With inflation on the rise, state officials announced Wednesday that increases in school property taxes for the 2022-23 academic year would be capped at 2% — up from the current year's 1.23%.
Under the state's cap law, in effect since 2012, annual tax hikes for school districts and other local governments are limited to 2% or the inflation rate, whichever is lower. The last time the maximum hit 2% was 2019.
Still, that limit is below the inflation rate, which is running at 4.7%, according to the State Comptroller's Office.
"School district and municipal offices must remain fiscally cautious to stay under the cap as they prepare their budgets," Comptroller Thomas P. DiNapoli said in a statement Wednesday. "Even with significant funding from the state and federal governments, school and local communities are faced with the rapid increase in inflation, pandemic surge and trying to retain and recruit employees."
School taxes are a major cost driver on Long Island, where they account for more than 60% of homeowners' property tax bills. In recent years, increases in those taxes have been held relatively modest, due to a combination of state caps and low inflation.
Whether those restrictions can be maintained, with inflation now kicking up again, is an issue that state and regional officials will have to grapple with in the months to come.
"Obviously, we are concerned with the cap being at 2%, even though this was foreseen," said Lorraine Deller, executive director of the Nassau-Suffolk School Boards Association. "Without promises of increased federal and state aid, we would be facing a catastrophic budget period."
Deller, in a telephone interview, added that health insurance costs are likely to jump at least 10% next year, and that districts also face rising pressures in other areas, such as the need to retain and recruit employees in key areas ranging from bus drivers to psychologists.
In addition, there is increasing demand for substitute teachers, according to Henry Grishman, superintendent of Jericho schools and a former president of the New York State Council of School Superintendents.
"Because of COVID quarantines, we are facing absenteeism among teachers and support staff," Grishman said.
One potential source of help for school districts in paying rising expenses next year will be a likely boost in state financial aid. Gov. Kathy Hochul, who is due to announce details of her state budget plan next week, has already pledged that "foundation" aid — the state's biggest school-assistance program — will rise by about 7.5% in 2022-23, bringing the total to $21.3 billion statewide.
"School districts would be in much worse shape if we were not expecting to receive meaningful increases in foundation aid," said Brian Fessler, director of government relations for the New York State School Boards Association, based in Albany.
Fessler added, however, that rising inflation illustrates the problems that can arise when governments must deal with tax caps. His association has called for revision of the current state cap law, to allow annual hikes in district tax levies ranging from 2% to the inflation rate, depending on which is higher.
Still, tax caps remain popular with many voters, and any effort to revise the current law would almost certainly touch off a political fight. Already, some of the area's taxpayer advocates are questioning why school budgets continue to rise every year, even as enrollments steadily decline in most districts.
"They would be really dumb to do that, because taxpayer activists would be coming out of the woodwork," said Andrea Vecchio of East Islip, referring to calls for cap-law revisions. Vecchio is a longtime advocate of curbs on local property taxation and founder of a regional group, Long Islanders for Education Reform.
The 2% cap applies to 676 school districts across the state, including 124 in Nassau and Suffolk counties, in the fiscal year starting July 1. School districts will set their individual rates for voter approval in balloting scheduled for May. The cap also applies to 10 cities.
Under the cap law, districts seeking to exceed the 2% limit will be required to obtain consent from at least 60% of local voters.