It seems like a simple thing -- the New York State Legislature passed, and Gov. Andrew Cuomo signed into law -- a bill capping local property tax increases at 2-percent annually.
Except it's not so simple.
If you think that one of these years, your taxes can't go up more than 2 percent over what you paid the previous year, think again.
The tax cap is actually on the tax levy. The tax levy is the amount of revenue a local jurisdiction needs to help pay its bills. A local jurisdiction determines what the levy needs to be and then calculates the tax rate for that budget year.
The tax cap doesn't touch the tax rate at all, nor does it control assessed value.
The law caps the levy increase at 2 percent, or that's what you might think.
It really doesn't cap it at 2 percent at all. There are exceptions for changes in assessed value and exclusions for increases in pension costs.
For the City of Batavia, for example, the city council could -- perfectly within the tax-cap formula -- increase the tax levy for 2012-13 and raise the tax levy 4.3 percent.
City Council President Marianne Clattenburg's reaction after seeing a tax cap presentation at the council's Monday night meeting: "Unreal."
"This (the tax cap) is misleading to taxpayers," Clattenburg said. "They’re expecting a 2-percent tax cap when they can get a 4-percent tax cap."
Besides not being a straightforward cap on tax increases, the law also provides local jurisdictions with the ability to override the cap with a 60-percent vote of the governing body -- something New York's cities, villages, towns and school boards seem prepared to do across the board, according to The New York Times.
In fact, because there are penalties for failure to abide by the cap, and because the formulas for calculating it are complex, city staff New York Conference of Mayors is recommending that the council enact a local law to override the cap every year, even if there isn't an increase in the levy at all. That way, the city is protected if a subsequent audit finds the tax levy increased more than allowed under the law.
For the city, once the calculation is done for the 2012-13 fiscal year, the city's levy could increase more than 4 percent, from $5.8 million to $5.9 million.
It hasn't been determine how that potential levy (there's no recommendation or budget decision in the calculation) will impact the tax rate paid by individual property owners.
In 2009, for example, the tax levy increased 4.2 percent, but the tax rate went up by only 1.62 percent.
In 2011, the levy went up 2.5 percent and the rate increased 1.26 percent.
City Manager Jason Molino was quick to point out at the start of Monday's meeting that in any of the financial presentations made, there were no budget recommendations. The presentations were merely to help the council understand current economic factors affecting the upcoming budget.
Part of the presentation, Molino (pictured) provided an overview of the recent "positive outlook" given the city by the bond-rating agency Moody's.
Though Moody's said the city has some financial challenges -- too small of a reserve fund and an unresolved contract with the police union, among them -- the city has made tremendous progress in going from a municipality having a hard time paying its bills to one planning for the future.
"It’s a good feather in the city’s cap that you’ve done the right budgeting, the right financing, over the past several years to get to this point," Molino told council members.
Also on Monday, the city approved an emergency expenditure of up to $35,000 to replace the roof on City Police Headquarters.
A proposed donation for a veterans memorial was put off until it's time for the city to discuss the budget.
