Thoughts on NYS Property Tax Cap

Recent events will provide major hurdles for the Saugerties School District and Town of Saugerties to remain within the State Property Tax Cap this year.  For taxpayers to receive property tax rebate checks from the State, local government units must remain within the tax cap.

The State recently announced that property taxes for schools will be capped at 0.12% this year.  While Saugerties School District spending was trending lower prior to the start of the cap in 2011, it’s faced serious reductions in State aid.  Finding a way to stay within the cap will be a major challenge for the School Board.

The cap has had a significant impact on town property taxes – but not by cutting spending.  Saugerties has stayed within the cap recently due to savings from the county gradually taking over Safety Net and election costs.  Ulster County recently announced it will seek to reduce the county sales tax distribution to the towns by one-third, which could cost Saugerties $70,000 in revenue and make it even harder to stay under the cap. 

Facing growing salary, fringe benefit and program costs, local governments statewide are calling for exemptions to the cap.  But relief is not likely.  Municipal governments will be put in the position of exceeding the cap at the risk of angering taxpayers not receiving rebate checks or significantly cutting services to remain under the cap.

The State is hoping this financial chaos will cause local governments to take drastic steps to significantly lower property taxes.  The State is providing financial incentives to merge and consolidate services.  Despite recent streamlining, the School District will have to dig even deeper to find more cuts and hope for sufficient State aid.   The town will be forced to look at sacred budgetary cows it has been unwilling to face previously.  Too bad the State is unwilling to apply the same tough medicine on itself to address its own spending habits!