Village Auditor: Property Tax Cap Will Affect Garden City Budget

On June 30, Gov. Andrew Cuomo signed a bill that limits property tax increases to 2 percent or the rate of inflation, whichever is less.

Cuomo called the cap "a critical step toward New York's economic recovery" and county executive Ed Mangano said the cap is "long overdue" for Nassau residents and considered Cuomo's move "among the most important accomplishments" of the governor's first six months.

Garden City village auditor Jim Olivo, however, said the cap will have a definite effect on the village's 2012-13 fiscal budget, which runs from June 1, 2012 through May 31, 2013.

"What was passed was a 2 percent tax cap that is indexed to the (Consumer Price Index), however there's discussion as to which CPI they're using," he said. Early indications place the cap around 1.8 percent, which Olivo said isn't "necessarily good for Garden City."

"The inflation rate in the New York City metro area is substantially different than the upstate index," he said. "We don't what they're going to be using."

Olivo noted the cap is a tax levy cap - not a tax rate cap. "That's a very important distinction to make," he said. The levy is the product of the budget while the rate is the product of the assessed value.

Garden City has a tax levy of $44,560,340; a 2 percent increase represents $891,206.80, according to Olivo. Should the village's assessed value drop, he said the tax rate increase may easily exceed 2 percent.

"One of the major drivers has been the loss of assessed value through certiorari settlements. That essentially will make the tax cap higher than 2 percent in the rate to the homeowner," Olivo explained. "While we are limited as to how much we can raise overall, an individual's tax bill might go up 2, 4 6 or 8 (percent) and still be considered tax cap compliant."

At a recent Government Finance Officers Association session Olivo attended, Peter Baynes and Barbara Van Epps presented the New York Conference of Mayors' (NYCOM) viewpoint on the legislation, pointing out "several concerns."

Olivo noted that a mitigating exemption for retirement contribution rate increases will raise the cap and that a "complex formula" in development will be applied to each unit by the state comptroller's office. Retirement rates are expected around Sept. 1. "Only then can a government anticipate its cap level," he said.

NYCOM officials said the mandate relief included in the law has "almost no effect," Olivo added. You Can't Cap What You Can't Control, a report released in December 2010 by NYCOM's Task Force on Mandate and Property Tax Relief, recommended a slew of proposals the task force believed should've been considered before the state legislature moved to adopt the cap and identified rising costs beyond local control that should've been excluded from the cap.

A resolution trustees passed at that time said the governor and members of the Senate and Assembly must first reform the cost drivers that lead to high property taxes in New York State like pension benefits and the collective bargaining process. Then-mayor Rob Rothschild said the resolution was "one of the most important things" Garden City could do to get through the budget session.

According to Olivo, a mandate relief council was established under the new law. Among the relief items not included in the final law was binding arbitration, he said. "These are all considerations to think about going forward into the next six months of the budget process," he said.

Local jurisdictions do have the power to exceed the cap through the adoption of a local law passed by a 60 percent majority - a 5-3 vote of the board.

For Mayor Don Brudie, overriding the cap could provde costly for the village. "If the board votes to exceed the cap, everything goes up with it," he said. "To stay within the cap we may have to cut services."