Southampton Town Comptroller Tamara Wright told the town board that the town could be forced to cut up to $5 million from its annual budget to adhere to a new state-imposed property tax cap. New York State Assemblyman Fred W. Thiele Jr. discussed this with the board and Wright during a work session Friday.
The measure, signed into law in June, imposes a cap on tax levy increases at 2 percent or the rate of inflation, whichever is less. The cap, Thiele noted, applies to every form of local government. Much attention has been focused on , with conjecture that massive cuts and layoffs lie ahead.
If a municipality does not hit the ceiling of the tax cap, the unused portion may be carried over to the next year, up to 1.5 percent. If the carry-over is not used that following year, it expires. “You use it or lose it the next year,” Thiele said.
Southampton Town's last tax levy increase — before the cap was put in place — was just .67 percent. The question of whether Southampton Town is eligible for a carry-over is being considered on the state level.
One critical component to the property tax cap is the override provision. Thiele said that while school districts may override the cap with a 60 percent supermajority of voting residents, for a town or village to override the cap a local law would have to be passed with 60 percent of the governing board in favor.
In Southampton Town that would mean a simple majority of three of the five town board members.
“In any given year, if you’re thinking about overriding or piercing the cap, you will have to have identified a good reason why you need to, and that should happen as early in the budget process as possible,” Thiele said. For example, the cap might need to be overridden due to a weather event such as a hurricane and that should be articulated to the public, he said.
To make it easier for municipalities to adhere to the cap, the state is offering to relieve them of some unfunded mandates. Thiele said that, according to Gov. Andrew Cuomo, mandate relief will “generate between $150 to $175 million in savings for local government."
“That may sound impressive,” Thiele said, “But think about the fact that the 700 school districts in the state will spend around $35 billion next year. I describe actual mandate relief as an eyedropper in the ocean of unfunded mandates.”
The formation of a state mandate relief council that will look at the issue is critical in order to “unshackle local government,” Thiele said. A provision in the tax cap law also allows local governments to petition the council for specific relief.
Councilwoman Bridget Fleming asked if there would be any “discreet assistance” from the state, such as an adjustable rate loan offered in the past. “You’re talking about essentially crippling our ability to provide services, if we have numerous costs and we can’t move our revenue to meet them,” she said.
On the upside, Thiele said while the cap is “a challenge,” it will force municipalities to “take another look at non property tax revenues,” and consider consolidation.
