among states, with per-capita property taxation of $2,782, down from fourth place in fiscal 2012-13. 

A study of the cap's impact released last month by the Rockefeller Institute of Government, an Albany-based nonprofit research agency, calculated that the Nassau-Suffolk area saved the greatest amount of tax money of any region of the state — a cumulative total of $7.7 billion.

The study was led by Jim Malatras, the institute's president and a former top aide to Cuomo. 

"We're going to bring fiscal restraint to government," the governor said Wednesday during a public appearance in Hicksville. "I want to make the property tax cap now permanent because I want to be able to say to homeowners, to businesses: 'Feel confident.' " 

The State Senate already has voted for a permanent cap, reflecting the makeup of its new Democratic majority that includes members from Long Island. The Assembly, dominated by urban Democrats, has not yet followed suit; its leaders have insisted in the past that any extension of caps be accompanied by extension of rent controls that are important to many New York City residents.

Under law, Cuomo and state lawmakers are supposed to adopt a state budget that includes a package of school financial aid by April 1. The governor has declared he will not sign a budget this year until he has a deal on making the cap permanent.

Meanwhile, education groups are pushing for a variety of amendments to the cap law.

Organizations representing unionized teachers and PTAs favor a change that would set limits at 2 percent or the inflation rate, whichever is higher. Representatives of school boards and superintendents support a limit of 2 percent with certain allowances for local circumstances.

"It's commonly understood as a 2 percent cap, so make it 2 percent," said Robert Lowry, a deputy director at the New York State Council of School Superintendents. 

By John Hildebrand

john.hildebrand@newsday.com@johnhnewsday

John Hildebrand is Newsday's senior education writer and has covered school news and policy issues affecting Long Island for more than 40 years.