State Assemblyman Fred W. Thiele Jr., I-Sag Harbor, said last week that he is confidant the state legislature will pass a property tax cap this year, to take effect in 2012.
Such a cap would limit the growth of tax levies — the amount of money school districts and local municipalities raise through property taxes — thus slowing growth in spending and the size of government.
The most likely scenario is a cap of 2 percent or the rate of inflation, whichever is lower, Thiele said Thursday during a presentation to Southampton Town school superintendents and financial officers at .
Under former Gov. David Paterson, a 4 percent cap was proposed. Now Gov. Andrew Cuomo is seeking a 2 percent cap, and according to Thiele, he is likely to get it.
“The governor has made it one of his top two or three issues he is pushing,” Thiele said, adding that Cuomo is in his post-election honeymoon period, with a high approval rating.
Thiele pointed out some questions regarding the cap that have not been addressed yet, like how school districts and municipalities will cope with high inflation and cost of living increases. “It just looks at existing conditions — that inflation is low,” he said.
If five years from now the rate of inflation is 10 percent, school districts will still only be able to raise the tax levy by 2 percent, he explained.
“No law should be put in place without a revisit date,” Southampton Town Supervisor Anna Throne-Holst said Thursday following Thiele’s presentation. The impact of legislation changes over time, she said.
Thiele agreed, posing the scenario of the East End being hit by a hurricane, which would have a dramatic effect on costs and tax revenues.
However, “there is a provision in there to pierce the cap,” Thiele said. A municipality or school district can increase the tax levy by more than the cap allows if 60 percent of voters give their approval.
Another exception to the cap is if a district faced a large lawsuit settlement, Thiele said. Capital spending, such as school expansion projects, would also be exempt.
Thiele stressed that a tax levy cap is not a tax rate cap. If property assessments go down, the tax rate could still go up 4 or 5 percent, he said.