School property taxes capped at 2% for 2023-24, state comptroller says
"School and local communities are still navigating the post-pandemic needs of their students and residents while dealing with high rates of inflation and employee turnover," said state Comptroller Thomas DiNapoli. Credit: Howard Simmons
Growth in school property taxes on Long Island and statewide will be capped at a maximum 2% for the second year in a row as inflationary pressures persist, state Comptroller Thomas DiNapoli announced Thursday.
Under the state's cap law, in effect since 2012, annual tax hikes for school districts and municipalities are limited to 2% or the inflation rate, whichever is lower. The inflation rate applied to the cap for the 2023-24 school year was 8% as of June and has since dipped to 6.5%.
"School and local communities are still navigating the post-pandemic needs of their students and residents while dealing with high rates of inflation and employee turnover," DiNapoli said. "School district and municipal officials must exercise fiscal prudence to stay under the cap amid these challenges as they prepare their budgets."
Annual caps, set by state law, limit increases in school tax collections known as levies, which account for more than 60% of homeowners' tax bills on Long Island. The latest cap announced Thursday marks the 12th year in a row that taxation has been limited under the state's strict system.
WHAT TO KNOW
- School-tax hikes will be capped at 2% in 2023-24, the state comptroller says.
- State-aid expansion will offset much of the restriction in local taxation.
- Gov. Hochul's plan to change a cap calculation is disputed by some conservatives.
The cap law was a hallmark initiative of former Gov. Andrew M. Cuomo, who resisted periodic efforts to amend the statute during his tenure in office from 2011 to 2021.
'Foundation aid' offsets cap
Next year's limits on local taxation will be offset to a large degree by continued expansion of state "foundation aid." Such assistance is aimed in part at narrowing the gap between low-wealth school districts and their more affluent neighbors, and the majority of districts statewide get at least minimum increases.
On Tuesday, Gov. Kathy Hochul confirmed that she will support a $2.7 billion increase in statewide aid, or 13% for the coming year, adding to installments already approved in 2021-22 and 2022-23.
"The governor's commitment to fully fund foundation aid over a three-year period is absolutely tremendous," said Ryan Ruf, chief operating officer of the regional Eastern Suffolk BOCES educational system headquartered in Patchogue.
Ruf and other regional school leaders noted that distribution of foundation aid will have very different effects on individual districts across the Island, depending on the size of their allotments.
"There are still going to be some hard choices that schools will have to make when it comes to budgets," said Bob Vecchio, executive director of the Nassau-Suffolk School Boards Association.
Possible change draws scrutiny
Meanwhile, some fiscal conservatives dispute a Hochul plan that would amend one aspect of the cap system.
Hochul, who previously served as lieutenant governor, succeeded Cuomo in August 2021, after he resigned amid allegations of sexual harassment. She was elected to a full four-year term in November.
Gov. Kathy Hochul delivers her State of the State address Tuesday in Albany. Credit: AP/Hans Pennink
Hochul's plan was outlined in a short section of a 276-page State of the State publication released Tuesday. Her proposed change would deal with the way so-called Payments in Lieu of Taxes, otherwise known as PILOT agreements, are used in calculating caps.
PILOT agreements are commonly used by municipalities as incentives to bring in commercial developers, in exchange for temporarily waiving property taxes.
The governor's plan contends that its proposed change in cap calculations will help ensure that localities are not financially penalized if they use PILOT agreements to encourage creation of housing developments.
"The status quo accounting methodology can discourage the use of PILOT agreements by putting more downward pressure on a locality's overall tax levy," the Hochul plan states.
Some school representatives agree with the governor's general approach, while adding that they seek additional details. Robert Lowry, deputy director of the state's Council of School Superintendents, said it was reasonable to provide support for districts in areas of new housing construction, since such development could result in larger student enrollments.
"We refer to it as a common sense adjustment," Lowry said of the Hochul plan.
In contrast, analysts at an Albany-area think tank said the plan could hurt ordinary taxpayers in communities that use PILOT agreements, by increasing their share of school costs. Analysts also suggested that the governor's proposal could lead to further changes in the cap law down the road.
"The governor is opening the door to weakening a tremendously successful policy," said Ken Girardin, a researcher at the Empire Center for Public Policy, the nonprofit think tank.
John Hildebrand is Newsday's senior education writer and has covered school news and policy issues affecting Long Island for more than 40 years.
