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2 percent tax cap misnomer creates confusion

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POTSDAM - Last June, state legislation approved to make taxing jurisdictions limit the tax levy to the rate of inflation with exceptions.

Since then, however, many school districts have scrambled to clear the popular belief that the levy caps off at 2 percent, no exceptions, before the public votes on budgets next week.

While most districts are staying under a 2 percent levy anyway, some districts, like Lowville Academy, are allowed up to a 22 percent increase. Others, such as Potsdam Central School District, are over the limit with a 2.9 percent increase.

“We’ve chosen in order to offset more cuts go with a 2.9 percent tax levy increase,” Potsdam Central School Superintendent Patrick Brady said. The 0.9 percent over the cap generates an additional $99,624 in revenue.

Mr. Brady explained when administration first began crafting the budget they were doing so thinking the maximum allowable levy would be a 3.2 percent increase.

“Our tax cap limit was going to be 3.2 percent, but then the state said a bus purchased with 2010-2011 funds had to count against the cap,” he said, explaining the district used cash to purchase a bus.

But since the purchase wasn’t actually made until the current calendar year, the state ruled those funds should count as a capital expense, something that when calculated actually counts against their maximum allowable levy.

“We thought we were doing our taxpayers a favor and saving them interest,” Mr. Brady said. “We strongly disagree that the bus purchase should count against our tax cap.”

Mr. Brady said if the purchase not counted against their tax cap the 2.9 percent tax levy increase would actually be below the maximum allowable levy.

For districts like Potsdam, exceeding the levy limit means a super majority — 60 percent of votes plus one — is required to pass the budget. If they budget does not pass, the board has a second opportunity to present the budget. If it does not pass again, the district is forced into contingency.

Most districts are not faced with Potsdam’s problem.

The Massena Central School District is avoiding the confusion and presenting voters with a 2 percent tax levy increase, slightly below its tax levy limit of 2.38 percent. The St. Lawrence Central School District has adopted a 3.28 percent tax levy increase, which is below their tax levy limit of 4.33 percent. The Norwood-Norfolk Central School Board of Education is staying right on the line, presenting voters with a 0.26 percent tax levy increase. Their tax levy limit is also 0.26 percent.

A district’s maximum allowable limit is based on an eight step math formula involving the prior year’s levy, payment-in-lieu-of-taxes approved in the past year as well as those expected the following year. Exclusions include capital tax levy, what is needed to pay additional pension costs and court order and judgement expenditures if it exceeds 5 percent of the total taxes levied the prior year.

“With all the talk of New York’s 2 percent tax cap,’ it may come as a surprise to learn that each school district in the state will present three separate tax levy numbers this spring as a part of their compliance with the new legislation,” according to a newsletter developed by the Capital Region Board of Cooperative Educational Services. “And chances are good that none of your school district’s three levy numbers will be exactly 2 percent.”

In St. Lawrence County, countless districts like Colton-Pierrepont, Parishville Hopkinton and Canton Central are raising their tax levies more than 2 percent but still below the allowable limit.

Colton-Pierrepont is presenting its voters with a tax levy increase of 2.03 percent, slightly over 2 percent, but also slightly under its maximum allowable levy of 2.04 percent.

Voters in Parishville-Hopkinton will be voting on a budget that presents them with a 2.91 percent tax levy increase, utilizing every dollar they were allowed by the state, while still coming in under its tax cap limit.



Staff writers Benny Fairchild, Bob Beckstead and Susan Mende contributed to this report.

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