Understanding The Tax CAP

Explanation
The tax cap law does NOT cap an individual’s school tax bill.

Although the new law has been referred to as a “2 percent tax cap,” it does not in fact restrict any proposed tax levy increase to 2 percent.

Essentially, the “tax levy limit” sets a threshold requiring districts to obtain a higher level of community support for a tax levy above a certain amount.

Increases in individual tax bills are different from increases in the tax levy. Tax bills may increase due to a variety of factors such as home assessments, etc., which are outside a school district’s control. This will continue to be true.

Explanation
The new law has been referred to as a “2 percent tax cap,” but the law itself does NOT limit how much the tax levy can actually increase under a proposed budget.

The law does, however, require at least 60 percent voter approval for a school budget if the proposed levy increase exceeds a certain amount. That amount, called the “tax levy limit,” will be calculated by each district according to a formula outlined in the law.

Explanation
The tax cap legislation will affect all districts to varying degrees, but it is clear that some will be affected much more than others. In particular, for poor and/or rural school districts with low property wealth and declining tax bases, staying within their “tax levy limits” will severely restrict their ability to generate the revenues needed to sustain core educational programs.

Explanation
If you guessed on this one, you are probably not alone.

The Spencerport business administration is working hard on the 2012-13 budget at this time, and right now, our calculated levy limit is 2.58%. Part of the budget development so far has been to learn all about the new tax cap, its formulas (up to 8 different calculations), and ultimately, its impact on our community.