Board of Education Tax Cap Letter

Board of Education Tax Cap Letter
Posted on 05/11/2019
Board of Education Tax Cap Letter

To Residents of the Indian River Central School District:


The Indian River Board of Education is writing to express concern with the New York State Tax Cap calculation and the fact that the result can be a negative tax levy.  For the last ten years, the Indian River Board of Education has made an effort to keep taxes stable for the residents of the district. The largest percent change in the local tax levy from year to year was 4.54%.  This occurred in the budget for the 2009-10 school year. Twice in ten years there was no change in the local tax levy. The average percent change for those ten years was 1.90%.


Ironically, this effort at local tax stability is being disrupted by the New York State’s “2%” tax cap law.  In order to comply with the “2%” tax cap, the Indian River Central School District must lower the local tax levy by 25.30% for the 2019-20 school year.  This dramatic change came about in part as a result of the district refinancing a 2002 bond several years ago. This was a fiscally sound decision that caused IRCSD to receive aid for part of the 2019-20 year with no corresponding debt.  That, combined with other changes in the local share from 2018-19 to 2019-20, caused the Board to choose between a -25% and -29% tax levy to remain compliant.


Thus, decisions that were made in the best interests of the district and its taxpayers prior to the existence of the “2%” tax cap law now have a negative impact.  You might say “Great…. who’s going to complain about their taxes going down by 25%?”. The problem is that this new lower tax base becomes the base upon which future “2%” limits are calculated.  As a result of a one-year anomaly created by the “2%” tax cap, the district is saddled with a local tax levy base that is reduced by one quarter for the foreseeable future.


During the preceding ten years, the school budgets were overwhelmingly approved each year.  The voters have affirmed that they are fine with the local tax levy as it has been. While the reduced tax levy does not create a hardship for the district this year, there is a concern the reduced levy could cause issues in future years.

The Board’s choices are not good.  We can put forth a budget that complies with the “2%” tax cap to the voters, cross our fingers that it passes and hope that the resulting lost revenues don’t hurt us in the future.  Or, we can keep the local tax levy the same and ask the voters to override the tax cap. With the latter choice the residents of the district who participate in STAR will lose their Property Relief Credit checks.  And, given the wealth ratio of the district, this loss, for the majority of those taxpayers, would be 85% of their basic STAR benefits. This would be a significant burden for those homeowners in the district.


This is a perfect example of why the calculation should not RESULT in a negative tax levy amount but rather, should have a minimum of a 0% increase.  For the Indian River Board of Education, the "2%" tax cap represents an inappropriate intrusion on local decision making.  It is also results in an unwanted variability in school taxes from year to year, requiring us to raise taxes in the future by a significant percent to return back to the 2017-18 and 2018-19 levels.


Indian River Central School District

Board of Education



Tax Levy Data

Time

Previous

Proposed

Change

%Change

May 2019

3,363,355

2,512,556

(850,798)

-25.30

May 2018

3,363,355

3,363,355

0

0

May 2017

3,329,966

3,363,355

33,389

1.00

May 2016

3,280,675

3,329,966

49,291

1.5

May 2015

3,280,675

3,280,675

0

0

May 2014

3,248,793

3,280,675

36,902

0.98

May 2013

3,169,544

3,248,793

79,239

2.50

May 2012

3,122,327

3,169,544

47,227

1.51

May 2011

3,031,622

3,122,327

90,705

2.99

May 2010

2,915,021

3,031,622

116,601

4.00

May 2009

2,788,547

2,915,021

126,474

4.54




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