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WACS board hears how new tax bill will affect budget

October 26, 2011
WESTFIELD — If voters are confused about the property tax cap bill which recently passed in New York State, they are not alone.

Business manager Al Holbrook gave a presentation to the Westfield Academy and Central School Board of Education at its last meeting on Tuesday, Oct. 11 explaining what the new bill means for the district.

While it first appeared the tax cap bill was not going to pass, the bill was tied in to a rent control bill and thus gained enough votes to make it law. The new rules will take effect in the 2012-13 school year and the bill will sunset in 2016.

What this new bill will change for the school board is how it set the district’s tax levy, which is different than the tax rate. Assuming a 2 percent maximum increase in the tax levy for next school year, the district would only be able to increase its revenue by around $105,988.

“The governor and state legislature would like people to think that there’s tax cap now in New York State,” Holbrook said. “There’s not.”

The tax cap legislation, which attorneys are suggesting districts call a voter approved threshold instead, does not actually restrict the amount a municipality can or cannot raise the tax levy. What is does is create penalties and consequences if a budget is not passed. This is different than the popular view that the bill will keep tax levy increases to between 1 and 2 percent depending on the inflation factor.

“It doesn’t work out that way, but that’s what the general public believes to be in place,” Holbrook said of the between 1 and 2 percent confinement.

In essence, a municipality or school board can increase the tax levy by whatever amount it wants, but if it is outside of the voter approved threshold — that 1 to 2 percent, depending the inflation factor and a complicated formula set by the State of New York — a super majority of voters is needed to do it. Currently a super majority is defined as 60 percent of the voters, but that percentage is one of the parts of the bill to which changes are still being discussed.

The tricky part of this super majority aspect of the bill is that while school budgets are subject to a public vote and thus needs 60 percent of those who show up to the polls, counties, villages and towns are only required to have 60 percent of the governing body vote for a larger increase to get it to pass. That means for a village or town board with five members, if three of them vote for a tax levy increase above the voter approved threshold, it passes.

One of Holbrook’s fears with this new legislation is that since the school budget is the only one voted on by the public and since the school budget is the last of the local budgets to be approved, voters will take any frustration they might have over municipalities raising taxes beyond what they thought could be done out on the school budget and vote it down.

Should that happen, the consequences could be dire for the school since it would have to adopt a contingent and the rules for that have also changed with the voter approved threshold bill.

“The Contingent budget impact is huge,” Holbrook said.

In the past, a contingent budget could actually have had a higher tax levy to go along with it which could have decreased the likelihood voters would reject it. Now what will happen if a budget is defeated is a contingent budget will be imposed and the tax levy will be set at the prior year’s tax levy with no adjustments. Therefore, multiple years of the budget being voted down could really hurt a district.

“Now people come into the voting, they really do have an impact,” Holbrook said. “They really do have a say.”

Another fear is that even if the district does all the proper calculations to determine the voter approved threshold, which only needs 50 percent of the votes to pass, the value could come out to be more than the 2 percent the public thinks is the limit. In one of the two seminars Holbrook has been to on this legislation, two live scenarios were run with the new formula for two real districts. For one, the calculated voter approved tax levy was less than the previous year’s tax levy. For the other, which was run through the same formula, the approved levy was 4.67 percent.

“Why would municipalities and school district’s not just raise (the levy) the 2 percent every year and not put themselves in a position of not being able to raise the funds they need?”Board of Education Vice President Tony Pisicoli said. “Effectively, they’ve increased our taxes by instituting this voter approved threshold,”

“To a certain extent, yeah,” Holbrook said.

He also said the board should raise the levy to the fullest extent possible every year so it does not find itself in a position where it would need a super majority vote to raise the money it needs.

“But the risk is that the taxpayers are not going to go for it,” board member Joy Bodenmiller said.

“That’s the real rub,” Holbrook said.

During the public comment portion of the meeting, Westfield resident Robert Neratko spoke to the board about his feelings regarding the voter approved threshold discussion.

“The taxpayers of Westfield need to be represented,” he said. “It came across as almost ungrateful to the taxpayers as some of the comments that were made.”

Neratko pointed out that the CPI has not increased over the last two years, meaning social security recipients, retired military and civil servants are not seeing an increase while the board sounded to him like it was wondering how it could live on only a 2 percent increase every year.

“I think when you look at things, we gotta be financially conservative,” Neratko said. “Everybody’s cutting back. Let’s not be ungrateful to the taxpayers who like you said have voted 65, 70 percent of the time for the budget.”

During board member commentary, Pisicoli responded to Neratko’s comments saying his frustration is with the state, not any ungratefulness to the taxpayers.

“If anything I say came off as ungrateful to taxpayers, that’s the furthest thing from what I actually feel.” Pisicoli said. “I think my contempt is more for how this law was introduced and written and where it puts municipalities and school districts than anything to do with the taxpayer.”

Board President Marie Edwards agreed with Pisicoli.

“It’s more the way the state is trying to address these problems,” she said. “They’re giving us the gun with no bullets.”

Edwards added that she thinks the board has done a very good job of keeping taxes stable and noted that, personally, her tax bill has not changed more than $50 in the last five years.

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Article Photos

Photo by Jenna Loughlin
Westfield Academy and Central School Board of Education Vice President Tony Pisicoli, right, asks questions of the district’s business manager Al Holbrook, left, during the school board’s meeting on Tuesday, Oct. 11 during Holbrook’s presentation to the board regarding the new tax legislation passed in New York State.



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